Sorry, You’re Not A Cloud Services Provider (CSP)
Thousands of VARs now resell Microsoft Office 365, Google G Suite, Box and other top 25 SaaS platforms. Quite a few of those resellers have warmly embraced the cloud services provider (CSP) term as their own. But the CSP pretenders won’t be around for long.
When public cloud services began to grab hold, I considered brands like Amazon Web Services, Google Cloud Platform, and Microsoft Windows Azure (which lost the “Windows” moniker in 2014) as the world’s true CSPs. Gradually, I opened my mind to realize CSP services largely involved IaaS (Infrastructure as a Service), Platform as a Service (PaaS), and Software as a Service (SaaS).
Around the time I left my previous job in mid-2014, quite a few observers were asking me if all MSPs (and some VARs) would somehow transform into CSPs. My answer back then — and today — is absolutely not. Overall, I think the lines between VAR and MSP have largely disappeared. But those MSPs aren’t somehow transforming into the next AWS or Azure. Instead, they’re following Rackspace’s lead and introducing managed services for third-party clouds.
Cloud Revenues, Margins: What’s the Partner Path?
Monetizing the cloud — in a profitable way — certainly isn’t easy for CSPs and their partners. Even Microsoft’s gross cloud margins were a bit of a roller coaster ride in 2016 until they improved toward the end of the year. As The 2112 Group accurately pointed out in May 2016, making cloud money is hard and will remain so.
What’s the ‘easy’ answer? For most VARs, Office 365 is the fastest route to cloud revenues. No doubt, Office 365 is widely popular and quite reliable these days. Frankly, it’s a great platform. But merely reselling a SaaS platform is no way to build an IT services empire.
Still, quite a few MSPs and IT solutions providers have formulated cloud revenue models over the past two to four years. Among those making noticeable, successful moves:
- CDI, which has a fast-growing ServiceNow practice (I’ll share more details soon).
- Presidio, which may leverage midmarket hybrid IT services all the way to an IPO.
- Synoptek, which unveiled a cloud assessment and planning service today.
Take a closer look at each of those companies. I don’t believe they’re transforming from MSPs and integrators into CSPs. And for good reason: They don’t want to be lumped in as a CSP that somehow competes with AWS and Azure — a competitive fate that nearly destroyed Rackspace before the company pivoted toward third-party cloud management.
March forward. Intronic and monetize managed services for on-premises and cloud workloads. Just be careful of the CSP moniker. Amazon, Microsoft and Google (among others) have truly earned it. Have you?