by Rabon Bussey, Partner Technology Strategist
At the Worldwide Partner Conference in July, the United States Keynote centered on the Microsoft cloud-first, mobile-first strategy and how partners should begin thinking about the future of their businesses in line with aligning to cloud and mobility. In conjunction with that keynote, we published our first “Your Future in the Cloud” blog post. I would like to build on and continue that conversation, with the goal of helping you understand the cloud momentum and opportunity, and what to consider in moving your business to the cloud with Microsoft.
Today, I’ll set a foundation about “Why Cloud,” and in future posts, I’ll delve into solution areas.
There is plenty of opportunity for partners who are offering cloud solutions. By 2016, public cloud IT will reach close to $100B—5 times the growth of the IT industry. We also see that cloud partners are outperforming partners without a cloud practice across the industry, gaining 1.3X more revenue per employee on top of the gross profit.* Cloud is quickly moving from being a trend to being the norm. Now is the time to invest and position yourself for the future.
Profit pools: making money in the cloud
Partners that are successful with the cloud find more opportunities within their current customers. Managed services and packaged solutions enable many partners to sell a good, better, or best offering that bundles common services to gain better utilization for their engineers and better margins while helping their customers to solve business problems by utilizing the cloud.
Recurring revenue is becoming the new success metric for partners. Having long-term customers, predictability, cash flow, and higher company valuations can appeal to business owners and executives. According to IDC research, cloud-oriented partners reported achieving more than 1.6 times the recurring revenue than other partners.
Take a look at your current business model, and then look at the profit pools below to plan your transition to the cloud. These four profit pools are in order from the least to most profitability:
- Transact – The resale of someone else’s hardware and/or software
- Project Services – Fixed services that align with deploying hardware, software or application development
- Managed Services – Standardized, tiered services that enable a partner to add value to their customer while building a recurring revenue stream (e.g. subscription or monthly billings)
- IP Services – The monetization of Intellectual Property through software development; packaged application or business process
Now is the time: things are accelerating…fast
If you consider where you are in the adoption phase with the drivers for Cloud services, I believe there is still time for you to get on board. Below you will find some key resources that can help you get started. I would encourage you to take advantage of them to help start you on your journey. You can see how other partners are succeeding with Cloud
If you are a partner with a silver or gold competency, or with a Microsoft Action Pack subscription, take advantage of your internal use software and services benefit. This can help you get the knowledge you need to be successful when building cloud into your existing practice.
This series of post will focus on Managed Services and Packaged Service offerings to give you some ideas on how you might be able to take advantage of this trends.
How do you get started? First, understand your profit pools. Cloud can be a great opportunity to build additional services that complement your business and further your relationship with your customer. Understanding how you currently serve your market by profit pool will give you the insight to help build cloud services into your business. These resources can help:
- Cloud is our core—build a profitable cloud business
- Download the IDC Successful Cloud Partners ebook
- Cloud Profitability Program: Build and Grow Your Cloud Practice
- Cloud Profitability Fridays: Build and Grow a Cloud Practice Webcasts
WPC 2014 Cloud Profitability Session Videos
Cloud was one of our main content pillars at WPC 2014. Watch these videos from our annual conference that specifically talk about successful and profitable cloud businesses. You can find more WPC 2014 sessions in the WPC Connect site. Select Content, then WPC 2014 Session Resources. And, I encourage you to register early for WPC 2015, in Orlando, Florida.
- CL201 – Successful Cloud Partners 2.0: What Successful Partners Are Doing to Build Profitable Cloud Businesses
- CL206 – Evolving your Business Model to Improve Profitability by Selling Cloud Solutions
- CL210 – Transform your business from IT Consulting Services to Cloud ISV
* IDC, 2014. Successful Cloud Partners 2.0., sponsored by Microsoft.