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Managed Service Provider FinancingFunding the Cloud: now that you have built a managed service practice, you need to fund your growing asset acquisitions … there is a way!
Tom ValloneVP [email protected]@gmail.comwww.linkedin.com/in/thomasdvallonewww.twitter.com/thomasdvallone847-274-8154
Managed service providers bear the brunt of equipment
costs
Companies desire ubiquitous, on-demand technology
Managed service providers and the cloud are the answer
But, how do they afford the technology build out required?
The Managed Service Provider Dilemma
On premise hardware installations are being moved off premise.
Increased build out of co-location data centers are being populated by IT managed service providers.
Equipment acquisition costs are shifted to MSPs.
How do MSPs ‘foot the bill’ and deliver margin?
MSP Funding
The equipment requirements for end users remain relatively the same. The cost burden can be accounted for in the following ways:
Self Fund
Lease to End User
Managed Service Contract
Self Fund Self funding has limitations
In order to be successful, the MSP needs increasing volume of end user engagements.
However, hardware and software are costly - even to the MSP that buys at a discount - the volume is too great.
MSP will run out of money as their balance sheet is limited and can not handle the load.
Self Fund
Lease to End User
A lease contract is separate and distinct from a service contract - that is not the goal
End users desire off balance sheet treatment which they receive via a managed service contract - one of the reasons users want to do business with the MSP. A lease obviates that concept.
End users prefer to execute one service contract and not a separate lease contract. The MSP also prefers one, bundled contract.
Lease to End User
Appendix A bundled, managed service contract
Develop a service contract with an embedded ‘lease’ for the hardware.
Acknowledges there is a fixed cost element in the contract.
The end user must pay a certain percentage of the overall monthly payment stream to full term if they desire to terminate the contract early. There is protection for repayment of the hard costs.
Managed Service Contract
Questions?
Tom ValloneClient advocate l Relationship [email protected]@gmail.comwww.linkedin.com/in/thomasdvallonewww.twitter.com/thomasdvallone847-274-8154
