Blog

Considerations when launching your Cloud Practice

Value-added resellers (VARs) and Managed Service Providers (MSPs) need to offer cloud-based options to compete for and retain business, but many VARs recoil at the daunting thought of building cloud infrastructure that easily and cost-effectively scales.  Cloud requires a substantial up-front capital investment.  That financial burden seems to grow when VARs contemplate the transition from capital sales revenues to Monthly Recurring Revenues (MRRs).  The impact on the VAR’s business model becomes multifaceted and a little intimidating.

This way of thinking doesn’t jibe with reality. VARs don’t manufacture the hardware or code the systems they resell to customers.  Why would they need to build their own cloud infrastructure to deliver cloud services?  They need to resell cloud services and focus on the value they can add in the process.

To effectively resell the offerings of a Cloud Service Provider (CSP), VARs need to consider certain criteria.  Some are visible to customers.  Others are not.  Here is a quick checklist.

Don’t build – label

CSPs can offer “white-label” cloud services that VARs can incorporate into their brands.  These services should look and work like something the VARs built and maintain, even if it belongs to a third party.

Create a “cloud suite” of IT products

Few customers move their entire IT infrastructure, all their applications and data, to the cloud in one fell swoop.  That’s why VARs need to offer a gentler migration path that’s easier for customers to embark upon.

CSPs that offer a suite of products, like backup, disaster recovery, cloud servers and so forth, help VARs create a “cloud strategy” their customers can use to move IT operations and assets to the cloud at a comfortable pace.  Such CSPs can help VARs set up their cloud suites and roll them out using their own brands.

Add value for current customers

Customers may already have all the services they need.  VARs who want to convert customers to the cloud (and its MRRs) must do more than simply replace traditional offerings with cloud IT.  They need to differentiate the cloud.  If they don’t, cloud looks like a commodity approach in which cost is the only difference.

VARs must design and build cloud practices that create value unavailable elsewhere. That extra value, whatever form it takes, can result in incremental revenue streams that supplement MRR.

Remember what prospective customers want

Differentiation and added value can help VARs and MSPs move existing customers to the cloud.  Prospective customers may notice differentiators, but they initially shop for “bread and butter” services and features like: backup, uninterrupted access to business data, disaster recovery, security, support and so forth.  VARs and MSPs that offer highly demanded services via the cloud effectively expand their product portfolios.

Plan for revised cash flows

Cloud-based services lead to MRR, which stabilizes cash flow in the long run.  Cloud is typically more profitable than on-premise technology sales and makes it easier to nurture ongoing relationships with clients.

But these cash flow, profitability and customer engagement improvements can take time to materialize.  That’s why VARs need to effectively launch cloud service sales and minimize foreseeable cash flow issues.  VARs can use tactics like the following to balance these concerns:

  • VARs can sell cloud services as part of their capital sales.  For instance, selling a server gives a VAR the opportunity to incorporate cloud backup for the applications and data that are on the server.
  • VARs can also promote the positive effects cloud has on a client’s financial statements when they replace large capital investments that are difficult to forecast accurately with more manageable monthly operating expenditures.

Modify sales compensation plans to reflect MRR

VARs need to re-evaluate not only their own cash flows, but also those of their salespeople.  Sales compensation plans must reflect the value of winning long-term contracts while helping the VAR evolve into a cloud-based MRR.

Paying large commissions up front to encourage salespeople to close long-term contracts creates an immediate culture change but can harm short-term cash flow.  To minimize this harm, VARs can pay commissions each month on recurring margins and otherwise restructure compensation plans.

Choose the right partner

The right CSP contributes greatly to the initial and ongoing success of a VAR’s cloud services. The right CSP helps the VAR launch the right services for customers.  The right CSP offers services that the VAR can brand as its own. The right CSP effectively supports the VAR’s cloud business with marketing, technical and business support and advice.

Want to provide enterprise-class cloud services for your customers?  Give us a call.  We can help.

Paul Butcher

Leave a Reply


What Our Customers are Saying

Our server environment changes almost daily as we power down, power up and scale compute resources to meet rigorous release criteria and timelines. Optimizing this aspect of our business operations was part of what drove us to evaluate Cloud. The second part is strategic. Once the business is running on the Cloud, ZIM will leverage Cloud to make software tools available to customers as a PaaS. This is the end game.

— Celso Bressan – Manager of R&D - ZIM

The solution from HostedBizz gives us more control over our server infrastructure than we expected. We can flex our computing resources up and down based on the demand that we see from our customers

— Josh Garellek – CEO Arctic Empire

4Té were using a tape backup which was a very cumbersome methodology for all of our critical data. HostedBizz were able to replace this whole process with an automated worry-free backup process into their secure Canadian cloud infrastructure

— Tammy Green - Systems Manager 4Té Inc

Bold Radius is a custom software development, training and consulting firm. Bold Radius needed bullet proof elastic computing. We needed the ability to spin up and tear down servers and to dynamically change server resources on the fly. Hostedbizz delivers this to us and our clients and we can control all of our services through their simple to use portal.

— Mike Kelland - President & CEO, Bold Radius

Connect with HostedBizz and become an authorized reseller for Cloud IT solutions.

Sales and General Inquiries

Service and Support