No matter which channel research groups you follow, there is a lot of corroborating evidence that IT is moving to the cloud at an impressive rate. In fact, a study conducted by MarketsandMarkets revealed that the cloud storage market, inclusive of backup and recovery, will reach $46.8 billion by 2018 at a CAGR of 40.2 percent. Within the channel, however, there’s still a lot of VARs that have yet to tap into the recurring revenue earning potential of selling cloud solutions and services.
In 2012, RMM (remote monitoring and management) vendor N-able conducted a survey of 1,800 channel companies that considered themselves MSPs. One of the interesting findings from the survey was that even among IT service providers—companies that already are set up to sell subscription based services—on average only 20 percent of their customers were buying subscription-based services from them.
Considering the massive adoption of cloud services among businesses, this can be a great source of recurring revenue for VARs and MSPs that are able to figure out how to bundle the right cloud services with their other IT offerings at a price that’s attractive to end users. But if it was that simple, cloud services would account for a larger percent of most channel IT company’s revenue.
There are dozens of cloud services VARs and MSPs can sell. If you’re having trouble figuring out where to start, consider the following two as starting points.
Backup and Disaster Recovery (BDR) as a Service: Most business owners understand they need life insurance, health insurance, car insurance and homeowners insurance to provide financial protection from accidents, disasters and tragedies. Yet, nearly 44 percent of small businesses with fewer than 100 employees have no business continuity or disaster recovery plan in place, according to Forrester Research.
Selling BDR as a service is the same insurance concept applied to your customers’ businesses and the data it depends on. Not only is it one of the easiest cloud-based services to cost-justify, but it should be the foundation upon which all other services are built. According to a three-year-old study from PricewaterhouseCoopers, 70 percent of small firms that experience a major data loss go out of business within a year. That’s a startling fact that should at minimum get the conversation started with your customer or prospect.
When small businesses try to figure out offsite backup on their own there are a number of pitfalls that can happen. Here are a few:
- Not encrypting their data properly
- Storing their data in a cloud data center that doesn’t meet the requirements for their industry
- Not considering how they would actually retrieve their data and get back to work following a disaster
All these reasons and more make BDR as a service the No. 1 cloud service VARs and MSPs should be selling their customers.
Security as a Service: Rather than citing the myriad studies that show that SMBs are the most targeted group among cybercriminals, let’s start with the premise that your customers understand the importance of security. Perhaps they’re already using antivirus software on their computers and they have a firewall, too. The question is: Why is it better for them and for you to move from the traditional licensing model to a cloud-based subscription service?
One reason is it makes security license renewals less of an event. If you’re selling traditional security software licenses, the burden is on you to keep track of when each customer is up for renewal, which could be every 12 months or 24 months. You then need to schedule a meeting with your customer weeks (or months) before the deadline to ensure their licenses don’t expire. It’s common for these meetings to be missed and for customers to miss their expiration dates, leaving them vulnerable for a period of time.
Also, in traditional software license scenarios, you run the risk of competing against your software vendor. Like you, many security vendors have difficulty managing which of their customers are buying their products direct vs. through their channel partners, and it can be confusing to your customers (and embarrassing to you) when you’re both trying to renew their software licenses. Moving security software licensing to a subscription-based cloud model eliminates these scenarios and replaces it with a small, ongoing monthly fee customers pay for security without interruptions.
Cloud-based backup and security are two foundational IT services your customers need and they both serve as good litmus tests for your customers’ attitudes about making the move to the cloud.
Once a customer realizes the convenience and effectiveness of the cloud business model, it will become easier for them and you to add incremental services over time as their business grows and evolves. In the cloud services model, you’re no longer asking for a huge outlay of capital, you’re simply identifying additional business needs and adding an incremental increase to an existing expense.
Start small. Play it smart and lead with two cloud services no SMB should be without: backup and security.
For more information on how VARs and MSPs are making use of cloud storage, see our new report on the state of cloud backup today.
Neal Bradbury is a co-founder and vice president of Channel Development at Intronis, a cloud-based backup and disaster recovery provider that works closely with VARs and MSPs.