MSPs and the private cloud in 2021: How can you take advantage of the growth opportunity?
The last four months of 2020 were the strongest in HyAlto’s history when it came to prospects reaching out to us. We expect most any service provider who works with MSPs to help enterprises with cloud migration has had a similar experience.
The writing, after all, has been on the wall for some time.
In June, LogicMonitor reported that 87 per cent of enterprises expected to accelerate cloud migration in the post-COVID world. Further, there will continue to be an almost even split between workloads residing in a public cloud versus a private cloud through 2025.
IDC reported that Infrastructure-as-a-Service (IaaS) adoption picked up speed in the year prior to the pandemic, while “the COVID-19 disruption has accelerated cloud adoption with both traditional enterprise IT organizations and digital service providers increasing use of IaaS for their technology platforms.”
IDC reported in August year-over-year growth for both IaaS and Platform-as-a-Service (PaaS) of more than 38 per cent. (Software-as-a-Service, SaaS, followed at a still respectable 19.8 per cent.)
And 2021 began with new survey data from IBM, which found that 95 percent of IT leaders intend to adopt public, hybrid or private cloud resources.
Which begs the question …
If you are an MSP active in the IaaS or PaaS spheres and your business is not experiencing the kind of annual growth noted by IDC, why not? What is causing you to leave money on the table and miss out on the opportunity?
In our experience, the answer usually involves three interconnected issues:
- A front office and back office mired in outdated manual processes reliant on spreadsheets when it comes to fulfillment, orchestration and billing.
- Lack of automation, whether internal or client facing.
- A rigid multi-year contract model for MRR (monthly recurring revenue), that fails to provide the client with the same flexibility to adapt to change as provided by a public cloud. This model also misses out on opportunities to upsell.
Let’s explore each of these through the experiences of three of our MSP clients and how they each grew their private cloud businesses with the HyAlto Cloud Management Platform. Our multi-tenanted platform delivers the private cloud integration, automated usage monitoring and self-serve convenience that drives revenue growth for MSPs and brings the cloud to heel for their enterprise clients.
Case #1: “We want to take the ‘Man’ out of manual billing for our VMware private cloud”
This MSP in Europe served hundreds of small to medium enterprises with an MRR of $175,000 per month. Thanks to outdated manual processes, the MSP routinely required that a Tier 3 technician go through all of its control panels each month to sort out billing—about 70 to 80 hours taken away from client-facing activities.
With HyAlto, the MSP was able to achieve more accurate billing, faster, and without having to waste the time of a Tier 3 tech. This spanned client usage of VMware’s vCenter and vCloud Director as well as Veeam and ConnectWise.
The MSP identified and addressed revenue leakage of 10 per cent per month and within the first year of using HyAlto, recovered $210,000 in lost revenue.
Case #2: “We want to grow our private cloud business but it won’t scale”
Many MSPs offer a white label/white glove service, but lack of automation limits growth. A North American service provider that had expanded into the MSP business suffered from this challenge.
With HyAlto, the MSP deployed a portal and dashboard that allows clients to access a catalogue of standardized services and pricing, and automatically updates usage by each client for each billing period. Clients can quickly source the private cloud resources they need, on demand, without having to go through a lengthy order fulfillment and orchestration process involving multiple sales reps and engineers.
A private cloud business with an MRR of $350,000 consequently increased its core revenue within one year by seven per cent. In addition, the MSP had the capacity to upsell an additional $670,000 annually (for an overall revenue increase of 16 per cent) with BUaaS/DRaaS (Back Up/Disaster Recovery-as-a-Service) services.
Case #3: “We want our private cloud to have public cloud flexibility and pricing”
This European-based MSP wanted to deliver pay-as-you-go private cloud services, with accurate hourly, daily or monthly rates and usage tracking, along with time-based discounts, to compete on an even footing with public cloud providers.
In other words, the MSP sought to escape the outdated contract model that locks a client into a multi-year contract at a fixed rate for fixed services. It wanted the capability to adapt services, and service levels, on the fly as the client’s needs changed and reduce the risk of losing the client’s business to a public cloud provider.
HyAlto made this possible, with a portal that integrated with ConnectWise Manage to automatically update all service usage for each billing period.
This enabled a private cloud business with MRR of $65,000 to increase core revenue in the first year by 22 per cent. This MSP also took advantage of the ability to upsell with BUaaS/DRaaS, for an additional $95,000 a year in revenue.
In conclusion: Your clients demand flexibility … you can be easily be equipped to deliver
The writing was on the wall for MSPs to invest in new tools and processes well before the pandemic. By investing in automation and new client-engagement models, an MSP can scale a private cloud business, increase profitability and effectively compete with public cloud providers.
2020 demonstrated that the time to make that move is now. The good news for MSPs of any stripe is that this is doable and affordable with HyAlto. Getting started is just a phone call away.