More and more SMBs are asking their MSP vendors to provide them cloud solutions to replace CAPEX and the associated hardware (Servers, Storage, Networks) to run applications and critical services such as inventory, ERP, custom apps, and more. MSPs, therefore, are faced with embracing cloud solutions and finding workable ways to integrate these offerings into their business model, often recommending solutions such as a hybrid approach or educating clients on the most functional solution given their specific regulatory requirements and other considerations, such as cost and recent upgrades.
To gain insights into the shifting perception among customers and what questions and perceptions related to cloud computing customers are conveying to MSPs, we asked a panel of MSP pros and consultants to answer the following question:
“What are MSPs hearing from their customers about Cloud Computing?”
Find out what our experts had to say below.
Meet Our Panel of MSP Professionals and Consultants:
Randal Wark is a public speaker and founder of IT Revolution, a firm that helps IT Firms hack their business to increase profits. Having survived in the IT world for 20 years, Randal’s instincts have given him the tools to help others adapt and evolve with the changing market.
“In terms of what customers are saying about cloud computing, we find that…”
I provide business coaching to VARs and MSPs and we sometimes go on client meetings together with the MSP. We are seeing clients say that they need to be on the cloud, but when we inquire further and ask why, they don’t know. They just heard it was the thing to do.
We are finding that customers are attuned to the OPEX model and want to move in that direction, but they don’t understand the significance of their decision. As trusted advisors, it’s up to us to analyze their specific needs and give them an unbiased solution. We are seeing more of a hybrid approach these days, which is good news for MSPs. There is still revenue to be made in sales of hardware and services along with the subscription model. Some applications are staying in house and some are being migrated to the cloud, all based on the specific needs of the client. This opens the door for an MSP to do a business case assessment, which is a new source of revenue. This balanced approach also allows companies to mitigate risks.
As an expert in security and network infrastructure on every platform, Nick has consulted with clients ranging from those with a few computers to the Fortune 100 level. He has designed, built, and implemented multinational networks, encryption systems, and multi-tiered infrastructures as well as small business environments. He is passionate about emerging technology and enjoys keeping current by creating, breaking, and fixing test environments. Currently, Nick is the CIO at BSSi2.
“It really depends on the offering, but we’re seeing explosive growth…”
At the moment, most in the SMB market are looking for a hybrid solution. Often times it’s too expensive for these clients to either go all-in to the cloud or host their specialized database in a cloud-based virtual private server. Where we are seeing the largest growth is in file sharing and collaboration because the cost of space has lowered to the point where it’s less expensive over time to host file sharing in the cloud than it is to purchase more servers to host a less robust solution on premise. Since enterprise-grade cloud file sharing includes IPSec level encryption, revision history that is SEC compliant, and file locking similar to on premise servers, this move is happening constantly as clients are decommissioning old Windows 2003 and now 2008 R2 servers. They’re also enjoying the increased remote access though mobile apps and the ability to sync data to remote computers.
Second, backups to the cloud are exploding in popularity even though they tend to cost more than local backups with manual offsite (take the tape/USB drive home) ability. This is in part due to the “set it and forget it” nature of the cloud. Many clients find it appealing to simply get an email each day letting them know they’re protected with multiple daily incremental backups that are replicated into the cloud.
The third fastest-growing market in the cloud, in our experience, is the Software as a Service (SaaS) offerings that many companies offer, though it’s limited to a few specific fields. We are seeing excellent growth in cloud-based Spam Filters, cloud based Virus Scanners (the locally installed virus scanner goes to the cloud for its definitions), and cloud based CRMs, which is actually growing to the point where it may become a much larger player in the SMB market.
The toughest growth sectors for Cloud Computing are both the Virtual Desktop market and the custom database market (ERP as an example). Often times the cloud hosting offering is prohibitively expensive, and in the case of highly customized databases, overwhelmingly so. For example, we have several manufacturing clients and, almost without fail, they’re running years-old databases native to the Windows 2003 era, now running on Windows 2008 R2. This is simply because these clients have already paid huge amounts of money years ago and are trying to avoid paying large amounts monthly for what they consider only “interface enhancements” from what they’re running now. Basically, why pay for a new version when the old version is still running for basically no cost and everyone already knows it? The hurdle these software companies face is convincing these customers that the new benefits outweigh the costs, and consistently we see our clients saying they simply don’t. These are the same clients with many other cloud offerings mentioned above as well, but they refuse to pay thousands of dollars a month for what currently costs them almost nothing in electricity bills.
Guy Baroan is the President and founder of Baroan Technologies, a managed service provider located in northern NJ. Baroan Technologies is a member of the exclusive Microsoft SMB Cloud Champions Club. Guy uses a combination of over twenty years of IT and business experience as the Senior Solutions Engineer.
“Our clients are saying the following about cloud computing…”
1. Clients in general are more aware of cloud computing. They may not know all about it, but they are at least asking to get a comparison of a cloud solution to a non-cloud solution. Not all cloud solutions are a good fit, but there are many solutions that make a lot more sense than having the solutions in-house. The type of solution a client would require is entirely dependent on their timing of their technology life cycle. For instance, a client may not necessarily want to spend money on a cloud solution to move all their servers offsite if they recently reinvested in upgrading all the software and hardware in house. Where it makes the most sense for a client to consider the cloud as a total solution is when they have to consider upgrading their current infrastructure of software.
2. Clients are more likely to ask about a cloud offering if they have recently been through a disaster, experienced downtime, or maybe even frequent power outages that are out of their control. The cloud is a more feasible solution than purchasing a generator or moving.
3. Whenever we present a hybrid cloud setup to clients, it is received very positively. It’s a good way to ease into the cloud and this is very popular right now. Clients may not want to migrate their entire infrastructure all at once, or they may want to test the cloud experience first, so hybrid is a good option for this.
Tom White is the Director of Online Marketing at CloudRoute, where he is responsible for driving inbound marketing leads and revenue. Prior to CloudRoute, Tom spent over 10 years developing profitable, data-driven, and conversion-focused marketing strategies that increased return on investment (ROI).
“CloudRoute is a born in the cloud Microsoft Cloud Solution Provider. In today’s ever-changing market, a managed cloud service provider needs to be agile and adjust to market needs. Overall themes we are hearing from our customers include…”
- How can I quickly transition my existing technology? I have a mix of on premise and cloud software.
- I need more education and training.
- Security is a major concern in the cloud. What can I do to protect my data?
Michael Edelberg is the Co-founder & Chief Digital Officer of Viable Operations / Bespoke Digital Solutions. Michael is a digital disrupter, influencer, and innovator. He has decades of business experience from commercial real estate development to program direction in the non-profit sector. He has successfully guided multi-million dollar projects while staying focused on individual client issues. Michael’s ability to adapt current trends and to anticipate future needs of different businesses make him a valuable asset to the Viable Operations team. He is married, has a son and resides in Chicago’s North Shore. Michael has a Bachelor’s Degree with honors from Roosevelt University.
“We get asked about this often, and our response isn’t always the same…”
For example, a 100 year old real estate company hired us to tackle their IT. This one was an easy choice to go full cloud. There wasn’t a lot of proprietary or sensitive data and the agents needed mobile access. The Capex savings and productivity gains were immediate. On the other hand, we’re building a network for a financial client that needs to be local and locked down. The security demands are stringent and we react appropriately.
An author, entrepreneur, IT expert, and public speaker, Raj Goel is globally known as the go-to man in cyber security and privacy law. He is committed to educating individuals and organizations about online safety and how to protect their most important assets: people and data. His expert advice helps individuals, companies, and conglomerates navigate their way through the world’s ever-changing technology and increasingly complex IT compliance laws. He often appears in the media and at conferences world-wide to educate the public on cyber-security and digital privacy, a subject he is passionate about. Raj is fueled by his passion for his job, his love of helping people, and a LOT of sci-fi. This is a man to be trusted to help you and your company go forward. Raj serves as CTO of the MSP, Brainlink International.
“We’re hearing three different messages, each from a different style of client…”
From compliance or security-conscious clients: Keep me away from the cloud. These clients shun Dropbox, Office365, etc. They prefer to keep most services in-house, with the exception of SPAM filtering. These clients demand exceptionally high performance that cannot be delivered over the cloud, and while the CEO may not use the word latency, his or her threshold for frustration is measured in milliseconds.
From Cloud-aware clients: They are more comfortable moving spam filtering, email archiving, and hosted email into the cloud. Files and LOBs (lines of business applications) stay in-house. These clients tend to be construction, architecture, or related industries that have traditional LOB vendors that have not fully adopted the cloud yet.
From Cloud-eager clients: These clients don’t want the CapEx of OpEx of owning hardware, and they are moving more and more services to hosted data centers, private clouds, etc. These clients are new-breed financials, and all their key vendors are cloud-enabled.
Simply put, clients are FOLLOWING their LOB vendors to the cloud.
Eddie Tsiao is the Vice President of Engineering at Zetta.net.
“Zetta.net works extensively with MSPs to deliver its backup and recovery solutions. What Zetta is hearing is that…”
Customers, as you noted, are looking to reduce hardware costs. In the case of disaster recovery, many solutions require the installation of a physical appliance, which sits between the server and the cloud connection. This adds cost and complexity and can cause bottlenecks in the recovery process because you’ll need to replace the appliance before your server can be restored. This can cost you valuable time in managing extra, unnecessary hardware. MSPs are now providing appliance-free disaster recovery solutions which enable SMBs to get back online quickly in the event of a disaster of any sort. Without having to wait for hardware replacement, an appliance-free solution means less disruption of workflow.
Oli Thordarson is the CEO of Alvaka Networks.
“Most MSPs hear from their clients…”
What the MSPs tell the client. The trusted advisor, the MSP is the most influential resource when it comes to IT. Once the precept is established, it is my observation that MSPs are all over the map with cloud recommendations, although they can be segregated into two general camps:
1. Smaller MSPs selling to SMBs are strongly selling O365 and other cloud services.
2. The mid-size to large MSPs selling to the small and mid-size enterprise are staying with conventional client-owned infrastructure, although the popular term for doing that today is private cloud. Most mid-size company IT staff and management don’t seem as gung ho for public cloud, a.k.a. O365, Amazon, Rackspace, and similar offerings as their small business counterparts.
Fahd Khan is a cloud Business Development manager at zsah – Managed Technology Services. zsah is a leading Managed Service Provider based in South Kensington, London. zsah delivers cost-effective, high quality managed services to a range of UK businesses operating across multiple sectors.
“As an MSP that has our own cloud offering, we get good insight into what the SMBs we interact with inquire about…”
Aside from more common requirements such as moving over their CAPEX and paying for more of an OPEX focused service, we are noticing a real increase in SMBs that may have never had anything to do with Cloud wanting to invest in it, not just for their own infrastructure but going further and looking into providing their own SaaS offering. That is a trend with a lot of companies that have a product that can easily become a SaaS offering. If a company has a product that can be offered as SaaS, then this is something we would always propose they take a serious look into.
Now something that is a dawning realization for more and more customers is the peace of mind that they now have thanks to the high levels of security that their systems are protected by after adopting the cloud, aside from most MSPs using high quality protection and security measures. I think this is more of a common misconception about security in the cloud and also leads to being one of the main reasons many companies are late at adopting cloud services, or in some cases not making the move at all.
A lot of MSPs are often asked why the customer should not go with AWS or any of the other major Cloud Service Providers, and what we find really separates us and other smaller MSPs from the big names is that the bigger names either provide no support or very little. The ones that do provide management within their service are nowhere near as personal or customer focused. Smaller MSPs form more of a working relationship with their customers as opposed to just providing a service.
Lastly, the most common question I’ve experienced from customers or potential customers is that are we a U.S.-based company or part of a U.S. conglomerate of companies. The reason for this is that a lot of customers are worried about the U.S. data laws and the Patriot Act, which allows the U.S. government to access any data held in the U.S. or even held by a U.S. company that could have offices based in the U.K. All U.S.-based companies are subsequently affected by U.S. data laws, which often (but not necessarily always) can be unappealing for companies based outside of the United States.
Adam Stern, founder and CEO of Infinitely Virtual, is an entrepreneur who saw the value of virtualization and cloud computing some six years ago. Stern’s company helps businesses move from obsolete hardware investments to an IaaS [Infrastructure as a Service] cloud platform, providing them the flexibility and scalability to transition select data operations from in-house to the cloud.
“About cloud computing, MSPs are hearing from their customers…”
MSPs represent the evolution of the IT professional services company. Where these companies previously focused on consulting and fixing things that had broken, they evolved to acquiring the software that watches and manages computer systems. Today, most MSPs manage physical equipment at the customer site.
We count a number of MSPs among our resellers. What we’ve been seeing of late is MSPs moving to an IaaS (Infrastructure-as-a-Service) environment lock, stock, and barrel. It’s an efficient way to get into the cloud. They’re making the move without having to change a thing, and the process is completely transparent to their clients. Physical machines become virtual in the cloud, and the MSP then manages those virtual machines. It’s also a way to ensure a continuous revenue stream, even as the dynamics of the marketplace change.
In our experience, the MSP business is evolving, and using the cloud as a tool is part of that evolution.
Eric Schlissel has built his career around two passions: entrepreneurship and enabling business with technology. He is fiercely dedicated to delivering exceptional customer service and cultivating a rewarding employee experience. At GeekTek IT Services, Schlissel blends his deep technical roots and operations savvy to lead the company and serve as CIO for its clients. In this role, he guides small and mid-size businesses on the strategic use of technology to meet their long term business objectives.
“In terms of what customers are saying about cloud computing…”
We have many clients that are caught in upgrade cycles because they are dependent on legacy software, but the numbers are shrinking. There are very few companies who are still hosting their own Exchange, and those that do
are either heavily invested in their infrastructure or have applications that depend on deep Exchange integration. Backup and disaster recovery almost always have a cloud component, and many of our clients are shifting to cloud-based file systems.
Some of our more progressive clients are using cloud-based authentication and endpoint management systems, and some have completely moved away from Active Directory as the single source of truth. We have several clients using SSO to tie together their AD with cloud applications, which is something that appeals to clients in the startup and software worlds. Many of our clients with more traditional backgrounds are not seeing the value in the utility of the cloud yet, but just as the first waves of cloud-based applications have seeped into businesses, we will see these clients converting over as operating systems across all devices have cloud functionality baked into their core. The truth is that the cloud doesn’t yet make sense for all applications, and our role is to assist our clients in making the right decisions for their companies at the right time.
As lead solution consultant at itas, an award winning Sage partner, Hannah has a real passion for data and process design. With an academic background in Mathematics and Operations Management, she has spent the last 5 years applying that knowledge to the project management, design, and implementation of ERP and BI systems across a range of sectors and with organizations of varying sizes. She gets a real buzz out of seeing her clients grow and flourish as a result of her efforts.
“At itas we have worked with ERP systems for years, and over the last year we have seen a massive growth in…”
People actually asking for cloud accounting solutions. It has often been a driver for the sale. Interestingly enough, they are not only after multi-tenant, single software-style solutions, but they are also asking for bespoke cloud solutions whereby the entire desktop and multiple different applications are hosted on the cloud. The reduced upfront costs in addition to the business continuity and scalability benefits are a massive driver for those at the higher end of the SMB market. While this is purely my own experience,it is backed up by the 2014 stats that state that 26% of SMB businesses are heavily using cloud infrastructure.
Marne is an experienced international executive leading transformation and growth for companies in the technology and telecommunication industries. She serves as CEO for ServicePower which helps field service organizations with innovative, effective mobile workforce management solutions.
“One area we see SMBs are particularly keen to move into the cloud is with…”
Applications that can be run on mobile devices. With smart phones, employees are so much more empowered than at any time before; they can access any information at any time, no matter where they are. Historically companies would upload software to devices, but that’s no longer acceptable or required. For a start, most individuals have their own smartphones. Using cloud on mobile devices makes Bring Your Own Device (BYOD) so much easier for employees and the company as it does not matter what device you access applications on.
In their private lives, individuals expect to view information they require on their smartphones via the cloud. It should be the same in the workplace. Additionally, cloud allows employees to ‘take the enterprise everywhere’. They can find information on the company’s systems remotely but also feedback valuable information, for example, by filling out time sheets or even recorded media.
HTML 5 means that working via the cloud on mobile is so much more effective and can be functionally rich. Now it is even possible to customize form data input fields and field groupings in a cloud-based browser environment to
suit any businesses’ or employees’ requirements. That’s light years away from what any SMB could have expected just half a decade ago.
“As I consider this question, I think we should consider what customers that are considering the cloud but have not made the move as a company are concerned or asking about. There are several factors that cause a pause or decision nexus about cloud computing…”
- Control – Most IT buyers are used to providing a high level, valuable, mission-critical service to their end users. As this moves away, the IT Buyer becomes an IT Vendor manager. This causes pause for many buyers.
- Security – IT buyers are rightfully worried and scared about security. They are asking their vendors to provide the protection that they will achieve by moving to their platform but also want to know what actions and protections will be in place in the case of a breach, which most buyers believe to be an inevitable occurrence.
- Integration and customization – Most IT buyers believe that premise-based applications provide for a greater degree of customization and control. IT buyers are asking their cloud solution providers to not only overcome this but explain that it is actually the opposite: that having a robust ecosystem provides for better and enhanced expansion and customization for ever-increasing values for the dollars being spent.
- MSPs and Cloud solution providers all preach the value of recurring revenue. IT buyers are worried about spending ever-increasing amounts to achieve the same result. These buyers are asking their MSPs to show that by moving to a recurring charge model that the scalability, ease of deployment, and technology usage enhancement is worth the initial incremental cost.
- IT Buyers are asking their providers to explain why the features of many of the applications are inferior to their on-premise systems. They are expecting not only an answer to this problem, but a road map of how the enhanced usage of the specific applications will drive to a more robust, applicable, business-focused usage of technology.
For example, more and more SMBs are asking their MSP vendors to provide them with cloud solutions to replace CAPEX and the associated hardware (Servers, Storage, Networks) to run applications and critical services like inventory, ERP, custom apps, and more.
Chris’ experience in the field of information technology spans more than twenty years. He spent much of that time in the field, taking part in and leading services engagements as IT manager/director, engineer, project manager, account manager, etc. Since 2007, when Xceptional Networks, Inc. was founded, Chris has been working tirelessly to ensure XN is a fun and rewarding workplace that provides the highest levels of customer service.
“MSPs today are faced with a dilemma…”
Embrace cloud services and the associated annuity income streams or face a diminishing project-by-project business. The good part about that dilemma is, if navigated properly, an MSP can pivot their project business built on capital purchases, like the services such as help desk, network support, and other recurring services, to an infrastructure as a service business model.
MSPs are uniquely qualified to introduce new models that are disruptive to the traditional capital purchases and project-based business because they already have that model in their traditional MSP services offerings.
From the client perspective, especially in the SMB space, they are clamoring for a new model that has predictable cost and cash requirements. It’s often difficult for these clients to finance the necessary capital purchase every 3-5 years, whereas a model that allows them a fixed monthly cost for infrastructure, applications, and management is very appealing.
What we tell our clients about Cloud services is that they offer a great option to accomplish financial goals but it comes with a few warnings.
First, make sure your network is sound. Make sure you have multiple routes to the Internet. Make sure you optimize traffic, and so on. Without a network that works well, there’s no connection to the cloud.
Second, make sure you architect out as much complexity as possible for the user. Have a launch pad. Have a single sign-on infrastructure. Make sure your data flows between systems, such as CRM and accounting, as required. Don’t make a morass of spaghetti code that will turn off and frustrate users.
Third, look to lower cost, eliminate duplication and redundant work loads. Optimize and create efficiencies. Do not fear change. Embrace it.
The traditional models will continue to be broken down. Clients are more and more comfortable housing their IT outside their walls. This will hasten the migration to cloud based models and ultimately will be good for all.