PHOENIX -- On the opening day of the Ingram Micro Cloud Summit 2013 here yesterday, there was no shortage of Ingram Micro channel partners hungry to learn how to evolve their business models to include a profitable cloud services strategy.
While Todd Hussey and Dave Zwicker, partners and co-founders of MSPexcellence, discussed cloud pricing and packaging strategies in one room, Jason Bystrak, Ingram Micro's sales director of cloud services, offered a lively presentation in another room on building a cloud sales culture.
We're definitely at a crossroads in this business, as are our SMB customers.
owner, Swinford Solutions Inc.
The attendees who filled the rooms at business-building sessions ranged from VARs in the early stage of information-gathering about cloud services to more mature MSPs offering cloud services from their own data centers. In a short 45 minutes, there were more questions than clock time.
According to Hussey, partners today have three key goals when it comes to cloud services: provide value, not just point solutions, to customers, attain long-term stickiness with customers and gain a strong revenue stream.
The road to these goals, Hussey said, is based on how cloud service providers price and package their cloud services. To the dismay of many in attendance at the session, he said there's no one-size-fits-all cloud pricing and packaging scheme. That's because, he added, the formula is based on the individual service provider's business costs and growth and revenue objectives, among other factors.
Pricing and packaging plans for cloud service providers should:
- Differentiate their business rather than compete on price,
- Create sticky contracts by bundling higher-value services,
- Showcase customer value,
- Include a blend of nonrecurring revenue with monthly recurring revenue,
- Make it easy for the customer to understand and for the partner to deliver,
- Establish consistency,
- Be flexible (depending on the customer profile) but definitive, and
- Support cost acquisition goals (do not exceed more than 12 months of margin dollars).
The industry veterans demonstrated how their methodology and business modeling tools -- which they have dubbed the "Cloud Solution Provider Business Transformation Platform and Program" -- can help partners with business assessment and gaps analysis; create go-to-market plans; select the appropriate cloud services; price and package for profitability; and create a blueprint and a roadmap with projections of what the business model will look like in one, two or three years.
Tim Pfeiffer, senior vice president of STL -- a technology services company offering managed IT, data center services, and commercial staffing and professional services at its offices in Illinois and Wisconsin -- thinks what's missing in the MSP conversation is the idea of taking a SKU approach to cloud services and turning it into a commodity market, rather than acting as solution providers. STL built out a data center three and a half years ago.
"In this business we're always on edge sitting between innovation and execution. The challenge is keeping the brand fresh," Pfeiffer said, adding that he's interested in hearing what issues other companies in attendance at the conference are struggling with.
Chris Swinford, owner of Elmhurst, Ill.-based Swinford Solutions Inc., a 13-year-old systems integration company formerly known as Interzone Technologies Inc., sees the writing on the wall for channel partners and is ready to embrace cloud services.
"We're definitely at a crossroads in this business, as are our SMB customers," said Swinford, who is attending the Ingram Micro Cloud Summit 2013 to gather as much information as he can about evolving his business.
At Bystrak's session on building a cloud sales culture, Swinford and other attendees heard about best practices for hiring the right sales team, developing a sales culture that motivates the team and establishing an appropriate compensation model -- knowledge Bystrak acquired from building cloud sales and development organizations at Ingram Micro.
The good news for channel partners was that they learned they don't have to get rid of their sales organizations and start from scratch. Rather, they need to recognize the sales skills required of cloud salespeople and either hire them or cultivate them from their existing employees.
Those skills include acumen in four key areas: sales, finance, business and technology.
Bystrak laid out several models for how cloud service providers not only align their sales teams but also compensate them based on what will drive the salesperson and what the company can afford as its business models evolve.