Everyone’s heard the industry visionaries: Cloud is the future. Cloud is safe and secure. But the real question many solution providers have been asking that hasn’t been answered is “is the cloud really profitable for us?” After all, what good is a tech opportunity if it uses valuable resources and diverts attention from more lucrative ventures?
If you're only reading the comments in channel forums and on related social media posts, one would assume the cloud is driving thousands of solution providers into insolvency every year. The reality that isn’t happening—at least to those with a healthy business to start. The truth is, cloud computing is growing whether providers are prepared or not, and those who embrace and adopt a model that works best for their customers (and themselves) are more likely to prosper.
In other words, cloud is here, like it or not. Solution providers have to be ready, willing and able to make it work. There’s no time for looking back on the channel that was, especially because the way forward is getting clearer and support options continue to grow. That was the focus of the panelists during the Cloud Community session at the CompTIA Annual Member Meeting in Chicago.
ChannelE2E’s Joe Panettieri guided and joined the discussion with several other well-known cloud experts, including:
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Jason Bystrak, executive director, North America with Ingram Micro Cloud
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Stephanie Martin, CEO of the Exigo Group
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Kenneth May, CEO of Swift Chip
The profitability providers can attain with their cloud practices depend a lot on their own ambitions and creativity. “If they’re willing to sit down and wrap around the right solutions, we should be able to get partners to 50 percent or higher margins,” suggested Bystrak. “When they build in a suite of a package of services, and scale it, their options grow significantly.” In other words, those who provide assessments, implementation, configuration and cloud management programs, or other support services, have a greater ability to grow margins.
That’s one side to the cloud value proposition. Another part of the equation is the long-term income it can provider. “Long-term retention is crucial to your profitability,” said Martin. “If you dial in the right mix of services and get solid monthly recurring revenue, it’s a big win. You may have to do little other than being available to lend a hand some months. There’s a value in having you available if and when they need you.” Customer retention isn’t easy, but those who can ramp up their annual client contracts and increase their 'wallet share' from each will see their revenue increase exponentially.
Even the simplest cloud sale can be profitable. “I’ll be happy with 10-15 percent [margins] if we have no support requirements,” added May. “Of course I want to create a broader gross product and profit by adding in other solutions and services, but getting a foot in the door can also be profitable. We acquired a lot of managed service clients just because we could help move their email to the cloud.”
This was just one of the many cloud-related topics covered by Panettieri and the panelists. They shared the value of going deep into verticals or horizontal, enhancing their skills to drive higher revenue. Later on, they discussed ways providers can leverage distribution and peer partnerships to expand their reach and capabilities, and how the end user experience could lead providers into additional cloud opportunities. And how, with more than 70 percent of purchases coming from line of business managers today, the options for breaking into new accounts are growing exponentially.
Those are just a few of the many topics covered quite extensively in the CompTIA Cloud Community. Interested in joining the discussion in their next virtual and/or live event? Sign up today at comptia.org/communities/cloud.
