By Derek Handova

With up to 70 percent of SaaS revenue in the channel by 2020, as forecast by IDC, cloud service providers need to take care of their resellers. But MSPs need to be selective about which channel marketing programs offer them the best bang for their buck. They also need to consider other benefits such as co-marketing, spiffs, exclusive territories, buyout support for competitor solutions and other cloud company partnership perks.

In short, a channel program must offer MSPs the best overall business opportunity. Some enable MSPs to deliver best-of-breed point solutions that can be easily integrated with other products. Other MSPs can only offer an enterprise suite that’s like a SaaS Swiss Army knife. Still others enable MSP engineers and customer IT departments to work together easily for the benefit of the end user. Talkin’ Cloud went to see what’s out there when looking for the best channel program options.

SaaS a la Carte, Multi-vendor Challenges

Many cloud service providers that use the channel offer an entire suite of services to resell to the end customer. However, certain ones have the option to let MSPs decide among the applications that they will offer to their users. And they do not preclude MSPs from offering other third-party solutions in conjunction.

“We look to our partner community to wrap their professional and managed services around our infrastructure,” says David Graffia, VP of Sales of dinCloud, a channel-focused provider of IaaS and desktop as a service. “However, we can also provide an a la carte approach, allowing partners to pick and choose what services they want to deliver and which they prefer we handle. The goal is to provide air cover and bridge any gaps so we can collectively deliver a full feature solution to the end user.”

There is much value for partners to have capability to rapidly provision and scale resources up or down while only paying for what is consumed, according to Graffia. Overall, her cloud company recommends MSPs offer vendor-neutral advice, custom migration plans and scalable solutions built with growth in mind.

However, with a rapidly expanding technical catalog from manifold sources, MSPs can find it hard to keep up. But if cloud vendors streamline the process, it benefits both parties.

“These challenges range from lack of expertise in an ever-widening range of cloud technologies to managing multi-vendors to optimizing cost and operational efficiencies to moving business-critical workloads at scale across a diverse environment,” says Ian Masters, head of channel partner programs, Atadata, solutions for MSPs/SIs to manage workloads across physical, hypervisor or cloud to various cloud platforms. “Additionally, the market is cluttered with a host of niche solutions that only address specific challenges in multi cloud migration.”

Atadata helps solve this problem for MSPs with its user interface that allows them to perform work remotely or onsite, at scale, for single or multiple customers, according to Masters, and allows MSPs to utilize one vendor for a range of use cases with the same technology. This should minimize skill set requirements and reduce internal costs, impacting bottom line results.

Relationship Marketing Made to Last

There are basically two types of marketing: transactional and relationship. Transactional marketing is one in which the seller only thinks in terms of discrete deals where one exchange has nothing to do with another—think used car dealer jerks. Meanwhile, modern relationship marketing assumes that each interaction will build on the previous, creating a win-win scenario for both parties. Channel cloud service providers employing this method conceive of their resellers as an extension of their own marketing, in some cases, and support them as fully as possible.

“Our channel partners are IT experts with strong technical backgrounds, but our relationship with them expands well beyond providing them with exceptional products, services and support,” says Pete Rawlinson, chief marketing officer, Datto, provider of business data protection and secure connectivity services. “We understand MSP business goals, and our overarching goal is to help them be as successful as possible.”

For example, according to Datto, it recently launched a new global partner program that provides business planning, commercial and technical education, enhanced training and onboarding best practices. An intriguing aspect of the program is a “marketing automation platform designed for non-marketers” that is called MarketNow, as Rawlinson describes it. This platform contains pre-built promotional campaigns, co-branded and customizable collateral and streamlined social media content so Datto partners can communicate with customers and prospects. Datto even offers an MSP marketing tip e-book and individualized marketing development plans.

Protection Money and Rewards Programs

Site security has long been a concern with more IT applications moving to the cloud, and MSPs have particular concern to protect their customer networks. Providing those customers with a differentiated security technology can be one way to stand out from the crowd in order to make more money off protection. And because security is considered a must-have, it is more resistant to commoditization and less subject to bargaining by the customer, providing a higher return for the MSP.

“Organizations can boost their sales and market share by offering their customers the best value for solving the urgent business challenges of managing and protecting privileged password credentials,” says RJ Gazarek, product manager, Thycotic, a provider of privileged account management security solutions. “Thycotic has a number of MSPs that leverage our solution to protect their customers’ privileged accounts across their networks. This is especially important if MSPs are also deploying and managing hardware, to better control those devices.”

As an incentive, Thycotic offers its MSP partners a rewards program that rebates them for each deal they register of a certain size on specific offerings. And for each registered deal, Thycotic works to help the MSP close the deal. But if the customer ends up buying through a different avenue, MSP profitability is preserved with a margin protection program, which can be worth up to 30 percent of the license value, according to the company’s website. Protecting the margin of MSPs gives them a security blanket and keeps them engaged, which many managed security services find important across the board.

“We deal with both security and compliance related information and situations, so it’s important all parties are engaged,” says Lee Sher, senior director, channel sales, Proficio, a managed security service provider delivering managed detection and response and other cybersecurity services. “Proficio engineers and analysts become a functional, trusted member of our clients’ IT organization, and this relationship grows stronger by the day. Our delivery model assigns a dedicated team to each customer allowing the relationship to continuously develop.”

Can MSPs Make Money Reselling Open Source?

It may seem paradoxical that MSPs could make money reselling something their customers can get for free on the internet. But RedHat has managed to eke out an income from directly supporting the Linux operating system and other open source solutions, so anything could be possible. Taking it a step a further, to resell a community technology maintained by a not-for-profit does not seem so far fetched, in that case. The flipside to that concept is that since open source costs the MSP virtually nothing, the profit margin can be much higher. And crowdsourced technology may be ahead of proprietary solutions in many cases.

“As the IT market is moving faster toward commoditized storage, many actors in the ecosystem are greatly challenged to stay relevant and provide the best value for their customers,” says David Gillard, co-founder, Pydio, an open source file sharing and synchronization focused project for the enterprise. “More than ever, it is a necessity for independent software vendors to stand out as innovative tech partners and build partnerships with inline resellers, having a solid, well-established customer base.”

And with more than 1 million downloads reported worldwide—translated into 27 languages—Pydio claims it’s one of the world’s largest enterprise open source file sharing projects. According to Pydio, it allows companies to implement a secure and controlled environment for file syncing and sharing, either on premises or hosted in a trusted environment, including Amazon S3, Samba, Red Hat storage and Dropbox. It supports MSPs with deal protection, preferred discounts, technical support by in-house expert engineers, as well as the possibility to negotiate deals on a per-company or per-case basis, according to Gillard.

“Pydio partners can develop a new source of value-added service to their prospects, and get a near risk-free source of revenue,” Gillard says. “And as data protection regulations increase, Pydio gives its partners a chance to earn additional commission from providing additional services regarding secure, enterprise-grade file sharing and collaboration platforms.”

A previous version of this article erroneously attributed quotes to Angela Tuzzo of dinCloud.