5 Ways Technology Providers and Consultants can Optimize Revenue with the Cloud: Part 4
Why You Can Not Afford to Ignore Cloud Technology
Every business needs to innovate in order to not only survive, but also to thrive. Maintaining the status quo every year will never guarantee success, and it will certainly never ensure long-term viability. But differentiating your business and providing a unique value proposition will.
As a technology expert, you know all about providing unique value. You know that clients purchase products and services from you because of your promise to deliver a better value than your competitors. But how much value is your current portfolio delivering? Are your services still unique? More importantly, will they still be five or ten years from now?
For most technology providers—such as VARs, MSPs, Systems Integrator and others—those answers are: ‘Not as much as before,’ ‘Our uniqueness is dwindling,’ and ‘in five years, our offerings will be outdated.’ If this sounds familiar, fear not. It’s not too late to add a service to your portfolio that will differentiate your business, empower you to offer unique value, and position you for financial success into the future. What is this secret weapon? In a word, “Cloud.”
Here are five ways technology providers and consultants can optimize revenue with the cloud, Part 4.
4) Maximize Your Financial Gains
The advantage to the cloud business model is that subscription revenue you earn from customers’ monthly service fees is higher in the long-term than revenue you earn from owned infrastructure. When you sell equipment, you get a one-time payment. But when you sell cloud, you get steady monthly revenue. So not only is it easier to sell a cloud service since it’s an operational cost versus a large capital expense, but it’s also easier for you to earn revenue into the future.
REAL –WORLD EXAMPLE: “Moving From One-Time Payments to Monthly Recurring Revenue”
A typical VAR or Systems Integrator purchases servers from a large distributor and sells them for a minor profit. Since servers are highly commoditized, profit margins are limited. The only way to grow revenue with the resale model is to sell more volume. With a cloud service, such as a virtual cloud environment, you deliver the same benefit to clients but you monetize that profit throughout the contract term, which means you earn more revenue over the life of contract than on the pure resale model.
An additional advantage to selling cloud services is leveling out the peaks and valleys in your revenue cycle. For MSPs, VARs and Systems Integrators, the peaks in revenue come from one-time services performed. During the down time in between projects and sales you have valleys—times when you are losing revenue. The reoccurring monthly revenue that you can earn by selling cloud technology adds consistency to your bottom line.
Another way to maximize your earning potential is to offer consultation and migration services for your clients who want to switch to the cloud. Move-as-a -Service (MaaS) answers your clients’ question, ‘How do I get from on-premises to cloud?’ This is a huge value-add to SMBs that are looking to get started with cloud technology but are not sure where to start. Many cloud providers will charge partners extra for this service, but Broadview Networks offers this for free. Any amount that you charge customers for MaaS is pure profit.
The opportunities for MSPs that manage customers’ premises-based IT environments are vanishing as more and more businesses move to the cloud. To survive in the marketplace, MSPs have two options:
1) Differentiate on services and value, or 2) scale their business. A vPDC like Broadview Networks’ OfficeSuite® PrivateCloud lets them do both. It enables them to make more money because they can provide a fully-managed infrastructure in the cloud, which protects their current business space. And since they’re managing everything, it is harder for them to be displaced by a competitor.
Not only can cloud technology help you optimize and maximize your bottom line, it can also help your customers do the same. The cloud enables you to meet or exceed greener, more sustainable initiatives for your customer by reducing their heating and cooling expenses. In general, the cloud delivers longer term revenue because it’s the technology of the future. The transition your clients will make from traditional, on-premises solutions to cloud-based services is inevitable. Now is the time to offer cloud technology and help your customers migrate to a better, more efficient way of operating.
Stay tuned for Part 5 of the article series: Start by Moving the Infrastructure to the Cloud