Grant Thompson has good news and bad news about making the move into cloud computing. The good news is that a lot of IT firms already have many of the abilities they’ll need to prosper. “There’s a lot of crossover in terms of skill sets,” says Thompson, a founding partner and solutions architect at MG Technology Group LLC, of Bainbridge Island, Wash., which provides hosting and software-as-a-service (SaaS) solutions alongside more traditional consulting and integration offerings. The bad news is that many channel pros don’t know that—and are steering clear of the cloud as a result. “There is a fairly high level of fear of the unknown,” Thompson observes
And that, many cloud veterans say, is a shame. Though managed service providers and VARs will indeed have to master new skills in areas like sales, marketing, and operations as they make their way into cloud computing, few will find doing so as hard as they may be expecting. Meanwhile, the longer they wait before starting the process, the smaller their chances of getting in early on one of the IT world’s most sweeping trends and lucrative opportunities.
Learning the Technical Ropes
Of course, some partners are likely to find their journey into the cloud easier than others. MSPs, for example, have a head start, since they’re already familiar with matters like defining service-level agreements (SLAs) and setting recurring rates. “If you’re already focused now on managing relationships and contracts and ongoing delivery of services, you are far more prepared to deal with the cloud” than other partners, says Dave Sobel, CEO of Evolve Technologies LLC, an SMB-oriented solution provider in Fairfax, Va., that offers hosted versions of Microsoft Exchange and SharePoint, among other cloud services.
Moreover, from a technical perspective, channel pros planning to offer SaaS solutions or cloud-based infrastructure resources such as storage space and processing power should be in for a relatively smooth transition, experts say. “In general, the response that I see from technical people is that it’s not all that different from what they’re used to,” observes Thompson.
MSPs and VARs that plan to leverage platform-as-a-service (PaaS) offerings such as Microsoft Windows Azure and Google App Engine, on the other hand, will have some new programming tricks to learn. PaaS solutions combine hosted software-writing utilities with online runtime environments, enabling organizations to create and operate entirely cloud-based applications. “There are technical skills that are going to be necessary to utilize those development tools,” says Jeff Kaplan, managing director of THINKstrategies Inc., a strategic consulting services firm in Wellesley, Mass., that specializes in cloud computing.
Perhaps the steepest technical learning curve awaits the relatively few channel pros thinking about building their own cloud data center, rather than partnering with a hosting provider. Consumers of cloud services insist on significantly higher reliability than the average managed services customer, notes Mike Klein, president and COO of Online Tech Inc., a provider of co-location, managed dedicated server, and private cloud hosting services based in Ann Arbor, Mich. “We’re talking about three nines, four nines of uptime,” he says. Meeting those expectations takes deep expertise not only in server virtualization, storage-area networks, and firewalls, but in the operational intricacies of keeping large and sophisticated computing facilities continuously available.
Sealing the Deal
For that very reason, of course, most IT providers will ultimately rely on cloud vendors rather than in-house data centers. Learning to choose the right vendors, however, will be an essential talent. Thompson advises channel pros to investigate a provider’s management processes, scrutinize its SLA, and ask to see customer references. In addition, make sure the provider has a SAS 70 or ISO/IEC 27000 series security certification. You could be in for serious trouble if your cloud partner’s infrastructure is vulnerable to intrusion.
Security is an issue your sales staff will need to be mindful of too, says Bob Leibholz, senior vice president of sales and business development at Intermedia, a hosted solution provider headquartered in New York. Business owners are often leery of exposing their intellectual property and sales records to theft by placing them on someone else’s servers; salespeople must learn to ease those anxieties. Most cloud vendors can help, Leibholz notes, by providing collateral about their security practices and case studies about satisfied customers with stringent security requirements. But it’s ultimately up to your sales team to present that material persuasively.
Salespeople must also learn to showcase a cloud offering’s features and capabilities compellingly. “Demo skills are really helpful in the cloud,” Thompson observes. SMBs typically take their time when buying hardware or evaluating managed service contracts, but with the help of a crisply executed demo, an experienced account manager can often close a hosted email or collaboration deal in an afternoon.
Of course, that initial sale may be a modest one, as newcomers to the cloud often start out small. That’s just fine, counsels Jon Beck, senior vice president for worldwide field operations and business development at OpSource Inc., a Santa Clara, Calif.-based provider of cloud and managed hosting solutions. By refining their upselling and cross-selling skills, cloud resellers can gradually grow that toehold into a rich source of monthly revenue. “Don’t wait around to hit a home run,” Beck advises. Successful cloud resellers understand the effectiveness of taking a “land and expand” approach to new accounts.
However, since cloud opportunities tend to close quickly—and yield slender margins—failing to produce them in large numbers can result in idle salespeople and meager profits. Channel pros who rely principally on referrals for new business, then, will need to add more aggressive tactics like search advertising, seminars, and telemarketing to their lead-generation arsenal. “They’re going to need to do some type of marketing to fill the pipeline,” Thompson says.
Even high-volume marketing techniques won’t do much for your bottom line, however, if you attempt to compete on price instead of value. “You’re not going to beat Google and Microsoft on trying to be the cheapest guy in town,” Sobel notes. Winning in the cloud entails learning to work consultatively with clients as a trusted adviser.
For example, Saber Solutions Inc., a cloud solution provider based in Indian Trail, N.C., always begins its client engagements with an in-depth analysis of the customer’s goals, pain points, and business processes. Then the company proposes cloud-based solutions reflecting the client’s greatest needs and opportunities. “At that point there’s a lot of value I’ve brought to the table, and I don’t have to price sell,” notes John Stewart, the firm’s president.
Developing vertical expertise can help add value to cloud solutions as well. For instance, Thompson works with a firm that offers a hosted SharePoint solution tailored to the needs of nonprofit environmental groups. That’s specialized functionality such organizations need, are willing to pay for, and can’t get from providers of generic online collaboration tools. Plus, it’s a packaged offering requiring relatively little customization, so margins are high. “These guys get to sell the solution over and over and over again,” Thompson observes.
No matter what kind of cloud services you end up selling, though, you’ll probably need to sharpen your financial management skills. The flexibility and pay-as-you-go pricing that make cloud computing so appealing to end users can also make revenue forecasting a major headache, as there’s almost no telling how much capacity your clients will consume in a given month.
Managing cash flow can be equally tricky, Kaplan notes. Like managed service contracts, cloud solutions generate revenue in small but steady increments. As a result, VARs used to receiving big lump-sum payments up front may be in for leaner revenues than usual as they grow their cloud account base.
Just the same, channel pros should not let the challenges of the transition process keep them out of the cloud, experts say. “Whether it’s now or six months from now, every MSP is going to need to get into the cloud services game,” notes Leibholz of Intermedia. There’s no better time than the present to begin acquiring the skills you’ll need to make your leap into cloud computing a successful one.