As an MSP, you need to sell added value of your managed cloud services
Is there a business case for MSP’s to deliver the Public Cloud?
Public Cloud is a success, and it will only grow bigger in the coming years. It presents an excellent opportunity for the partner channel that adopts the Public Cloud and delivers managed cloud services. But that opportunity of managed cloud doesn’t present itself in a conventional reseller model with high margins provided by suppliers. If there is any discount at all, it is more aligned to covering the cost for billing and customer relationship than that it represents a healthy margin where companies can rely on for their existence.
The managed cloud services multiplier
Instead, the opportunity of managed cloud offers to partners is all about the services multiplier. This multiplier states that with every dollar or euro spent on the Public Cloud, a partner can sell anywhere from 4 to 8 dollars or euros of added value managed cloud services. There is no silver bullet for generating that extra revenue with managed cloud. Instead, this added value is built up as a layered cake, with each layer adding value and generating a healthy margin.
A managed cloud services provider needs added-value managed cloud
So, what type of added value services should you be thinking of that create that well-needed healthy margins? Your customers have enough challenges like, struggling to get their cloud costs transparent. You can support your customers’ finops – and cloud governance teams to get the right insights to make business decisions. According to a report from IDC*, an average of 66 percent of managed cloud partner revenue is generated from their own IP, which can yield as high as 85 percent gross margin on software and 30 percent to 50 percent on professional and managed cloud services.
Cost efficiency is vital when delivering managed services for public cloud
Many conventional Hosting companies that adopt the Public Cloud struggle to change their business model. They lose their current margin on infrastructure services and need to build that layered cake of added value managed cloud services.
Satya Nadella says ‘upwards of 70 percent of Microsoft partners may not make it. That’s causing a lot of buzz.’
Successful MSP cloud services
The Managed Service Providers that are truly successful combine their added value services with cost-efficient automated delivery and billing of their managed cloud services. They invest heavily in automation and tooling to create a recurring business while cutting out costly and labor-intensive processes.
They have done their homework and worked on the essential checklist for cloud MSP companies that deliver added value MSP services:
- People: Have the right skillset
- Process & tooling: Enable automated delivery, management and billing
- Added value: Create added value services
- Business: Focus on recurring revenue
That’s how MSP’s keep track on their cloud msp business model.
Have you done your homework, or does it need updating? Then start with these essentials to keep your focus on the things that matter.
Contact us to find out how you can create value-added managed cloud services with C-Facts?
* How Partners Are Winning in the Google Cloud Economy: Google Cloud partner opportunity to triple by 2025 | Google Cloud Blog