Planning for Cloud Profitability From Day One: MSP VAR Companies and Cloud Computing

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Planning for Cloud Profitability from Day OneWebinar with ProfitBricks, Inc. | Q1 2016

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Introduction ProfitBricks in 2015

Mission Painless Cloud Computing Infrastructure service which enables existing IT teams, to deploy their applications and get all of the benefits of the at an IT budget friendly price.

Details HQs in Berlin, Germany, San Antonio, TX and Boston, MA 135 Employees

Investors Achim Weiss –CEOAndreas Gauger –CMOUnited Internet (UTDI: Market Cap: $8 Billion)

Technology KVM Based – Cloud Computing IaaS service, built on InfiniBand network interconnects with an efficient, performance optimized platform with minute based metering and billing, deployed on premium commodity hardware and housed in top-tier data centers.

Product IaaS – Compute, Networks, Storage with Data Center Design and Management Software

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Other Cloud Providers ProfitBricks:Painless Cloud Infrastructure

Painless Cloud Infrastructure

©The 2112 Strategy Group, LLC – Distribution Prohibited Without Express Permission.

STRATEGY.

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Cloud Computing’s Appeal

• F l e x i b i l i t y • A g i l i t y• S c a l a b i l i t y• U b i q u i t y• A d a p t a b i l i t y • U p d a t a b i l i t y • C o s t s


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Why Customers Want Cloud

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43% reduce IT capital expenses

40% reduce cost of IT operations

23% increase operational productivity

22% increase agility & competitiveness

21% improve performance

15% access new technologies


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• Software as a Service (SaaS)• Platform as a Service (PaaS)• Infrastructure as a Service (IaaS)• Business Process as a Service (BPaaS)• Managed Clouds

Enter the Clouds


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Cloud Computing Is a Growing Market Opportunity

SaaS$133B

PaaS$12B

IaaS$5B

BPaaS$10B

Source: Forrester Research

Total Cloud Sales: $160 Billion


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Technologies with High Growth Potential

Managed Print ServicesConverged Infrastructure

Software-defined networkingUnified communications and collaboration

Servers/data centerPCs/notebooks/netbooks

Data networking (routing, switching)Business software

Other (please specify)Data storageVirtualization

Application developmentMobile device management/BYOD

Internet of Things/machine-to-machine applicationsPrinting and imagingWireless networking

Mobile devices (smartphones, tablets, handhelds)Business analytics / Big Data

Voice services/bandwidth/connectivity/Internet accessBackup, continuity and disaster recovery

Data securityCloud infrastructure/services

0% 10% 20% 30% 40% 50% 60%


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Cloud as a Replacement

Servers Backup Storage

Software Security Communications


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Average solution provider earns as much as 1/2 to 2/3 of their gross revenue from managed services

Cloud as a Revenue Generator


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Cloud as a Systems Catalyst

Cloud Computing

Devices

Applications

Networks

Analytics

Storage/Backup

Output/Presentation

Transport Sec

urity

Adm

inis

tratio

n &

Ope

ratio

ns

Trai

ning

& S

uppo

rt

Man

aged

Ser

vice

s

Con

sulta

tion

& A

dvis

ory

Cap

Ex

OpEx

(CapEx) + ((OpEx)*(Time))

=Total Accretive Value


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CapEx vs. OpEx

Rev

enue

Time

CapEx

OpEx

Compounding Recurring Revenue


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Operating Deficit

Cloud Challenge

Rev

enue

/Cos

t

Time

1

Operating Costs

Recurring Revenue


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Cloud Challenge

Rev

enue

/Cos

t

Time/Accounts

12

34

56

78 Operating

Costs

Recurring Revenue

Cash Flow Positive

• Cash flow turns positive when recurring revenue is greater than operating expense

• Cloud service achieves ROI when revenue covers operating expenses and initial investment costs

• Profitability happens when recurring revenue generates more than investment and operating expenses


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Compounding Cloud Revenue

Rev

enue

& O

pera

ting

Exp

ense

s

Time

Revenue

Expenses

Profits

• Continuous addition of new accounts or account expansion that leads to increasing revenue

• Scaling resources faster than services consumption

• Maintaining a low account attrition rate

• Commitment to sales and marketing of services and value

• Focus on customer experience and outcome-based value


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Planning for Profitability

• Identify Customer You can operate globally, but the world is not your

customer Understand and profile customers to establish

sales scenarios and customer interactions Define who is not your customer and why


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• Select a Cloud Model

Advise

Refer

Resell

Build

Support

Manage

Operate

Value

Investment


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• Select a Recurring Revenue Model

On-demand Weekly Monthly Quarterly Annually

Revenue model will determine sales needs and operating

parameters for planning expenses and investments


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• Pick a Cloud, but Not Any Cloud Keep start-up costs down by leveraging existing

expertise and resources Build cloud practices based on existing technology

and customer experience Create value by incorporating existing resources

with cloud capabilities


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• Plan Transition – Don’t Do a Crash ChangeR

even

ue &

Ope

ratin

g E

xpen

ses

Time

Cloud

Legacy Products

Inflection Point

• Do not stop selling legacy products; use legacy revenue streams to pay for future investments

• Plan a steady, progressive transition from legacy revenue to cloud/services revenue

• Set milestones and goals for expanding cloud revenue and measuring performance

• Accept that this process takes time – up to 3 years


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• Make a Plan, Set Goals, Draw a Road Map Create a vision that translates to value Set goals – revenue and development

Know how you’re performing Decide when to expand capacity Maintain and exceed returns on investment

Draft a plan that sets the operational parameters, roles and responsibilities, and performance expectations

Establish what you want to be when you grow up


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• Commit to Sales, Not Just Technology You are first and foremost a sales organization Cloud services model is dependent on sales first,

technology second Create a sales culture with management,

governance, planning, expectations, and accountability

Demonstrate sales capabilities to vendors


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• Commit to Marketing Cloud capabilities are worthless if no one knows

who you are, what you’re doing, or what you’re capable of

Communicate value to vendors and customers alike Use all available resources Commit to sustained marketing and

communications; no “one and done” efforts


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Wash, Rinse, Repeat


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QUESTIONS


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Getting Started

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Check out the new ProfitBricks Cloud Computing: Channel Go-To-Market Guide, produced by The 2112 Group


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Larry [email protected]

@lmwalsh2112

@the2112group

Websitewww.the2112group.com

2112 Blogwww.the2112group.com/blog

Information contained in this publication has been obtained by sources and methodologies of The 2112 Strategy Group, LLC, and are considered to be reliable but not warrantied. This publication may contain the opinions of The 2112 Strategy Group, which are subject to change from time to time. This publication is copyrighted by The 2112 Strategy Group, LLC. Any violation of the limited terms of reproduction or redistribution of this publication, in whole or in part, whether in hard-copy format, electronically, or otherwise to persons not authorized to receive it, without the express consent of The 2112 Strategy Group, LLC, is in violation of U.S. copyright law and will be subject to an action for civil damages and, if applicable, criminal prosecution. Any questions should be directed to The 2112 Strategy Group at (347) 770-2112 or [email protected].