IT and Business Insights for SMB Solution Providers

Building the Cloud Services Practice of Tomorrow

Want to be a leader in cloud computing three years from now? Here’s what you should be thinking about today. By Rich Freeman
Reader ROI: 
AUTOMATION AND COMMODITIZATION are sapping profitability from basic cloud migration and implementation services.
THE COMPETITIVE CLOUD SERVICE PROVIDER of tomorrow will therefore have to focus on offering holistic solutions to business pains
OPERATIONAL EXCELLENCE in everything from sales and marketing to service delivery will be also be critical to maintaining margin
CHANNEL PROS WHO WISH TO BE LEADERS in the cloud market going forward should start investing 10 to 20 percent of their revenue i

IF YOU BELIEVE, as most experts do, that cloud computing is destined to dominate IT in the years ahead, there’s good news to be found in recent research conducted by channel advisory firm The 2112 Group in partnership with Microsoft Corp. and Ingram Micro Inc. Only 6 percent of solution providers, the study finds, collected nothing from cloud products and services in 2016, and less than half a percent expect to see no cloud revenue in 2017.

Now here comes the bad news—the kind of basic migration, deployment, and management services most of those solution providers rely on for their cloud income at present will soon be obsolete. Giant technology companies like Microsoft and Google excel at automating complex processes, observes 2112 Group President and CEO Larry Walsh, and onboarding cloud customers isn’t ultimately all that complex.

“It’s not rocket science, and that’s the real threat,” he says.

Moreover, there’s only one way to meet that threat and prosper into the future, Walsh adds: Begin cultivating the cloud skills and services that will be in demand three years from now today.

Holistic Bundles

Walsh’s grim prognosis isn’t the only reason cloud service providers need to start planning ahead. If automated onboarding doesn’t sap profitability from migration and implementation services, creeping commoditization of those offerings will. Already, 88 percent of solution providers in the U.S. sell cloud-based productivity applications such as Microsoft Office 365, according to The 2112 Group’s study. Standing out from a pack that big is hard now and only looks to get harder.

“[If] you were a pure-play cloud provider and all you were doing was Office 365, I think you’d be out of business pretty quick,” predicts Eric Long, president of TeraCloud Inc., a provider of managed online solutions with dual headquarters in Dallas and Bradenton, Fla.

Providers who specialize in a specific type of cloud technology, be it storage, backup, or email, may have tough times ahead too, according to Alex Brown, CEO of Chicago-based solution provider 10th Magnitude. Tomorrow’s cloud customer, he believes, won’t be satisfied with point products.

“They’re going to want one holistic bundle where it all just operates seamlessly,” he says. “That presents a challenging transition for some organizations [that] are used to simply providing individual pieces of an overall solution set.”

That business owners will expect their cloud partners to meet standards of convenience and ease of use set by the likes of Amazon and Airbnb will only make that transition more demanding.

“The expectations for customers will be ratcheted up, in terms of a seamless experience [and] in terms of a high level of support and business outcome,” Brown says.

About the Author

Rich Freeman is ChannelPro's Executive Editor