Unlocking Cloud Profits: What MSPs Need to Know

Cloud is the top issue keeping MSPs up at night, according to CompTIA’s Fifth Annual Trends in Managed Services Report. One big reason is the hit that cloud pricing has taken as the major cloud vendors jockey for position and resort to price wars to compete. In fact, findings by 451 Research in its Cloud Price Index show steady price declines since October 2014.

But MSPs shouldn’t lose sleep over today’s cloud wars. Instead, they should know how to position themselves for success, because declining prices bring both risks and rewards. Consider this: with the cloud giants delivering a lower price of entry for cloud services, the easier it becomes for MSPs to extend services to clients at prices that can bring profits.

However, the double-edged sword is that your customers also want value. The key for MSPs is to look beyond pricing and partner with cloud providers whose services align with client needs. In addition, MSPs must find ways to add value by providing relevant professional services and features that create market differentiation, not just from other MSPs, but also from the major cloud providers themselves.

Getting Cloud Right

To successfully sell (and profit from) cloud-based managed services, MSPs first need to concentrate their efforts on targeting the right customers. A customer who already recognizes the value of proactive managed services will be more willing to adopt cloud services than one who sees IT only as a cost to be paid when something goes wrong.

Proactive customers understand that preventative IT maintenance and services are core to their business. They know that investing in their IT infrastructure will ultimately drive employee productivity and lessen the impact of system downtime. And, they are often more willing to sign a fixed-fee contract to ensure that their needs are taken care of on an ongoing basis, making them a strong target for MSPs.

The A’ La Carte Service Model

With the IT marketplace still in transition as SMB customers move from reactive to proactive in their approach to IT, how can MSPs more quickly advance their installed base toward cloud services? One way is through the use of an à la carte service model, which serves to cultivate a proactive mindset. With this model, MSPs sell individual IT services, such as antivirus, data backup and patch management, that are delivered as a managed service over the cloud.

Productizing the service offering in this way makes it easier for smaller businesses to buy from the MSP. More importantly, offering a menu of individual services is a great way for MSPs to get reactive customers onto their dashboards and begin moving them toward the proactive end of the spectrum.

The truth is, reactive customers need to be slowly shown the value of cloud-based managed services. With the flexibility to sell precisely what these customers are looking for, MSPs can ease them into simple (but profitable) managed services relationships. Once they recognize the value of the services they’re receiving, it suddenly becomes much easier to upgrade them to more comprehensive cloud-based offerings.

Sell to the Right Need

The reality for some MSPs is that every client might not be willing to make the shift to cloud. That’s why it’s important to be aware of the top drivers for pitching managed cloud services, one of which is replacing aging and failing hardware. This often requires clients to make massive capital investments in new technology. The flip side is that this need can create the perfect opportunity for an MSP to present a proposal for a virtual, cloud-based environment, eliminating the requirement for a capital investment, whether it’s new servers or other equipment. Any experienced MSP will tell you that most SMBs will find this proposal very appealing.

In addition, resource-strapped businesses are often looking to free their in-house IT teams from the burden of low-value tasks (such as troubleshooting employee workstations). Freeing them up allows them to focus on activities that support the growth of the company. And, moving on-site hardware to the cloud – where it can be managed by an MSP – is not only appealing to this type of customer, but it is often considered a top priority.

How can you win at cloud? Start by looking at your installed base and identifying your clients’ unique needs and pain points. Talk to them about the business benefits of cloud services: how they can save money, increase productivity and collaboration, and gain a better guaranteed level of service.

The bottom line is that benefits like these, and the value-add you bring, have always been the best option for channel players to distinguish themselves. The cloud doesn’t change that. It improves upon it by giving MSPs new ways to become a true value-added provider to clients. Ultimately, your success in uncovering the cloud opportunity lies in your ability to stay focused on that value, and on zeroing in on the right prospects.

Frank Colletti is VP of sales at SolarWinds MSP. Read more SolarWinds MSP guest blogs here.