The Cloud: Stop Selling Ingredients, Start Selling Chocolate Cake

By samdizzy

Managed services providers are guilty of selling cloud “ingredients” and need to start selling cloud as part of a larger “chocolate cake” to SMB customers. That’s the key message from TruMethods CEO Gary Pica and CTO Bob Penland, addressing roughly 150 MSPs during the Schnizzfest conference this morning in Philadelphia, Pa.

What exactly do Pica and Penland mean? During the presentation, Pica and Penland offered attendees a lengthy list of cake ingredients — eggs, flour, room temperature butter, etc. — for $16.95. There were no buyers in the room. Then, Pica and Penland displayed a rich, enticing chocolate cake for $16.95. The cake sales theme is similar to a cupcake theme used by Master IT, an MSP in Memphis, Tenn.

The key takeaway:

Much like backup and patch management, cloud-related services will be widely offered by all MSPs, Pica predicted. So it’s critical for MSPs to get their “cake” strategy developed. Moreover, SMB customers will continue to spend $2,000 to $5,000 per month for at least the next three to five years for MSP support offerings (such as support, centralized & cloud services, technology consulting and network administration). MSPs that already offer cloud services typically offer all-in bundled solutions rather than a la carte, according to attendees.

The big cloud challenges for MSPs, Pica asserted, involve: Capital expenses, cost of complexity, hidden cost of risk, cost to manage relationships, client costs and opportunity costs.

A prime example: Some MSPs offer very low cost online backup as part of bundled services but generate huge margins because the cloud backup approach frees up the MSPs’ IT resources, which had previously managed on-premise backups — an expensive, tedious process.

So, which cloud services should MSPs offer? Pica suggested following the following priority list, top to bottom:

“The bottom line: Any time things change [in the IT industry] that’s our chance,” Pica told the MSPs in attendance.

Follow Talkin’ Cloud via RSS, Facebook and Twitter. Sign up for Talkin’ Cloud’s Weekly Newsletter, Webcasts and Resource Center. Read our editorial disclosures here.