Managed services providers are guilty of selling cloud “ingredients” and need to start selling cloud as part of a larger “chocolate cake” to SMB customers. That’s the key message from TruMethods CEO Gary Pica and CTO Bob Penland, addressing roughly 150 MSPs during the Schnizzfest conference this morning in Philadelphia, Pa.
What exactly do Pica and Penland mean? During the presentation, Pica and Penland offered attendees a lengthy list of cake ingredients — eggs, flour, room temperature butter, etc. — for $16.95. There were no buyers in the room. Then, Pica and Penland displayed a rich, enticing chocolate cake for $16.95. The cake sales theme is similar to a cupcake theme used by Master IT, an MSP in Memphis, Tenn.
The key takeaway:
- MSPs spend far too much time selling individual piece parts such as patch management, online backup, hosted Exchange, remote monitoring and virtualized servers.
- Instead, MSPs should focus on the right support offering — a branded support service that includes all the ingredients (without emphasizing the ingredients) but actually sells customers peace of mind and business productivity.
Much like backup and patch management, cloud-related services will be widely offered by all MSPs, Pica predicted. So it’s critical for MSPs to get their “cake” strategy developed. Moreover, SMB customers will continue to spend $2,000 to $5,000 per month for at least the next three to five years for MSP support offerings (such as support, centralized & cloud services, technology consulting and network administration). MSPs that already offer cloud services typically offer all-in bundled solutions rather than a la carte, according to attendees.
The big cloud challenges for MSPs, Pica asserted, involve: Capital expenses, cost of complexity, hidden cost of risk, cost to manage relationships, client costs and opportunity costs.
A prime example: Some MSPs offer very low cost online backup as part of bundled services but generate huge margins because the cloud backup approach frees up the MSPs’ IT resources, which had previously managed on-premise backups — an expensive, tedious process.
So, which cloud services should MSPs offer? Pica suggested following the following priority list, top to bottom:
- Tools (backup, anti-virus…)
- Applications (Exchange, SharePoint…)
- Infrastructure (servers, data storage, security…)
- Virtual desktops (do this last since it’s all about the user experience).
“The bottom line: Any time things change [in the IT industry] that’s our chance,” Pica told the MSPs in attendance.
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Good advice from TruMethods. For years, IT providers have been talking about “Selling Solutions not Technology” – the Cloud should be no different. I like the priority list here too – great article!
Totally agree. It’s time for IT providers to stop selling the pieces and start selling the solution. The Cloud should be sold as a service. The question is not “would you like hosted email” but instead, “would you like to have the same email platform on your PC, iPad and iPhone ?”. when the client answers YES then they’ll get a Cloud solution and won’t care. To them………….. it just works !
Richard, Craig: Hats off to TruMethods’ Gary Pica and Bob Penland for the cake analogy. And another tip of the hat to masterIT’s Michael Drake for setting the stage, with his cupcake analogy.
The big remaining question: Just how far will the solutions roll-up strategy go? For instance, some MSPs are starting to bundle everything (hosted email, online backup, help desk, NOC) as a single monthly service. Those MSPs are done breaking out pricing for individual cloud services.
-jp