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Two ways to ramp up your cloud computing revenue

In the cloud world, single-digit profit margins don't have to be the new norm, says Jason Bystrak. Here are two ideas for accelerating cloud computing revenue.

You don’t have to look too hard to find overwhelming evidence that cloud computing adoption is growing at a fast rate. IDC estimates the public cloud market, which reached nearly $46 billion in 2013, will continue growing at 23% CAGR through 2018. On the private cloud side, IDC estimates that worldwide spending on hosted private cloud services will surpass $24 billion by 2016. For some value-added resellers (VARs), these statistics generate little more than an eye roll. After all, how much excitement can selling hosted Exchange subscriptions for $6 per mailbox with razor-thin margins generate, compared with the $10,000 on-premises Exchange server sales of the not-so-distant past?

Although Capex investments will continue to dwindle, single-digit profit margins don’t have to be the new norm. However, you will have to find new ways to add value to your customers’ businesses to accelerate cloud computing revenue. Here are two ideas for new services that can help you boost the bottom line.

Cloud computing revenue boost No. 1: Mitigate frustrating cloud experiences with cloud migration

A study conducted by the IT Process Institute (ITPI) found that 76% of companies reported a low to medium level of success with their cloud projects -- nearly twice the failure rate of general IT projects. More likely than not, it wasn’t a security breach or power outage that led to this frustration. Cloud data centers use better security and have better power redundancy than most Fortune 500 companies. The real culprit was most likely the initial deployment.

Sure, multiple cloud servers can be up and configured in a matter of minutes. Unfortunately, the process of migrating on-premises apps and data to the cloud is another matter. Here are a few questions the cloud migration services pros ask their clients and cloud providers to ensure a smooth transition:

  • How much data needs to be moved to the cloud?
  • How will that data be moved: Via the Internet, shipping an external drive or some other way?
  • When should the data be transferred, and should it be done all at once or in phases? If the latter, in what order should the data be migrated?
  • How long should the two IT environments operate in parallel before going live with the cloud service?

Those consultative questions can spark a conversation that reveals the customer’s needs and the types of services a channel partner can provide. Instead of merely selling email subscriptions at $6 per mailbox, you can sell mailbox migration services at more than $100 per mailbox. And while the cloud subscription profits are recognized over time, the cloud migration project is generally paid upfront to accelerate cash flow and profitability -- great for overall cloud computing revenue.

Cloud computing revenue boost No. 2: Become the go-to solution for cloud service problems

The channel sales opportunity remains open, even after you’ve sold cloud migration services. Indeed, post-deployment problems can surface despite the best-planned migration. Potential problems include an application that won’t load properly, a VoIP app that randomly drops calls or an email spam filter that needs to be tweaked. The source of such problems can prove elusive: Is the problem with the customer's network, is it an issue with the Internet or is the cloud provider to blame?

End customers can waste a lot of time trying to identify the root cause of those issues, or they can turn to their IT solution provider for help. You can add real value and reduce cloud-related performance problems if you provide managed services such as help desk and remote monitoring. Such offerings keep tabs on each component in your customer’s IT chain. And, when a problem occurs, you can serve as the liaison between the ISP and cloud provider. Not only will managed services increase your incremental sales beyond the $6-per-mailbox income you once considered inevitable, they will help you optimize your client’s cloud experience and make the client a customer for life.

About the author:
Jason Bystrak serves as executive director for Ingram Micro Cloud for North America. In this role, he is responsible for the sales, marketing and partner support organizations, driving profitable growth and operational excellence for the business unit and its portfolio of cloud solutions. He leads a team of technology and business professionals focused on developing and executing go-to-market plans for channel partners by providing sales and marketing support, technical and operational resources, and supplementing service delivery capabilities to capture market opportunities and exceed end customer expectations. Bystrak has been with Ingram Micro since 1995. His Twitter handle is @jbystrak or you can view his LinkedIn profile.

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