By Grant Thompson, Managing Partner/Solutions Architect MG Technology Group
Part Two of a Four-Part Series offering guidance, hope and solutions for MSPs and VARs who are struggling to make money in the cloud.
In the first part of this series (go to: http://www.smbnation.com/magazine to download the Q1 2013 issue), I covered core cloud services and discussed some of the more profitable services. In this issue I will be covering successful positioning of services.
Bundle it UpEveryone is at least somewhat familiar with Microsoft Office 365. This is one type of bundle – email, document storage, communications (Lync) and, in some plans, Microsoft Office. This is a successful bundle because it includes things most businesses need. Similar to including call waiting, voice mail and dial tone in a phone plan (whereas these used to be separate).
However, you can leverage solutions, such as Office 365 and/or services from other providers to create your own bundles. A simple example would be to combine the Office 365 style bundle with cloud-based backup.
In most cases, bundles sell better than individual services, though I recommend that MSPs have them available in case there are customers who want some (but not all) of what is in the bundle. And, of course, this is not new and common in many industries. It works.
If you are able to take this to another level, the success in selling, “stickiness” of customers and profit margins increase.
Vertical Specialties
The easiest way to begin putting together your unique bundles is to look at vertical specialties. These might be areas where your company has depth of experience or expertise or you may have purposefully or inadvertently ended up with a large percentage of your customer base in a few particular industries. You are already well-versed in what technology these companies need and use.
For example, a manufacturing company has some specific technology needs. Everyone needs e-mail and document storage, backup, etc., however the manufacturers also (typically) need ERP (enterprise resource planning) systems capable of handling inventory well, kits, work in process, locations, etc. They may need a purchasing requisition system as well. So perhaps you end up building a custom bundle that has the core services plus ERP.
In addition, you can create your “secret sauce.” SharePoint is an excellent place to start. SharePoint is a platform for building solutions, far more than document storage. You can build templates for various business processes (R&D, project management, etc.), workflows, etc. One of SharePoint’s strengths is the ability to reuse components (e.g. templates and reusable workflow). If you know the industry well enough, or work with a client to build some things for them--and retain ownership of the IP (Intellectual Property)--you can resell these, often at a premium.
One partner of ours worked in the non-profit sector–specifically with environmental organizations doing clean-up work. It was actually more narrowly targeted than that but I’ll let them remain anonymous. Having worked for these types of organizations, and then working with them as outside IT professionals, they created templates for SharePoint that solved numerous business problems for these organizations.
Advice and Resources
Think about tracking basic project management, boilerplate spreadsheets, lists and dashboards--all ready to use with a little customization. Combine this with those core services, and you have a solution for an industry that has some significant advantages in the marketplace: It is unique and it solves problems versus providing just “dial tone.” To the customer this equates to value. Then it is up to you to put the price tag on it. Drop the line item billing for each service and sell it as a single solution. Mark-up accordingly to realize revenue on your Intellectual Property. Even if your IP is the combination of specific services and some light integration.
Develop partnerships with other companies. You may need to find a systems integrator or someone with SharePoint expertise. Go and meet the Dynamics VARs in your area. Very few Dynamics VARs are also IT shops. They typically are from the accounting world and strong in areas of technology where you may not be. If you have the means, and desire, you can hire companies to help you put together the solutions and you pay them for the project and own everything at the end.
Talk to cloud providers who offer different services. Determine what software your existing customers are using and contact those companies to see if they have a cloud model or you may simply work with a provider to deliver the perpetual license for that application “in the cloud” and build it into your package (upfront cost for that software and monthly for the rest).
While none of the information here is new, it never ceases to amaze me how many MSPs aren’t doing this. Start with one thing. Start with something small, and then build on it.
Join me in the Q3 issue in which I will use this column to discuss ways to add billable (e.g. hourly/project) revenue to your cloud sales.
Grant Thompson is a founding partner of MG Technology Group, a leading cloud services company. As a solutions architect with a diverse technical and business background, Grant helped build MG Technology Group on the premise that businesses need solutions that fit their unique needs and IT professionals need a service provider they can trust.
