Building Value in your MSP Business with Cloud Services, Predictable Revenue

In my previous post, I covered the operational advantages that many service providers realize when they implement a Cloud Workspace offering. Since then, I’ve had a few conversations with our partners about related economic benefits. By this time, we all know the monthly recurring revenue (MRR) model is the ultimate goal of most service providers. We also know that more of the monthly IT budget is being spread across more vendors. Lastly, reducing churn is paramount in an MRR model. In this post, I’ll discuss the key takeaways from those conversations, as well as how service providers can stop revenue leakage and increase MRR with Cloud Workspace.

Inevitably, in most of my partner strategy calls, we end up discussing business impacts that weren’t entirely obvious when they initially signed up to be a partner. For example, most of our service provider partners are aware that the large incumbents are selling direct, and thereby taking potential revenue out of their pockets. What they don’t know is just how much revenue they are missing out on, or how to stop losing out to the bigger players. Here are a few areas that service providers can find additional value in a Cloud Workspace solution.

• Revenue leakage – The increasing adoption of hosted and SaaS applications, Office 365 and file sharing tools has resulted in lost revenue opportunities for MSPs today. With a Cloud Workspace solution, however, MSPs can offer all the functionalities that companies currently cobble together through external offerings in single offering, retain more secure control of the environment and prevent further revenue loss.
• Time to market – Although there are a plethora of hosted desktop solutions available to MSPs, many of those require a large and highly technical IT staff to implement and manage. To mitigate the budget burden, MSPs can choose software tools with intuitive control panels, simple workflows, automation and orchestration capabilities in order to deliver services in a faster and more economical fashion. In other words, and with a tool like the Cielo Platform, MSPs can scale their business without scaling the IT headcount.
• Reduced CapEx and OpEx – By leveraging Cloud Workspace from itopia, MSPs can eliminate spending on expensive infrastructure to run critical business applications, as well as the costs required to re-engineer legacy applications and infrastructure to run in a cloud environment, and meet the demands of an increasingly mobile workforce.
• Inherent value of the MRR model – For some MSPs, the benefits of an MRR model is the biggest driver when moving to the cloud. BY combining project revenue, soft costs and software into a packaged, per user/month basis with a Cloud Workspace solution, MSPs can increase revenue by 30-40% per user/month.
• Customer retention – With a Cloud Workspace solution, MSPs can provide their customers with everything they need to run their business – secure access to data and applications, file sharing, DR & backup, elasticity and device compatibility – for a predictable, subscription-based price. When an MSP proves that it can provide a consistent user experience across multiple devices and network locations, it’s not worth the hassle (or expense) for customers to switch to a competitor, even if it means saving a few extra dollars. In switching, customers run the risk of finding that the competitor doesn’t provide the same level of service, and switching back and forth can end up costing them more money in the long run.

In the end, and in today’s changing IT landscape, we are seeing a massive amount of consolidation in the service provider space, and the companies that are receiving the highest multiples and valuations are those that have recurring cloud revenue models in place. There have been some very good articles discussing this topic like this one by, Channele2e or this one by MSPAlliance. Both of these articles highlight the value of predictable recurring revenue, low CHURN and specialty skills or services. It is no wonder then why more and more service providers are turning to cloud revenue and services to bolster their own business. I’m certainly biased but if this is of interest, I’d strongly recommend MSPs consider deploying a Cloud Workspace solution, like that from itopia, powered by Cielo.

 

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