Cyber Warrior 5 steps to adopting a cloud service model
Cloud computing has transformed the way companies do business. It’s no longer a solution for just enterprises, as it’s expected to exceed $270 billion by 2020 and 44 percent of the growth will come from small businesses. And it’s anticipated that this shift will be bigger than the transition to managed services.
Adopting a cloud services model
Business as usual is no longer an option for managed service providers (MSPs). Small and medium-sized businesses (SMBs) recognize the value of cloud solutions and old support models — with carefully controlled, on-premise environments — are going by the wayside. SMBs want information and services to be accessible anywhere, at any time, on any device.
To stay relevant and be a value-added member of their team, your service model needs to support cloud applications so you can help with their cloud migration. If you don’t, your customers may leave you behind.
Success in the cloud
As an established MSP, you have the foundation in place to build your cloud service provider (CSP) practice. Think about your cloud service offerings from your customer’s perspective and map each stage of the buyer’s journey:
- Building awareness for cloud services benefits
- Receiving services and support
- Paying invoices
Next, determine how to map your business processes to each stage of the customers’ journey. Then, determine if you should hire a new team or have your existing team dedicate a percentage of their time to cloud services.
Finally, keep your existing service offerings in place, because the transition to cloud won’t happen overnight. A diverse services portfolio ensures your business will remain agile and that you can support your customers’ needs.
1: Build Awareness
Cloud vendors have spent millions to convince SMBs to transition to the cloud. Use this to your advantage as you talk with your clients. Focus on:
- Migrating from on-premise to cloud services offerings.
- Monitoring for disruptions and usage plans.
- Providing proactive support.
- Reducing downtime and providing a single point of contact for local, onshore support.
- Identifying the right cloud services for their business needs.
- Providing an additional layer of security.
- Offering the convenience of one vendor, one invoice.
2: Close deals
Define your sales process so you can talk with customers and prospects, quote cloud services, add new offerings to agreements, and close deals. Software license renewals and maintenance contract expirations are the perfect opportunity to update customers on your new CSP offerings and benefits.
Since most SMBs won’t move everything at once, highlight the cloud services that will benefit their business the most. By offering two or three options — on-premise, cloud, and hybrid cloud — with pricing, it may be an easy decision.
Also, be sure to sell your value as a trusted advisor since you understand their business challenges better than anyone else.
3: Purchase and Delivery
With so many distributors, how do you determine who you should work with? First, consider the entire package of services as well as the maturity and richness of the cloud services market they’ve built. Evaluate how their services stack up against your own capabilities, especially in areas where you have gaps.
Your relationship with each distributor is important because support escalations will go through them not the cloud vendor. Also, consider pricing, margins, and the level of support you desire.
As a CSP, you own the complete customer lifecycle — managing cloud licenses, monitoring and reporting on usage patterns, and serving as the primary support contact. Use this as a selling point since most cloud solution vendors prefer to push customers toward online help.
By adding a cloud management and monitoring solution, you can support cloud services as efficiently as your managed services offering. For efficiency, which translates to profitability, select a cloud management solution that integrates with your existing tools.
Cloud services tools provide the same level of control as remote monitoring and management (RMM) tools used for managed services. By monitoring the cloud real-time, you can notify your customers when you see a disruption in service or there are scheduled maintenance downtimes.
Monitoring cloud usage and cost is another opportunity for you add value. If they run out of storage or capacity in a cloud application, it’s an opportunity to upsell them, while building loyalty by looking out for your customers.
Automating billing for cloud services will help protect your profit margin by:
- Adding cloud licenses to existing agreements — bundle costs so you can reset prices to include desired margins.
- Embracing a user-based business model — create packages that focus on number of users versus devices to align with cloud billing models.
- Capturing prorated revenue — automated system that prorate billing as users are added.
- Delivering a single, unified invoice — customers receive one invoice for everything versus bills from multiple vendors.
Measure your success
Once your cloud practice has launched, set clear goals and measure against key performance indicators (KPIs):
- Monthly recurring revenue (MRR) — revenue gained from cloud practice.
- Recurring revenue percent/profit pools — recurring revenue from cloud services versus managed services.
- Churn percentage — number of customers expect to lose each year.
- Lifetime value of customer — average time customers stay and amount paid per agreement.
- Existing client transition — number of customers you want to transition to cloud services.
- New client acquisition — number of new cloud services customers.
As more and more smaller businesses move to the cloud, they will be looking for a provider — like you — to support them. By following the steps outlined in this post, adopting a cloud services model will put you in a good position to capitalize on this opportunity.