Small Technology Providers (STPs)
Continuation from last weeks article. See the article here
Here’s the opportunity for little / middle guy. It’s funny, I’m a big networker and I can’t tell you how many conversations I’ve had with IT folk across all these specialty functions and everyone says the same thing: They all felt like they were in danger of getting left behind. But realized, if they embrace the cloud, not only will they survive – they will thrive. Particularly because, it all comes down to relationships, and no segment of the IT industry has relationships like the consultative small technology provider.
Clearly they get it and here’s why:
We’re going’na have class. We’re going’na be a contender. We going’na be somebody!
Unlike Terry Molloy, nobody can hold back these technology providers. They can be generalized and/or specialized. The provider can be any size. They can focus on one or many business functions. They can operate locally, nationally, or internationally. Either way, they can bring multiple technology opportunities to a business, while at the same time, implementing and managing them.
The key tenant that cloud solutions make available to these providers is the idea of adding opportunities and removing old remedies when it makes sense for their clients. Knowing the industry, the client, or just having the focus, STPs will know when to test and implement a new cloud offering, when to stick with a cloud solution and when to get out of an inadequate offering – it won’t be based on gut feelings or isolated good/bad experiences.
Show me the margin!
So unlike MSPs, small technology providers typically have low capital expenditures with small to intermediate operational costs – depending on the business model. As a result, moderate or even small margin levels are profitable. Further, cloud services are typically providing MRR rather than the one-time sale.
Also, when it comes to cloud services, STPs can easily experiment with their revenue streams. There is no standard. It can depend on any factor – the cloud provider, the industry, market, client, etc. You can choose a referral, integrator, white-label model, or some combination. It’s what economics work for the business while helping STPs retain their presence at the customer – this is what’s most valued. How may MSPs can do that?
Here’s another important consideration, how many MSPs can take a flyer at selling emerging cloud services categories or companies? None — they like to sell established products and companies that already have brand presence at the customer. However, STPs can be very experimental, can be very flexible with business development, and are good at advocating for something new at the customer. STPs can make a zero investment in researching a differentiating solution that could return big margins particularly if it’s a screaming hot category; the provider is looking to gain market share; and / or the customer is independently asking the STP if they have any related solutions.
Carpe diem. Seize the day, boys. Make your businesses extraordinary.
John Keating was a romantic and pushed his students beyond conformity. So to, by considering more than the “canned” IT solutions and utilizing cloud technologies, STPs will find that creativity with consumer and business solutions can help drive business. Notice I said consumer cloud solutions – originally developed to capitalize on mobile technology, these solutions, when even somewhat successful, are morphing into serious business technologies.
If you subscribe to any mainstream email newsletters, you have to be noticing that business technologies and consumer technologies share a rapidly growing common ground, with the former benefiting from the latter. And increasingly, STPs should be utilizing the benefits of consumer cloud technologies as eloquent business solutions.
Again, here’s an opportunity for STPs to utilize cloud services to assist their clients and partners to build an innovative solution that leap frogs the business in terms of competitiveness, along with the opportunity to significantly cut information technology costs.
Cloud, Cloud, Cloud! Oh, everyone’s doing cloud? Then strategy, strategy, strategy!
And like Al Czervik – differentiate yourself from your partners and your competition.
In response to customer demand, don’t be like your competition and simply add “Cloud Services” to your line card. STPs truly need to commit to making the most of the new cloud era while carefully choosing the most appropriate revenue approach.These STPs can now use the cloud provider’s infrastructure as their own to deliver customized and tightly integrated managed services to their customers. And, instead of consulting on servers and storage devices, they can talk about business processes and the integration of these processes with cloud services. Instead of hardware, they can sell SLA’s. Rather than one-time sales, they lock in long-term recurring revenue streams.
If you build it, Small Technology Providers will come.
So a MSPs argument will be, “we manage infrastructure, small guys don’t have the ability to build and maintain like us.” This doesn’t fall on deaf ears. Many STPs know that they need to go beyond simply selling but ensure their services are used efficiently. They haven’t overlooked the importance of migration, ongoing monitoring, and customer support.
Interestingly, it’s just not STPs that have noticed this. There’re are many new PaaS startups beginning to address this space. They are building platform services that allow STPs to assess client business services, to dynamically compare and design multiple cloud services, add professional services and billing, orchestrate provisioning, actively manage usage, spot bottlenecks and recommend potential improvements. This is occurring via proprietary and open source platforms.
For STPs, this assists with one of the biggest tasks when assessing and implementing cloud solutions – the need to understand why and how the customers are using the platform, providing advisory services, as well as also having the tools in place to do so.
Uh, oh, MSPs.
So what’s in store for MSPs and STPs, who knows? I just finished a book that was a fictional account of the future of the United States. We all have seen those movies, from the 70’s, 80’s, and 90’s about the future. It’s interesting, for as much as they predict our technology will change, it’s interesting how little has.
However, if the business model for MSPs still remains fixated on overhead, margin and building “homegrown” private cloud solutions, and if just one consultant can do managed services, so spells MSPs death spiral.
Customers are looking for a consultative approach to help them understand the why’s and how’s of cloud services and how it will support their business. This puts STPs in a unique position to understand their customer’s business apps and business drivers; they’ll need to get to know the Presidents, Principles, Owners, CEOs, CIOs, CTOs, and VPs of finance, because what were once IT decisions are now business ones.
So, from the STP and cloud provider point of view, the gold rush is on. The question is no longer whether customers will adopt more cloud services. It’s when. From tactical functions, like customer relationships and marketing, to IT services like monitoring infrastructure, to collaboration tools like virtual meetups, to fielding applications that are core to the company business, there’s something for everyone. As cloud services are taking center stage, managed services providers and small technology providers will be wise to transform themselves into trusted business advisers. Because going forward, the conversation doesn’t start with “How many seats do you have?” or “Which features do you need?” It starts with “What’s your plan for growth?”
By Tony Pagano