5 Moments of Angst On the Road to Cloud Service Provider Success

By Rhonda Trainor, Director of Merchandising at ScanSource and Channel Partners Editorial Adviser

Thinking of transitioning your current agent or managed-service-provider business to a cloud service provider, or CSP, model? While this change can be exceedingly beneficial if done correctly, it can also be somewhat risky, giving rise to common anxieties that can paralyze partners. Here are five worries that I find particularly common among our partners, along with moves to make now to ensure success.

Consideration: Who will buy my services?

Step: Educate and evaluate your current audience. Before you begin looking at what it will cost you to transition to a CSP, first look at your existing customer base. Are they a target market for cloud services? If so, don’t wait for them to ask you about what to purchase. Be proactive about educating them on the breadth of services you can provide. And start that conversation early, before they’ve had a chance to consider buying SaaS directly or working with a competitor. That way, when they start thinking about who can advice them on their cloud strategy, your name is at front of mind.

Consideration: Can we bootstrap the move?

Step: Start small and smart. You don’t have to conquer the world today; for example, you might seriously consider a “cloud-in-a-box” bundle, or prebuilt stack, which can get you to market quickly. You’ll appreciate the access to professional services and the software and hardware integration that come with these ready-made solutions.

If startup costs seems high because you’re missing the hardware, software or skilled-employee resources to launch your cloud offering, here’s another idea: Try partnering. Look around for a peer or business partner with a data center. You promote their cloud services, they help you get staff up to speed. If you can find the right partner with complementary business tenets, it’s a great way to get your foot in the door.

If partnering, what should you look for? A cloud service provider whose line card includes a fairly complete set of cloud products. Someone willing to hold your hand (figuratively) and make sure key details aren’t missed as you shift customers’ IT from on-premises to the cloud. for example, there are specialists who are skilled in Office 365 migrations.

However, if you do decide to partner with a cloud provider, remember: Your reputations will be synonymous, so make sure you’re synching up with someone you trust and that you believe will protect your good name.

Consideration: What if we build it and customers don’t come?

Step: Anticipate objections. This is basic marketing: Consider what risks your customers perceive with cloud – or that they really face, like lack of bandwidth – and develop a plan to ease their minds. Some might be concerned with security and need to understand where their data is, since it’s not physically on-site. Other risks include come-ons from competing service providers and the possibility of a single point of failure. If you draft a detailed set of operational procedures to outline processes, such as pulling workloads back from the cloud should that need arise, your customers will rest more easily during the transition knowing that …

… you have thought through ways to protect them.

Consideration: We’re late to this market.

Step: Differentiate yourself! A wide variety of IT services comprise the cloud, so think about which ones you can specialize in to build expertise and stand out among the other companies. Some of the fastest areas of cloud applications include IT areas like managed mobility; big-data storage and analysis; network and systems management; SD-WAN; managed security; data recovery and backup; and help desk. If you can offer cloud services in a few of these areas, especially to SMB and SME customers, you’ll have a serious opportunity for growth.

Additionally, think about the value-adds you can provide that will make you unique. SD-WAN is a particularly good base to build services on. That said, don’t try to be everything to everyone. While a comprehensive services slate is important, to establish trust with your customers and truly be an expert in one area, home in on one vertical market or customer segment that reflects your area of expertise. In other words, go niche with the customer, not the tech stack.

Consideration: Is it hard to be profitable?

Step: Understand that the ideal CSP business plan is based on three tenets: low overhead, limited inventory and decent margins. Some partners struggle with the pay-as-you-go model that accompanies cloud services. Because revenue can be difficult to predict with this method, you will need to examine your current recurring income and think about how to replace it if you move those IT services to the cloud. Specifically, you need to find another way to continue adding value, whether through selling RMM (remote monitoring and management) services, or upgrading to more complex solutions and “as a service” products (infrastructure, software, platforms).

Keep in mind, to be successful and profitable, you’ll want to meet your customers’ needs of a highly automated cloud offering with self-provisioning services and tracking capabilities. Further, automated cloud services can drive down labor costs and enhance profitability. Long term, a secure monthly recurring income from cloud services raises your company’s valuation, a nice benefit if you plan to retire anytime in the next decade or so.

Rhonda Trainor is director of merchandising for ScanSource and a member of the Channel Partners editorial advisory board.