MSP 501 Newcomer Award: ZNet Technologies

ZNet Technologies Private Limited has used its own digital transformation journey as a blueprint for the customers it serves.

“Because we are a cloud service provider ourselves, we have to go through a lot of our own transformation to adapt to the new way of working in the digital transformation era,” said Sabarinathan Sampath, ZNet’s senior vice president and chief operating officer.

ZNet’s Sabarinathan Sampath

The 10-year-old Indian company landed in the MSP 501 leaderboard for the first time this summer. We honored it with the Newcomer Award not simply because of its first appearance in the 501, but because of the dynamic path it has taken.

The MSP is known for offering cloud services, but the cloud wasn’t always the company’s specialty. ZNet launched in 2009 as a hosting and domain services company before making the cloud pivot about five years later. ZNet signed up with Microsoft as one of its first cloud service provider partners. The young CSP joined Microsoft co-selling and go-to-market programs and utilized the Microsoft brand name to start building a reputation.

Those moves paid dividends.

Sampath said India’s cloud market was in a nascent stand two and a half years ago but has been picking up steam.

“We are starting to see large enterprise customers really going full-on with cloud adoption,” Sampath said. “They are wanting to grow their offerings from on-premises onto cloud. They’re also working on hybrid adoptions where they want to retain some applications on-premises and move some into the cloud as well.”

ZNet now works in conjunction with Microsoft Office 365, AWS and Google, and it offers its own proprietary cloud services delivery platform. ZNet also offers Acronis backup services.

The road to the cloud has included its fair share of challenges. Firstly, Sampath said India, where ZNet generates 80% of its revenue, is often a price-conscious market.

“The customers are generally very, very, very price conscious. Differentiation among the competitors was a big problem,” he said.

The company decided to build its own intellectual property to solve this problem. ZNet in 2017 launched its RackNap software, which automates cloud delivery and helps service providers track real-time cloud consumption. You can read all about RackNap on Microsoft’s website.

Sampath said the software started for ZNet’s own cloud services but eventually presented a compelling business opportunity.

“We developed it for our in-house use. We were able to solve our problems by ourselves. And since we were able to solve problems for ourselves, we decided, ‘Let’s product-ize it and then start offering it in the market,'” he said.

RackNap was part of a larger managed services initiative that helped ZNet increase margin.

“Just selling licenses won’t get you anywhere in the long run,” Sampath said. “So we decided to bundle managed services with it, and we were able to increase our bottom line quite significantly.”

ZNet also needed to overcome…

…a lack of sales resources. Strapped for field sales personnel, the company resorted to digital marketing.The investment paid off, as approximately 80% of ZNet’s sales now come through a direct online purchase.

And ZNet is expanding its sales force this year thanks to recent M&A.

The value-added distributor RP tech India announced in February that it would acquire a majority stake in ZNet. Sampath described the acquisition as a “complementary alignment” between an MSP that has technical skills but less of a financial backing and geographical presence, and a distributor that lacked a cloud portfolio. ZNet gained access to new offices and more than 10,000 partners as a result of the deal. ZNet will function as RP’s cloud business unit.

“This partnership is a win-win for both RP tech India and ZNet,” said Kapal Pansari, RP tech India’s director. “RP tech India’s vast IT distribution network and financial backing, supplemented with ZNet’s technical expertise at the back end will help propel this partnership to become the leading distributor of end-to-end IT infrastructure including new-age cloud services in the next 24 to 36 months.”