Global customers are demanding lower costs and more flexible delivery methods, and innovative Solutions Inte-grators and Managed Services Providers are responding by providing cloud services. Research shows cloud-com-puting services adoption is accelerating, with approxi-mately $2 billion in cloud-computing services expected to be sold in 2012.
The addition of cloud services to a solution provider’s portfolio can be an evolutionary step for many channel partners as they assess how to benefit from providing their products and services via the cloud.
Customers, too, are taking steps, adopting cloud com-puting in addition to, or in place of, many traditional IT services. In this UBM Channel White Paper, we will assess the customer and channel benefits to the cloud model, look at ways to add cloud services to a reseller’s product and services portfolio, and how to select the right Cloud Services Partners.
How-to-Guide:
Building a Cloud
Services Practice
CONTENTS
1. The Sky’s the Limit: Four Steps to
Building a Cloud Services Practice
2. Big Benefits for Customers in the
Cloud
3. Selling Cloud Services to End
Customers: A Three-Step Process
4. Six-Point Checklist for Selecting a
Cloud Vendor Partner
1. Examine Your Current Portfolio
Times are changing. In the first half of 2010, nearly half (43 percent) of resellers’ solution delivery models were traditional on-premise options, with only one-quarter of 2010 revenue coming from off-premise hosted and pure cloud sales combined.
Today, those same respondents say they expect signifi-cantly more (38 percent) of their IT spend to be in off-premise sales by 2013, a 50 percent increase. So what are these resellers going to be selling? How are they going to account for that increase? Questions like these are what resellers have to resolve today in order to remain in busi-ness tomorrow.
When resellers consider their current portfolio, there are two critical questions they should ask:
1. Am I keeping pace with my competition with my cur-rent portfolio?
2.Am I preparing myself today to compete in the cloud-inclusive reselling landscape of tomorrow?
If the answer to either question is “no” or “maybe,” it’s time to examine what’s being offered with a fresh eye. For decades now, the channel has embodied very clear rules of engagement based on a complex IT infrastructure requiring extensive expertise to deliver. With increasing acceptance of the cloud, the way technology solutions have traditionally been conceived, sold, delivered and sup-ported is changing, and resellers have to change with it.
2. Evaluate the Cost of Delivery and Support
For resellers that haven’t examined their operations costs lately, now is the perfect time to start. Many resellers—and even corporate IT departments—are finding that they’re
caught in the proverbial cycle of dedicating only about 20 percent of their time to activities that can actually build the business, while spending 80 percent of their time just maintaining the status quo.
This is a perfect example of where a cloud practice can help resellers start anew. Imagine a fresh business model where both reseller and customer enjoy easier software implementations, faster upgrades and 24x7 uptime (which translates to lower risk for all). Another critical consider-ation: Hosted solutions allow reseller and client to operate with a leaner, more productive technical staff.
In a cloud model, resellers can tap into the staff of an experienced cloud provider, reduce their risk, control costs and increase the work their existing technical staff has time to accomplish.
3. Expand Your Services Offering
It’s imperative that solution providers expand their offer-ings in order to fuel growth in 2012, something resell-ers clearly do undresell-erstand. The majority of the resellresell-ers responding to UBM Channel’s study said they are planning
The Sky’s the Limit: Four Steps to Building a
Cloud Services Practice
Today’s most perceptive resellers are monitoring the cloud market and investigating ways to capitalize on what promises to be a lucrative opportunity. Some resellers may wonder whether they need to launch their own cloud practices.
Software as a Service (SaaS) offerings, hosted via a Cloud Vendor Partner, are among the most popular ways for resellers to begin a cloud practice. Midsize businesses worldwide have already begun to embrace cloud solutions and, as security, privacy and recovery concerns are alleviated, enterprise customers are beginning to jump on the bandwagon as well.
While more than half of end customers anticipate “the cloud” will account for nearly 13 percent of their IT spend this year, a surprising one-third of the solution providers questioned in a recent UBM Channel survey said their customers don’t see the opportunities that a cloud-based solution has to offer. Resellers that fail to see what their customers are already consider-ing—if not budgeting for—may soon miss out on their piece of the cloud pie. The question resellers have to ask themselves is how they can tap into the four “E’s” Examine, Evaluate, Expand and Entice—to help them build a successful cloud practice.
Diversify IT systems Customer lack of knowledge about IT systems Add redundancy Offload meintenance/scalability of IT resources Reduce implementation time Limited requirement for internal IT suport Solution can be accessed anywhere Control/improve profit margins Reduce IT CAPEX in favor of operational expence Increase computing capacity and business performance Provide competitive business advantage
Provide business continuity and disaster recoverry 57.3% 51.8% 51.4% 50.9% 50.5% 49.5% 48.2% 47.3% 35.5% 35.5% 31.8% 25% Customer Drivers: Continuity, Competitive Advantage, Capacity, Reduce IT CAPEX
to expand their solution offerings into new, emerging tech-nology areas. To add those capabilities, more than half plan to form new strategic supplier partnerships, and over 65 percent say they plan to offer cloud solutions. What these resellers are planning to do is tap into cloud sales, developing a cloud practice through a SaaS delivery model. In fact, providing Software-as-a-Service is by far the most popular way resellers are planning to break into the cloud resale market, with a full 40 percent of their cloud revenue expected to come from SaaS sales alone this year. E-mail management and disaster recovery in the cloud are two enticing opportunities resellers are latching onto, though infrastructure-as-a-service opportunities are also beginning to grow in importance and acceptance among end users, a trend sure to continue as concerns over security, pricing models and the capability of cloud providers fade.
4. Entice Customers to Try the New Service
Thanks to the barrage of television, radio and print ads making “the cloud” sound like an illustrious travel destina-tion, most customers are already familiar with the basic
premise of cloud computing. This makes it only natural for resellers to bring up cloud options in any discussion about software and how critical applications can be deployed, accessed and supported.
It is important to recognize, too, the ubiquitous nature of SaaS and how it’s already finding its way into clients’ businesses with resellers’ help. Software-as-a-Service is gaining traction. Close to 80 percent of respondents to a recent InformationWeek survey say their companies are using some form of SaaS, up from 61 percent just two years ago, with CRM and e-mail leading the charge. To find the magic words to entice customers to try a cloud service such as SaaS, resellers need only to put them-selves in the customer’s shoes. Clients want faster soft-ware deployments, less demand on their internal IT staffs, 24x7 uptime, reduced risk, top-tier support and easier renewal processes. Couple that with an OpEx (vs. CapEx) discussion and resellers will be on their way to launching a cloud services practice that makes dollars as well as sense.
There are three basic models of delivering cloud comput-ing: Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS). Each has a role in the delivery of services to end-user customers. In addition, each of these models represents regular, recur-ring revenue, which can be billed in accordance with cus-tomer or market demand.
When speaking with customers about the differences between traditional delivery of software and software delivered via cloud services, there are numerous benefits they should consider.
Cloud Computing Models
1. SaaS refers to end-user software applications deliv-ered over the Web.
2. PaaS refers to the technologies and services for coding and deploying SaaS applications quickly and efficiently.
3. IaaS refers to the infrastructure that supports everything: servers, storage, networking, operating systems, databases and applications.
Big Benefits for Customers in the Cloud
Traditional Software Delivery vs. Cloud Services Traditional Software
Delivery
Cloud Services Explanation
CapEx OpEx Cost is shifted from high, up-front capital expenditures to
lower, recurring operational expenditures.
Higher costs Greater savings Forrester estimates that 75 percent of IT budgets are
spent simply keeping the lights on—rather than being invested in innovation.
One-time purchase Regular, recurring
rev-enue.
A benefit to both customer and channel partner is the predictable, recurring payments and revenue stream that occurs with the SaaS cloud-services model.
Constant infrastructure upgrades
“Pay-for-usage” model Instead of the constant treadmill of hardware and
soft-ware upgrades, customers pay for the services they need, when they need them.
Resellers say their customers would consider a cloud solu-tion if it could help them with the following, according to a recent UBM Channel study:
• Risk avoidance: More than half of the survey’s reseller respondents said business continuity and disaster recov-ery (BC/DR) concerns would play a factor in their custom-ers’ decisions to deploy a cloud solution.
• Competitive Edge: Of nearly equal importance, the survey showed, was the desire to gain a competitive ness edge and to increase computing capacity and busi-ness performance.
• Expense Reduction: Doing these things, of course, costs money, and that is where cloud services can really shine. In fact, more than half of the resellers surveyed said their customers would consider a cloud solution in order to reduce expenses, trading a significant up-front capital expense (CapEx) for a much smaller, ongoing operational expense (OpEx).
It’s Time to ACT (Assess, Create, Transition)
Once a reseller has defined what it is that’s driving their customer’s interest in the cloud—risk mitigation, creating a business advantage or reducing costs, for example—it’s time to develop a sales strategy that speaks to that client in a meaningful way. In short, it’s time to A-C-T.
1. Assess the client’s needs: Start off by getting to know the client’s business well, understanding the problem that needs to be resolved, determining if the client’s business and technical organization are ready for the cloud—and
only then, when the cloud is a strong and justifiable option, recommending a cloud solution that makes both busi-ness and financial sense. Create a side-by-side total cost of ownership comparison of two possible solutions—one traditional, one cloud. The numbers will speak for them-selves. CapEx vs. OpEx is a discussion sure to resonate with customers, particularly with watchful CFOs keeping a close track on every expense.
2. Create a blueprint for the project: Once the client has agreed that the cloud is the right option, design a plan that makes sense for the client’s business and for its IT depart-ment. The cloud is not right for everyone, and every cloud opportunity may not be a perfect fit for every potential cloud client. This is where a reseller’s value-add comes into play; a sale such as this requires a great deal of
consulta-Often decentralized Always centralized Software is managed, deployed and upgraded from a
central location and made available via the Web.
Device-dependent Device independent The application experience and all capabilities are
deliv-ered in the same way to all supported devices.
Licensing agreements No long-term contracts Unlike traditional software delivery, SaaS can be delivered
as a month-to-month service.
Complex Simple Software delivered via the cloud removes customers’ pain
and time involved in upgrades, patches and maintenance.
Selling Cloud Services to End Customers:
A Three-Step Process
Making money. At the end of the day, that’s the reason resellers sell technology and the reason end users buy it—to help their businesses make money. To effectively sell any technology solution, resellers need to start with the most basic premise of making money, then walk backward, working their way to a deep understanding of the very specific business needs that any technology is intended to resolve.
Diversify IT systems Customer lack of knowledge about IT systems Add redundancy Offload meintenance/scalability of IT resources Reduce implementation time Limited requirement for internal IT suport Solution can be accessed anywhere Control/improve profit margins Reduce IT CAPEX in favor of operational expence Increase computing capacity and business performance Provide competitive business advantage Provide business continuity
and disaster recoverry 57.3% 51.8% 51.4% 50.9% 50.5% 49.5% 48.2% 47.3% 35.5% 35.5% 31.8% 25%
Customer Drivers: Continuity, Competitive Advantage, Capacity, Reduce IT CAPEX
tion and technical expertise. It is the reseller’s job to make recommendations that take into account the client’s exist-ing infrastructure, IT capabilities and business objectives. 3. Transition the customer to the new platform: From activating an account and provisioning server space in a hosted environment to customizing software or platform options that reside in the cloud, resellers must do what-ever it takes to transition the client from where they were to where they are going—and beyond. The reseller remains accountable for training and supporting the end user, as well as for the quality of service being delivered and any
ongoing maintenance not specifically assigned by an SLA to the cloud provider—including any patches or updates that need to be made.
Keeping in touch with the client is the key to additional sales down the road. To really deliver on the promise of the cloud, resellers should periodically return to the assessment stage, and re-examine how the solution is per-forming for the client, searching for new ways to optimize performance and reduce costs. A-C-T is not a one-time event, but a continual opportunity to stay in front of the client, assess and reassess their needs, and in doing so, learn about new up-selling opportunities.
1. Lead generation and support in closing business— Channel partners are looking for Cloud Vendor Partners that can create the demand and funnel leads to them. This can include Webinars held by a vendor that sends appro-priate leads to regional or vertical partners. It can also include call center campaigns that result in hot leads for follow-up contact. Look for a Cloud Vendor Partner that focuses on growing its clients’ businesses and protects their sales from competitors.
2. Quality sales and marketing tools— A solid hosted application doesn’t sell itself. It takes marketing muscle and sales tools. Look for a Cloud Vendor Partner that provides the marketing outreach as well as the sales col-lateral—and sales training— necessary to support its clients’ sales efforts. Marketing tools should be part of an ongo-ing awareness and conversion campaign, not just a songo-ingle one-time program.
Six Point Checklist for Selecting a Cloud
Vendor Partner
As always, partnerships are the foundation of solid business. In fact, according to a recent UBM Channel study of channel partners, in 2012 nearly 50 percent plan to expand their solutions offerings into new and emerging technology areas and more than 25 percent plan to form new strategic supplier partnerships.
Once a Solutions Integrator or Managed Services Provider has made the decision to offer cloud services to their customers— perhaps a related software application or one it has been reselling and deploying traditionally for years—it is time to review Cloud Vendor Partners.
Channel partners who sell or plan to sell cloud-computing services said that their top customer drivers were Continuity, Competition, Capacity and CapEx reduction, according to the UBM Channel study.
There are other important channel-partner drivers as well. This checklist will help resellers in the selection of the partner that will best meet their needs as they make their move to building a cloud services practice.
While there is no one-size-fits-all Cloud Vendor Partner, there are things to look for in a new partner. When choosing a Cloud Vendor Partner, make sure they provide the following:
2011 Study: How likely is your company to implement each of the following business strategy in the next 12 months?
Will replace most of it's current commodity suppliers Will be sold because of past or expected poof financial results Will acquire other business to expand into new emarging technology areas Will from new strategic supplier partnership Will expand its solution offerings into new emarging technology areas
The Channel is Seeking New Partnership:Looking to Add Technologies/Solutions to Fuel Growth
Source: UBM Channel
Will expand its solution offerings into new emarging technology areas Will from new strategic supplier partnerships Will acquire other business to expand into new emarging technology arias Will replace most of it's current commodity suppliers Will sold because of past or expected poor financial results
Rated Extremly Unlikely/Unlikely Rated Extremly likely/likely
Source: UBM Channel 46.0% 25.3% 11.2% 4.2% 3.5% 67.7% 58.6% 46.4% 15.1% 8.9%
3. Secure and compliant access— Today’s security- and compliance-driven computing environment requires that off-premise application and data hosting in the cloud must be as trusted as an on-premise data center. Make sure the Cloud Service Provider under consider-ation can offer four key features: confidentiality, integ-rity, availability and control.
4. Lower costs through improved productivity— Providing IT services often focuses on maintenance and support, rather than proactive technology recommenda-tions that drive the bottom line. The benefit of the cloud services model is that integrators can now deploy a cloud solution once without the headache of maintenance and upgrades. This is a win-win for the integrator as well as the client. Look for a Cloud Service Provider that focuses on
productivity gains for the integrator as well as the customer. 5. 24 x 7 customer support— It’s not a win if the integra-tor has to be available around the clock when providing a cloud service. Look for a Cloud Service Provider that is fully staffed and able to provide the needed organization to support customers when and where necessary—seam-lessly and without difficult handoffs.
6. Long-term services revenue— Support your current customer offerings portfolio with a cloud services pro-vider that adds greater long-term services revenue for your business. Look for a provider that is dedicated to creating a global partner community to support mutual continued growth. Ask about renewal rates for the applica-tions the provider is hosting.
E-mail Continuity
Mimecast delivers always-on, seamless e-mail availability through automatic service failover and failback in near realtime during planned or unplanned e-mail outages. Seamless integration with Microsoft Outlook, Webmail, and smartphones provides uninterrupted, policy-based e-mail and calendar services for office staff and remote workers. Using a series of geographically dispersed, highly secure data centers, each with built-in safeguards to pro-tect against individual device or media failure, Mimecast offers 100 percent service availability SLA that satisfies regulatory compliance while reducing security risks. If your customer is an archive service subscriber, they will also be able to access all of their archived e-mail during any e-mail outage.
E-mail continuity also supports scheduled maintenance during normal working hours without affecting e-mail use, thereby eliminating after-hours costs and making mainte-nance less disruptive and easier to manage.
E-mail Security
Mimecast’s e-mail security offering provides the most comprehensive, cloud-based e-mail risk mitigation on the market today. Backed by stringent availability and secu-rity SLAs, along with flexible e-mail encryption options, it cuts cost and complexity, removing threats in the cloud to reduce your risks and improve overall e-mail server performance. It is also built to ensure you can meet data security and privacy obligations governing everything from health information to payment card processing information in e-mails.
The system protects against inbound and outbound e-mail-borne threats, including malware, spam, phishing, DoS & DDoS attacks, deliberate or accidental data leaks, outages and social engineering attacks. Tight integration with Active Directory simplifies the setting and enforce-ment of organizationwide e-mail security policies. E-mail management is greatly streamlined, offering realtime control through a single pane of glass.
Mimecast: Making E-mail Work Again
Mimecast works with channel partners to take the pain out of handling their customers’ most important data: the infor-mation that passes through their e-mail systems. When we started out 10 years ago, we saw what others didn’t—that while corporate e-mail was increasingly being used as the primary store for critical business information, it was also becoming more complex, fragmented, less reliable and ever more costly. What had started out as a simple business tool was becoming hard to manage—and creating risk for businesses in the process.
Today, we provide essential cloud services for Microsoft Exchange, eliminating customers’ complex e-mail challenges and making running corporate e-mail easy. By working with the Mimecast partner program, you can instantly expand your portfolio with a set of cloud-based e-mail archiving, continuity and security services. Becoming a Mimecast partner requires no financial commitment or extensive training burden as we provide full sales and technical support while you transition your customers to the Mimecast service.
E-mail Archiving
Mimecast has reduced the cost and complexity of secure, accessible e-mail archiving. Users have instant access to every e-mail they’ve ever sent or received, based on cen-trally controlled e-mail retention policies. E-mail is stored in a highly secure and resilient cloud-based archive that provides as much capacity as your customers need for a default period of 10 years with predictable per-user costs. Searches over your entire archive are returned in near realtime through a standard Microsoft Outlook interface— or through our secure Webmail interface. This makes an e-mail from a decade ago as accessible as one sent today. All messages are tamper-proof and strong chains of cus-tody are maintained throughout their entire lifecycle in order to support the most demanding legal requirements. Helping users quickly and easily search their personal e-mail archive cuts down on help-desk queries, which in turn reduces costs and improves productivity. And, by giv-ing your staff access to the most complete information pos-sible, it helps them quickly make more informed decisions.
The Channel Opportunity
Mimecast has been working closely with channel partners in the UK and South Africa since the company opened its doors in 2003. Sales efforts expanded into the United States approximately four years ago, moving from an initial direct sales strategy to a focused channel effort supported by all levels of the executive team, who fully recognize the role of partners in the company’s 60 per-cent year-over-year revenue growth.
While some vendors are constraining partner profitability through such practices as reducing or eliminating chan-nel compensation on renewals, the Mimecast partner program is based on significant and tangible rewards. Mimecast augments your Microsoft practice with recur-ring SaaS revenues and margins that range from 20 to 30 percent. Partners who actively find new customers are eligible for an additional 5 percent for deal registration. An
innovative “poachers penalty” helps to reward and protect the incumbent partner at renewal time as well. These pro-grams, plus other components such as market develop-ment funds and certifications, are all designed with the objective of making Mimecast both partner-profitable and easy to do business with.
The Perfect Time
Events in the Microsoft world are making now the perfect time for the channel to engage new partnerships with Mimecast!
The migration from Exchange 2003/2007 to Exchange 2010 will otherwise require after-hours labor combined with a comprehensive backup plan. These engagements provide a perfect opportunity to begin leveraging the fea-tures and benefits of Mimecast.
Keep in mind that some of your customers have already begun kicking tires while others may have even begun adopting cloud services. The Mimecast strategy provides an opportunity for both you and your customer to make an incremental move into the cloud. The traditional resale portion of your business does not need to be eliminated, but it should be augmented. There is no need to make wholesale changes while the new model is being tested and developed.
Capturing recurring revenues over the life of the contracts and combining that with your company’s consulting and complementary offerings provide a rich opportunity to add value to the client engagement. As your move toward cloud, SaaS and managed services gathers steam, your cash flow will become easier to predict, and your numbers will no longer start at zero at the beginning of each month. Mimecast offers your company the perfect way to get the most out of your investment in Microsoft. Build additional revenues by extending the value that you already bring to the table. Go to www.mimecast.com to get started!
