“It is not the strongest of species that survives, nor the most intelligent, but the one most responsive to change.” – Charles Darwin.
Digital transformation is one such change that is set to completely alter the modus operandi of businesses today. Organizations are adapting to match the requirement of the current digital era – one that is facing significant changes in the way technology is created, managed, analyzed and consumed.
69% of organizations consider digital investment important in achieving their organization’s business transformation objectives.” – 451 Research.
The digital business transformation is about “more” – more people, making use of more technology, from more locations, through more devices and for more of the time.
This transformation is also making the solution providers see a paradigm shift in terms of business technology use cases, their role as an IT services provider, customer preferences and more.
A smart solution provider will need to identify this opportunity stream and look for ways to monetize it and build a recurring revenue source. But, what services or technologies will be the most beneficial? Or, which services will be most in demand that service providers should sell?
Where does the opportunity lie for service providers?
“Over 80% of customers are actively deploying or embracing the cloud.” – IDC CloudView 2016 survey.
A study by 451 Research identifies the following major technologies that will see the highest level of investment in coming five years by organizations, amongst which cloud-based software, applications and infrastructure services will see 59% and 57% level of investments respectively.
Cloud, unlike traditional hosting services, requires a complete process to be followed before and after an organization migrates its application and services on it. Managing and running a cloud environment requires various skill sets like technology specialization, security expertise, compliance and risk management, orchestration etc. The graphics below shows the major cloud skill sets which the organizations find lacking when it comes to manage their cloud environment.
Not, every organization can have the complete skill set. Hence, most of them are willing to take the help of managed cloud service providers.
“50% of the organizations prefer a combination of internal IT and service provider’s resources and skills for cloud application deployment.” – 451 Research.
A managed cloud service provider helps the customer analyze which cloud service or application his organization needs, supports in pre-migration, on-boarding and post-migration services, backed with simple cloud billing and pricing. Being a local player, it understands the biggest pain points of the customers in terms of infrastructure, security, backup and most importantly, support.
“Over 50% of the organizations plan to use managed services for backup and recovery in the coming years, closely followed by disaster recovery and 24/7 premium support services.” – 451 research
Here, it’s important to understand that as the demand for the cloud services grows, so is the competition among the service providers, so, you must grab it fast before the opportunity window closes.
Also, the competition is fierce and will turn fiercer soon. Look at the following stats:
The stats show the Average Revenue Per User (ARPU) with average renewal rate and average number of providers that organizations of various sizes use. As per it, the average number of years that a customer spend with the primary provider is 3.2 years.
Retaining the customer and assuring renewals is primary in cloud business. That can happen only if you build a long-term value based relationship with the customer.
Becoming a managed service provider or a cloud solution provider can be a great move. The MSP model will give you a monthly recurring revenue stream and a lifetime customer value relationship.
To become a successful MSP, you should:
- Get complete knowledge of the market and start engaging customers.
- Plan and define your service portfolio like what you will offer, how will you price the customers, how much flexibility can you give them, with value adds and many more.
- Create a comprehensive business plan – define detailed pricing strategy, expected growth rate, operating expenses and breakeven and ROI analysis.
- An MSP uses several pricing models – tiered, one-time, contract based and pay-as-you-go. Use a cloud business automation tool so that you can provide flexible pricing structures to your customers, like RackNap’s cloud billing module empowers service providers to offer all cloud billing capabilities.
- Define a proper marketing and sales plan, by identifying the customer needs and buying patterns.
- Differentiate your offerings from other competitors. This is somehow the most decisive factor in an MSP’s success. It will result in higher efficiency, higher price points, expanded geographic reach and increased ARPU.
- Become a Microsoft CSP partner to experience growth and profit opportunities.
- Make use of apt tools for cloud management and delivery: As an MSP, you need to choose the right platform for managing different operations – assessments, deployments, monitoring, support, migration etc.
A central system of management that can handle complete billing, pricing, marketing, sales and inventory with end-to-end automation will be a perfect tool for you. The major benefit that a cloud customer expects is faster time to market with less complexities, and by offering services through a central cloud management platform, you can ensure that.
RackNap – a unified cloud business process management and automation platform
RackNap is the perfect business process automation platform that provides complete cloud orchestration and management services. Orchestration will be the need of the hour with 65% organizations considering it as an important factor that will help them to achieve their digital transformation goals.
RackNap is a product that was born to fulfill the digital transformation needs of an organization that was both an MSP and a CSP and thus, it understands their exact requirements and thus enables them to deliver cloud services with complete automation from a single dashboard.
By making use of right technology, the service providers can easily build a loyal customer base, not only survive, but thrive in this digital era.
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