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Cloud Services: Channel Partners See Revenue, Customer Growth

When many small businesses began migrating on-premises servers and applications to the cloud, conventional wisdom said partner revenue streams would shrink -- perhaps substantially.

Channel-related cloud concerns reached a fever pitch in 2011 and 2012, when Microsoft officially launched Office 365 and then kill on-premises Windows Small Business Server software development. Some partners pressed the panic button. But fast forward several years, and incremental evidence shows many partners are actually thriving with cloud services.

Indeed, partners are seeing per customer and quarterly revenue growth, expanded new customer acquisition, and improved customer retention as a direct result of adding cloud services to their portfolios, according to a February 2018 StorageCraft survey of 50 U.S. partners.

Channel Partners: Cloud Services Momentum

Among the survey highlights: Partners are adding cloud services for the following reasons...

  • A desire to expand their portfolio (37 percent of respondents)
  • Lacking cloud services is a competitive disadvantage (32 percent)
  • To win new customers (13 percent)
  • Increase revenues per customer (10 percent)

We assuming the missing 8 percent of respondents had a mix of responses.

When asked about customer revenue, wins and retention due to adding cloud services:

  • 66% reported an increase in revenue per customer
  • 63% reported improved customer retention
  • 23% reported they have won new customers

When asked about the impact of cloud services on quarterly revenue

  • 15% reported increased quarterly revenues of between 11-19%
  • 41% reported increased quarterly revenues of between 6-10%

Predictably, StorageCraft pointed to cloud momentum within its own partner ecosystem. For instance, StorageCraft Cloud Services and the purpose built DRaaS (Disaster Recovery as a Service) channel grew four-fold in the last year alone, according to Shridar Subramanian, vice president marketing and product management at StorageCraft.

Still, StorageCraft did not disclose actual revenue figures associated with those cloud services. Nor did the survey result announcement describe partner profits from cloud services.

Laggards Are Running Out of Time

With the current trend towards cloud services for IT infrastructure, I agree that MSPs that are not currently offering cloud solutions will soon be at an extreme disadvantage with clients. While only 32 percent of those surveyed claimed this as their motivating factor, I believe this is also the driving force behind wanting to expand their services portfolio. So, while 37 percent of the channel partners claimed expansion as their main motivation, I think that number is skewed by the underlying motivation of competitive disadvantage.

The survey shows similar results to other surveys we have seen lately, showing how dominant cloud services are becoming. MSPs that fail to keep up with the changes by not offering some form of cloud services, whether it is through monitoring, or offering infrastructure services, will be left in the dust.

Additional insights from Joe Panettieri.