Transformation. From Traditional to Cloud.

I’ve been in contact with many IT companies who offer various ICT services to their customers—selling them hardware equipment, reselling software, offering them support.

As IT is evolving so are they.

In the past few years they’ve added hosted voice into their portfolio, backup and other cloud services. Now they are considering or already offering Microsoft Office 365 as one of the fastest growing cloud service. And there is also AWS, Azure and a number of other Cloud vendors they need to consider adding into their portfolio. Not only to gain new clients but more or less to keep the existing ones.

When adding cloud services to their existing portfolio, IT companies usually fail to successfully imbed the new product/service and to get the numbers on the table. There are a few reasons why this happens. I’ll be taking into consideration Value Added Resellers (VARs) and System Integrators (SIs) and why they need to accept the changes the industry has brought to all of us.

I’ll be exposing various areas and sharing with you my experience and would love to hear your feedback.

1. Technical knowledge

Every VAR already has its established business with services and products it is offering and is faced with a steady income. It’s crucial for VARs to observe ICT trends and add new services/products that had traction among the competitors (locally, globally). In order to meet this demand VAR’s engineers need to gain knowledge, certificates and a working playground. Usually this is done in correlation with additional (cost) investment and management isn't always keen to invest. VARs need to focus—pick new technologies and invest in order to stay sharp! More @segmentation.

1. Sales (team, model)

The sales departments stick to existing sales models and work hard to close deals and meet their targets. Selling one-time projects (HW, SW and services) brings more revenue and adds the volume. With cloud – you’ll get a reoccurring revenue model where the sales volume is reflected on a yearly (or even longer) timeline. So is the bonus. And to motivate sales departments, the bonus needs to be defined differently. Working in sales in the cloud industry during the last 5 years has helped me to understand what this model needs to contain.

I would love to share my experience with you.

1. Marketing

A number of Cloud providers/vendors (CVs) are offering collateral which VARs need to use and white label it in order to position themselves as cloud services providers (CSPs). Smaller IT companies don’t have marketing departments and defined marketing strategies. They do business as is usually done—sales teams use social networks and send sales promotions to a limited number of existing customers (up-sale). All major cloud vendors have tools and collateral that can be white labelled. VARs need to set a marketing strategy for each cloud product they are launching and follow the marketing activities with sales ones. Do your case studies. Promote them. Existing user cases sell. Spend some bucks on a conference where your existing and future clients will be. Invite one or more of your distinguished customers and let them do the talking. Invest into a reliable case study.

That will do the trick. Believe me.

1. Packaging (merging the services portfolio)

The most common business model for VARs is sell, install and operate (monthly support). As you can see there are 3 types of income VARs are achieving and only the ‘operate part’ is a monthly revenue they are getting. I’ve been talking to a number of VARs who had only 50% of their customers paying on a monthly basis. More than half of their clients were just paying when they needed support. No reoccurring revenue. Income is guaranteed when you have clients that regularly update and invest into their ICT (20% of clients, or less?). Others only upgrade when they absolutely need to.

With managed cloud services VARs are able to merge the following:

• HW investment (servers and desktops moved to the cloud) CAPEX vs. OPEX
• SW investment (most of SW could be purchased on a pay-as-you-go model) CAPEX vs. OPEX
• Upgrades (SW and HW)
• Installation (migration cost can be added to monthly contract)
• Operation and support (100% of your clients will be paying you monthly support :), you add SLAs you already have
• CPE HW; laptops, thin clients, tablets, network equipment... (use a lease model and earn on a long term)
• Add voice, connectivity, etc…

Packaging or how to add cloud services to your existing portfolio is one of the crucial phases in the Cloud Transformation Model (next to Sales). Use best practices and bundle to gain long-term reoccurring revenue.

Digg, Explore, don't be afraid to ask.

1. Segmentation

Most VARs are supporting a number of verticals. Find a cloud service/product you are comfortable with. Pick a vertical. Do your homework. Package products/services based on the vertical’s requirements. Migrate 3 clients. Polish all the steps in the process. Then Launch. Big time! And let me know how it went.

I would really love your feedback.