Can MSPs Afford to Sit on the Cloud Computing Sidelines?

By Maurice Saluan 1

Before I start, the answer is NO. You can’t afford to ignore that elephant in the room. You’re risking everything that you have established up until now. A fundamental shift is taking place and it can’t be ignored. It’s not a matter as to IF it’s happening, only when it will fully take hold. Tim Shea, CEO of Alpha Netsolutions Inc. recently wrote: “Pretty soon, clients won’t care where a server sits or what brand it is. They will just care that they have the computer services they need—and how much it will cost to have them.” Here are the implications for MSPs.

Cloud computing has received a lot of publicity in the last two years as organizations large and small look to automate and virtualize at the lowest possible cost. But while the public cloud has grown significantly, IT Solution Providers are trying to make sure that it’s a fit for them as well as their clients. Often they find their clients need more flexibility, security, scalability, and deployment options than the public cloud can deliver. Additionally, their clients may want to transition slowly based on applications or hardware needs. In other words, the public cloud is not a one-size fits all. I know I may be preaching to the choir but it’s time to stand back and assess where you are and where you want to be in 2-3 years.

First Steps

For solution providers, this opens an opportunity to provide low-cost enterprise-level computing to clients via private clouds, or hybrids that combine the public and private clouds. Private clouds deliver a lot of the same benefits, such as virtualization and automation, without the public cloud’s security risks and scalability limitations. A private cloud owned by the client, or a hybrid owned by client and VAR, delivers centralized management and better resource utilization, also providing storage, backup and recovery through both on-site and off-site solutions.

By managing private or hybrid clouds for clients, solution providers take on the role of virtual CIO, becoming more than a technology advisor, and in fact, serving as a business advisor as well. As such, the solution provider occupies the perfect position to make recommendations to scale the client’s computing environment to meet current needs and anticipate future requirements. The solution provider becomes a true extension of the client’s business, at a fraction of the cost of what the client would have to pay a CIO and full IT staff.

The private/hybrid cloud approach builds on the managed services pricing model of charging the client monthly or quarterly fees for services rendered. As the virtual CIO, the solution provider can discuss overall availability and scalability instead of being reduced to a hardware and software sales person. In addition, because of the built-in scalability of private and hybrid clouds, the “pay-as-you-grow” models pioneered in the SAAS space also fit neatly into a client contract. Eventually, as private clouds mature, we won’t be talking about SAAS and managed services models, but rather a unified approach with built-in expandability.

Rethinking IT Costs

This pay-as-you-grow component is a big selling point. It’s no secret that organizations historically have had more computing capacity than they need, which means they have paid for power they don’t need. By paying as you grow, the client gets charged only for actual use, which leads to budget savings and the opportunity for the client to reduce its carbon footprint. The latter is increasingly important because it cuts down energy costs while allowing the client to project an image of social responsibility.

Of course, pay-as-you-grow services put the onus on the solution provider to find the right fit, technology-wise. It’s important to find the right solutions with the right technology partners, at the right profit margins. If you don’t provide your clients with alternatives, they will gradually move away from you as their service provider. When you provide alternatives, retaining control of the relationship and the service you deliver will increase your profit opportunities. Also, by allowing your technology partner to have more back office control this will free you up to focus on building your business and build your own brand. Individual solution providers have to figure out the balance that best works for them. But remember that once you become the virtual CIO, you also become a business advisor, so don’t narrow your focus on the technology part.

According to Gartner, most solution providers will be offering cloud computing services by 2015. If you plan to be in the game, it’s time to develop and execute on your cloud strategy. If you haven’t begun, start building your cloud brand now. Early adopters will be rewarded. Come 2015, you don’t want to be one of those Technology Service Providers watching the clouds roll away.

Note: Maurice Saluan is VP-Channel Management for Zenith Infotech as well as seasoned sales veteran in the managed service arena. Guest blog entries such as this one are contributed on a monthly basis as part of MSPmentor’s 2010 Platinum sponsorship. Find all of Saluan’s blog entries here.