Successful Cloud Partners 2.0: What Successful Partners are Doing to Build Profitable Cloud Businesses Darren Bibby, Channels and Alliances Research @darrenbibby
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Successful Cloud Partners 2.0: What Successful Partners are Doing to Build
Profitable Cloud Businesses
Darren Bibby, Channels and Alliances Research @darrenbibby
2013 IDC Report – It Can Be Done 2014 IDC Report – How? WW Survey with over 700 respondents 20 in-depth interviews
2 http://aka.ms/idccloudebook
Agenda Planning for Your Cloud Business Your Cloud Business Strategy Your Cloud Sales Strategy Your Cloud Marketing Strategy Your Cloud Managed Services Strategy Your Cloud Intellectual Property Strategy Essential Guidance
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 3
Successful Cloud Partner Practices
Planning for Your Cloud Business
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Planning for Your Cloud Business Consider Your Cloud Plan
• You’re probably not behind… yet. • But you are losing deals to
Born in the Cloud and other partners
Don’t Wait To Adopt Cloud • You’re probably not behind… yet. • But you are losing deals to
Born in the Cloud and other partners
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Planning for Your Cloud Business Endure Short Term Pain For Long Term Gain
• Revenue and cashflow trough • What will my business be like in 3 or 5 years?
Is it time for a management
offsite? • Key decisions must come from the top
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Planning for Your Cloud Business Organizing for Cloud
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Successful Cloud Partner Practices
Your Cloud Business Strategy
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Your Cloud Business Strategy Go Big Or Go Small. You Can’t Do Both
• SMB = volume • Enterprise = depth
You May Not Have To Change Everything • Selling services to enterprise customers may not change too much.
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Your Cloud Business Strategy Use Cloud Internally And Share Your Own Best
Practices • Gain powerful credibility with customers by using the products you
are selling
You Only Have To Stay One Step Ahead
• Cloud technology is evolving rapidly • Successful partners stay one or two steps ahead of the customer
and competitors to be a leader
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Your Cloud Business Strategy Differentiate With Domain Expertise To Increase Profit
• Cloud can commoditize; You must differentiate • By business process (e.g. accounting) or by industry vertical (e.g.
retail).
Build Your Recurring Revenue – The New Killer Metric
• Offers predictability, cash flow, and positive impact on company valuation
• Top RR: 1.5X Gross Profit and 1.8X Revenue Growth
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The Cloud / MSP Trough
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Today Past Future
Revenue Revenue Shift + Investment
Recurring Revenue: Long Term Appeal
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Revenue from customers signed in year 1
Revenue from customers signed in year 2
Revenue from customers signed in year 3
Revenue from customers signed in year 5
Revenue from customers signed in year 4
Today Future
Recurring Revenue: Predictability
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Past Future
Revenue
Traditional Project Services Model Cloud or Managed Services Model
Having recurring revenue on a cloud service model has been gold for us because it flattens out the peaks and valleys of revenue. ISV
Recurring Revenue: And not Or?
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Today Past Future
Revenue
Successful Cloud Partner Practices
Your Cloud Sales Strategy
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Your Cloud Sales Strategy Understand Why Cloud Sales Are Fundamentally Different
• Past: Get to the sale • Now: The sale is the beginning
Open Doors With Cloud, Then Up-sell
• Get in the door with Cloud • Upsell over the long term relationship
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Your Cloud Sales Strategy Choose the Right Sales Structure For You
• Separate or Integrated? • Solve for Internal Conflict or Customer Choice?
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 18
Separate Cloud Group Integrated Group
Your Cloud Sales Strategy Carefully Architect Your Sales Compensation
• Problem: How to motivate salespeople who were used to selling up front license + services deals?
• If affordable, pay up front
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Your Cloud Sales Strategy Consider Hiring Outside The Box
• Hire Young • Hire Congruent • Hire for Value • Cloud partners have more staff in sales
and marketing vs. other partners
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Your Cloud Sales Strategy Create A Lean, Mean Operating Model For Volume
• For a volume play, impetus must be on efficiency • Lowering cost of making the sale
Consider Telesales To Increase Your Reach
• Telesales can be a cost effective strategy, • Different skill • Metrics driven
Consider Selling 1:Many • Take customers through non-competitive steps together
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“The top sales people, like Charlie, are making 50 to
100 calls per day. The sales cycle is a few days and
implementation is a matter of weeks. The focus is on
high-volume.” Ben Gower, Managing
Director, Perspicuity
Your Cloud Sales Strategy Take Customers To The Cloud In Steps
• Many customers are still not ready to fully dive in • Certain products are good for the first sale, some better to upsell
Speed Up the Sales Cycle by Sidelining Cloud
Objections • Arm your telesales team with resources to take FUD questions
off-line • One-page FAQs, videos, web sites, etc.
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Successful Cloud Partner Practices
Your Cloud Marketing Strategy
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Your Cloud Marketing Strategy Shift Your Marketing To Digital
• Successful cloud partners are investing in digital marketing • SEO, pay-per-click, banners, videos, webinars, blogs, social media, iterative web
pages and landing pages, etc.
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Establish Your Brand With Thought Leadership
• Get known as a thought leader • Some partners provide incentives for staff to
publish
Successful Cloud Partner Practices
Your Cloud Managed Services Strategy
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Your Cloud Managed Services Strategy Increase Gross Margin Through Managed Services
• Partners with higher cloud / recurring revenue earn higher gross margin • Become more efficient at delivering at a fixed monthly price
Create Efficiencies In Your Managed Services
• Remote delivery • Spread highest paid technical staff across
more clients • Automation, Methodology
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Your Cloud Managed Services Strategy Be Your Customers’ CIO or IT Department
• Some partners play the CIO or IT department role
Add Ongoing Retainer Hours To Your Projects
• Successful cloud partners are turning more offerings into recurring revenue contracts
• Pre-purchase of monthly discounted hours • Support, monitoring, but also ad hoc professional
services, custom development, etc.
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“There’s a bucket of hours bought on a retainer, or use it
or lose it basis, at a discounted rate. They can use it for whatever they require as
the need arises.”
Greg Schlather, General Manager,
Cloud & Managed Services, Catapult Systems
Successful Cloud Partner Practices
Your Cloud Intellectual Property Strategy
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Your Cloud Intellectual Property Strategy Leverage Cloud To Create Your Own IP
• Cloud services are more stable • Development effort is easier today • Distribution of apps is easier today
Manage Using New Key Performance Indicators (KPIs)
• Different KPIs: Monthly Recurring Revenue (MRR) Recurring Revenue % Churn % Lifetime Customer Value
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Essential Guidance
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Essential Guidance There are many paths to Cloud success. Common elements of
success include: Recurring revenue models are slowly but surely replacing traditional project and
transactional based models.
Most partners will have to endure some short term pain in order to achieve long term success, which could include higher margins and a higher company valuation.
Those who master a specific vertical or horizontal domain will be able to speak the language of the new power broker in the enterprise, the Line of Business executive.
The time to act is now. There is a land grab going on for cloud customers and there’s not much time left before you find yourself in the bottom half of cloud partners.
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Successful Cloud Partners 2.0: What Successful Partners are Doing to Build
Profitable Cloud Businesses
Darren Bibby, Channels and Alliances Research @darrenbibby
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