The one thing missing from this cloud strategy: business model.
For all the talk about monthly recurring revenue, the commissions off cloud services are tiny compared with the time it takes to sell and support.
Even with the drop in uptime for carriers, the amount of support for network services is small. The sale is easy. The commissions are fair. High ROI.
Microsoft Office365 is starts at $60 per seat per year. That is a commission of fifty cents! If the client calls with just one support call, all of your profit is gone.
In network, almost all carriers deliver services as advertised. There isn't really a big trust issue with the customers. It's plugged in and usually works. Stays up most of the time.
The same can be said of PRI. But SIP trunks? That gets tricky with inter-operability, with porting numbers, with quality of service. There are so many providers that it isn't even possible to do an apples to apples comparison. Easier to sell POTS lines, in my opinion.
UCaaS has been notorious for porting problems; QoS issues; lack of user training; and deployment mishaps. Also, too many features, not enough pain for the buyer to move to what looks like a complex system. At ARPU of about $350, that is a lot to overcome to make a little bit of money. The SPIFF War that pays out up to 6X MRC is getting attention, especially if the partner can just throw a lead over the fence, let the ITSP close it and collect his $200 after passing GO!
The big impact from cloud is the integration. But who is going to do that integration? Who is going to come in and add the Zaps or the IFTTT? Who is going to script together the various pieces of software to get data to flow without swivel chair?
On a client call recently, they mentioned that many IBM A/S-400s are still in service. Those applications don't easily port to the cloud for a number of reasons. There are a number of software applications that won't easily port to the cloud. That's why we have the Hybrid Cloud strategy, right? Which just means that some stuff stays as is, some stuff goes to AWS/MS/IBM/Rackspace, some stuff moves to a private data center. (SD-WAN plays the part of making that network optimized for a hybrid environment, or as I like to call it the usual system.)
I'm not saying cloud isn't here to stay (see here). I am saying that the Business Model for Partners to be Cloud First has not become mainstream yet.
A good Cloud Engineer/Cloud Architect or a knowledgeable Sales Engineer are expensive full time positions. It would take a lot of large deals to begin to offset that investment in talent. There is a new skill set needed for cloud services that wasn't needed for managed IT services. New sales skill set too as the sale transitions from transactional replacement of services (cable for T1 or Ethernet for T1) to consultative selling involving business needs and impact.
"What we've found working with clients who want to begin taking advantage of the cloud's cost and accessibility advantages is that they will start new projects in the cloud, but will leave their legacy systems intact." To find these deals, you would need to be proactive in marketing your firm as a cloud expert (and actually have the chops to pull it off without burning the client and your reputation, which is a real problem that vendors don't want to address.)
Personally, I wonder about the economics of cloud. VDI, UCaaS, CRM and Office 365 are going to cost you ($40+$30+$100+$5) roughly $175 per month per employee. At 99 employees that is $200K per year. Seems like a lot, but if you are the partner and you get most of that share that is $20K per year in commission.
]]>This managed desktop offering from Amazon will be called WorkSpaces, "not to be confused with Cloud Workspace from IndepedenceIT, which EarthLink white labels.
I find it interesting that Amazon would get into a service that has a heavy demand for support, but then I remembered that they just added Mayday to the Fire HDX tablet, so maybe Bezos is ahead of this.
The real uphill battle is that there are a boat ton of laptops and desktops already collecting dust in offices and homes. VDI, DaaS, or whatever you want to call it is driven by the mobility, ubiquitous broadband and devices that people are using. It's what is driving most cloud services - On-Demand Demand.
One thing is certain: when Amazon starts selling it, the market for it will pick up. So Agents get on-board now!
Now will that DaaS come on my Kindle Fire HD?
PS
Even VoIP players like 8x8 are getting into the VDI / DaaS game.
]]>Fist up, a merger of two cloud security companies: Total Defense Acquires iSheriff.
VMWare bought Desktone, a virtual desktop company who owns the Desktop as a Service trademark. This will be a nice add to VMware's own VDI (virtual desktop infrastructure) initiative with vCloud, vSphere and Horizon View. Someday DaaS will be big in North America.
Kaseya acquired 365 Command to add management to Office 365. There are tools (like app management of SAAS) that are lacking for the VARs and MSPs. "This acquisition confirms the importance of reliable, easy to use cloud application management in today's IT environments."
There was a Forbes article this week about how UC or UCaaS. The author suggests that the predictions of 20+% CAGR for UC is laughable. "As encouraging as that is, no one, however, seems to be talking about the elephant in the living room when it comes to UC: a stunning lack of interoperability." Deployment and inter-op have been the walls around any of the as-a-service stuff.
Security, privacy, migration, deployment, inter-op, training, re-training, monitoring, management, and remote support are just some of the factors that the cloud still hasn't worked out. More M&A will happen until someone has a complete set of tools (or a craftsmen like toolbox) that makes these factors easier.
UPDATE
Montreal-based iWeb has been acquired for $145 million by Internap Network Services Corporation.
]]>Social Media (SM) , mobility, are cloud - threats to some, opportunities to some - both to many.
"Behave like a three-year old: fall down, learn something, try again."
How do you scale marketing and lower customer acquisition costs in cloud?
The Channel is hiring sales <-- luv to know where they are finding them.
Amazon has $1bill cloud biz and not even 5 people on the street.
Amazon, folks, offers just 2 services in self-serve fashion.
RainKing, Salesforce, radian6 (social media), data mining to understand clients better.
Vendors need scale, but the channel needs customer intimacy (and the channel needs to build its own brand).
Manufacturers do not like the channel. Channel Partners are not enamored with the the manufacturers either.
Biggest Issue: Mainly vendors don't understand what the channel does. Manufacturers/vendors do not like that channel partners are not exclusive and offer choice to the marketplace. [Telecom vendors are the same way!]
@UBMChannel: Number 1 trouble w/ vendors: they don't understand solution provider business and value. "We are not just vehicles to end customers" #BoB12
@UBMChannel: Marketing has changed as businesses do. Moving from finding customers to how do customers find you? #BoB12
Overall, even as the marketplace is changing, manufacturers are slow to change. Vendors still want the channel to just get them customers, push their products and get out of the way. The Channel now wants to build a brand, retain customers, increase wallet share, and sell managed services (some of which will be their own). Unfortunately, there isn't a huge ROI on that strategy for vendors. In Telecom as well.
A final point by the panel revolved around Gartner pushing the Cloud Services Broker model on VAR's. The panel thought that was a ridiculously low margin business - basically, transactional. It is likely going to become what the VAD (value added distributors like Ingram and Tech Data) will become in some sense.
Here's the flipside to that. Right now VAR's have accounts with both Ingram and Tech Data (and likely at least one other distributor like SYNNEX, D&H, CDW, Insight). When looking for hardware, VAR checks to see who has it in stock, at which distribution center, and for how much. When things switch to cloud services, it is unlikely that VAR's will have accounts at all 3 because they are not going to manage SAAS accounts across multiple vendors like they do now. It will be about going with 1 or 2 plus having their own.
The panel noted that we are in the midst of a change in the VAR business to a completely new organization - structure, personnel, skills, compensation, financing, marketing, sales and metrics will all be different when it is all done.
Sales is changing. Not only what is sold, but to who - IT is not the only buyer in an Enterprise any more. IT doesn't own the desktop anymore due to consumerization of IT. CMO and CFO buy differently from CIO. Can IT sales people sell to buyers other than IT?
Plus sales isn't about low hanging fruit anymore. It's about harvesting the whole tree. Acquiring customers is getting harder and more expensive. Retaining customers will be huge. Acquiring customers is different now. CLIENTS FIND YOU NOW, via blogs, social media, SEO, PPC. Are you involved in that???
The three panelists are making money now on Help Desk, End user Compute Space (which can include VDI) and in Global Managed Services (including help desk).
]]>tw telecom has rolled out a virtual desktop services as well. TWC's NaviSite signed up with Desktone to deliver a cloud-based Desktop-as-a-Service. AllCovered is an MSP that is acquiring smaller MSP's that offer VDI.
Citrix and its partners, like Ncomputing, are bringing back the thin client for use with virtualization. And these thin clients are cheap!
I'm wondering when Dell will roll out a Wyse service offering. They didn't acquire Wyse, Sonicwall and others just to let them stand by themselves.
Best Buy's Geek Squad added a Channel program to help them sell Managed IT nationally. Managed IT, remote monitoring (of desktops, laptops, and servers), and virtual desktop are all kind of in the same bucket. And all require serious bandwidth. You aren't going to be running an office on VDI on cable modem, which may be why EarthLink and other CLEC's are embracing IT. One way to combat the cablization of the small business market (sub-$750 telecom spend) is to add enough reasons - VDI, VoIP, Cloud, monitoring, etc. - to require dedicated bandwidth (or even MPLS for private WAN and cloud). Dedicated bandwidth counters the cable modem versus the T1 debate.
We'll see if the right message and value proposition pop up in the marketplace to move the needle on this set of service offerings (VDI, Managed IT, RMM) from the CLEc world. The MSP sector already delivers these services.
One tool to make the message pop in the marketplace is smarter PR. CLEC's need to craft press releases to explain what services offerings are being sold, to whom, and why. It is one avenue to get the story as concrete as possible to the marketplace.
]]>EarthLink is really pulling out the umbrella to get it to rain in Cloud. EarthLink picked up XO's former CMO, Michael Toplisek, as EVP of IT Services. The press release says that he was President of Concentric Cloud, but that was for a hot minute, since XO only rolled out that brand 2 weeks ago. He's not a cloud guy - he worked at XO, Global Crossing, MCI and Frontier - all telcos. The only IT he got near was conferencing at GC. Why would you spin this resume? (Especially after the Yahoo resume-gate.)
EarthLink rolled out 4 cloud packages. "The Cloud Launch Pad, the Cloud Entry Bundle, and the Secure Email Bundle enable customers to economically partner with EarthLink to complement their internal IT resources by leveraging a comprehensive mix of IT Services and security experts in an enterprise class data center environment." [Source: PR Newswire] FYI, "Cloud Launch Pad is designed for organizations that want to leverage the benefits of a virtual environment or that currently run VMware® environments and need additional elastic computing capacity."
These products allow the business to keep things intact, but layer on Cloud Services from EarthLink to complement the current system or outsource extra capacity or services.
The Secure Email Bundle is with Zimbra, encryption and archiving.
The fourth package is Cloud Workspace, which is hosted virtual desktop.
An interesting play since it sounds like it requires MPLS. If so, then ELNK is tying their products to MPLS, probably to insure quality of service delivery.
Will they be able to sell these services against other MSP's and VMware partners? We'll see. It will depend on training - not just salespeople but the marketplace as well.
Watch this video where all the Master Agents talk about why they are choosing EarthLink.
]]>The other piece is that WYSE has 3000 partners. Too bad a CLEC didn't think to buy it just for that new channel.
Dell is an interesting company because while it is known for hardware - PC's, tablets, gadgets and servers - Dell is making the move to cloud.
__PLACEHOLDER__Going back to December 2010 when "Dell announces the acquisition of the cloud-based medical archiving leader InSite One to help healthcare organizations simplify retention of healthcare data." The PR says, "Additionally, like Dell's recent acquisition of Boomi, this acquisition builds on our strategy to help customers take advantage of the economics and scalability of the cloud in the way that best fits the requirements of their industry and the needs of their business." So while Dell chases the Cloud, it seems to be doing it in a hardware-services model. In other words, VAR's are used to selling hardware and wrapping one service around it. Dell is still doing it. InSite One was image archiving for medical - basically, managed storage.
Storage - like InSite One, Compellent and EqualLogic.
Networking: Force10 Networks and SonicWall. Both also spill over into Security in the managed security segment, which falls in with Dell's SecureWorks and KACE divisions. Security is supposed to be a big game to be in. Dell is buying into that space. I wonder how many VAR's it picked up with Force10 and SonicWall... 1000?
Next, AppAssure backup and recovery was an obvious move to become more of a managed services provider -- or to empower its VAR's to become MSP's. That might be the strategy: empower its VAR's to become MSP's all through Dell services (and hardware).
This puts Dell directly in competition with the VAD's - Ingram, Tech Data and SYNNEX. Who will get the attention of the VAR?
And to tie that strategy of a VAR becoming an MSP is the announcement that Dell Offers Partners 'Cloud Services & Solutions Certification'. That ties the MSP bow up.
]]>No one buys the way most service providers sell. That's why we are always searching for Consultative Sales Professionals. Because the whole industry sells what they want - and it is followed up by a series of me-too.
Just because one CLEC is selling Managed Security does not mean that the marketplace wants it or will buy it or that it will want it delivered that exact way. It also doesn't mean that the next eight CLEC's or service providers need to market that same offering.
The market is consuming technology differently. It enters the business via the consumer. About 70% of devices are owned by the consumer in the business environment. Only about 30% are paid for by the business. That means support for devices either isn't available or is imposed on the IT staff by the employees. That's a confusing (and expensive) way to handle it. Don't you agree?
Most of what Bova and Ochs presented had to do with mobility and Cloud. Mobility is a huge problem for most CLEC's as the model for cellular sales is unprofitable - whether they sign a wholesale, agent or MVNO contract - the margin on cellular is thin to none.
And what is prompting Cloud? Two things: ubiquitous broadband and a mobile workforce.
Ubiquitous is really hyperbole because even with 3G, 4G and wi-fi, you can't get bandwidth everywhere and even when it is available it is shoddy (like at tech conference hotels).
Mobile workforce means a couple of things. One that more businesses have accepted remote workers - whether at home locally, across the country or across the globe. The economic downturn (and all the consolidation) has translated into businesses having less workers but expecting more work. This means working at home, while on the road, etc. Hence, not just email, but the application data has to be available from any authorized, connected device. That is the beauty of Cloud.
Cloud changes the way business is done.
Read that again, because that means it has to be sold that way.
It's easier to sell email, because everyone has email and it is almost a requirement. Selling unified messaging gets more complicated. Unified Communications and Collaboration is just too complex of a sale, of an explanation, of an implementation, of a deployment. That's where the service providers want to go, but they neglect the challenge of the sale. There is a lack of the story, the sales triggers, the value proposition, the WHY, and of course the on-boarding.
One thing Bova pointed out was that VDI (virtual desktop) sales have grown in EMEA (Africa and Mid-East) while have stagnated in North America. One reason: VAR's have too big a quota with HP or Dell to take a 500 desktop refresh to VDI instead of selling 500 desktops. Not just the quota for the discount, but to sustain Gold level service. It's the same with Cisco, Microsoft, etc. VAR's will keep selling what they sell for 2 reasons: First, to maintain the current level of vendor support to continue to service current clients in the manner that is expected (or even contracted). Second, making the changes to shift business to an MSP or all service model is complicated and expensive. Bova suggested firing clients and employees to create the business you will need in 5 years, but that's easy to say from a consulting seat. Not so easy from a business owner perspective.
When EarthLink told its channel partners in Tampa that it only wanted Multi-Site multi-access opportunities, it didn't come right out and say that it would stop selling T1's, but that was the underlying message. (And ELNK did tell me that 1GB and 10GB private line, even ON-net, was not what they wanted to sell.) That's one way to start planning for where you want to be. Say no while being specific about what you are looking to offer.
As a whole I don't think the service providers have any idea what buyers are buying or why. Just because you WANT to sell MPLS with security or Hosted UC&C or whatever, doesn't mean that prospects will actually BUY it (that way).
When does something become a commodity? When the customer buys it directly online.
For non-commodity services, you need a well trained sales force that understands the brand, the value proposition, and the target. As an industry we aren't there yet.
I'm going to leave you with that.
Coming soon two posts: (1) Master Agents are like Pharma Reps. (2) Tech Data versus Master Agents.
]]>I learned a few things at the EarthLink training today in Tampa. EarthLink has 175K business customers and about 3 Million consumers, most of them dial-up customers, providing $20M in free cash flow per month. So of the $1.3B in annual revenue, about $500M is dial-up. ELNK has 4 data centers - Columbia, SC; Rochester, NY; Marlborough, MA; and 55 Marietta.)
The first (or 70+ slides) shows that Pipe is the foundation for Managed Security and other services. However, despite having 28,000 miles of fiber, they don't want to sell transport on it. Even On-Net gets the response that "This is not our sweet spot".
What is the Sweet Spot? As I wrote here, Multi-Location Multi-Access type across LEC's or cablecos.
The partner portal is in development. The customer portal, called myLink, seems cool they way that you can drill done on customer locations in Google Earth and open a trouble ticket.
Agents in the room, called T1 Slingers, asked about DSL, since EarthLink resells ADSL out of 10K end offices through 12 providers. As a resell service, a 1FB is required. And since neither RBOC is really supporting their copper plant and especially not DSL, it leaves the business DSL customer hanging for days when there is an outage. [See my post about Is DSL Done?] 3G/4G wireless backup is my answer for that. There are cool routers that even do it automatically.
The other question centered around T1. "You just are not going to make a living slinging T1's at $400 any more." PRI's are available east of the Mississippi still, which actually IS an advantage for ELNK. TDM PRI's are still the preferred reliable way to deliver voice to a PBX, especially with alarms, faxes, and elevators.
It was an hour on MPLS. I still find it amazing that almost 9 years after my first MPLS class, we are still presenting the Fundamentals of MPLS. For Agents, it will be about layering on services to the MPLS network. The sticky stuff is value added services.
Retail needs a voice line, some Internet, credit card processing, payroll and data backup. That should actually be a bundle that someone offers. ELNK has the old New Edge AX platform that connects payroll and cc processing to the MPLS Network. Add on a VoIP line and some data backup and there's a bundle. Want to make it stickier? Add network DVR to the service so that those IP surveillance cameras can be viewed from anywhere (and can't be erased locally). Bingo! (Do you have an opening in Product Management? My resume is here.)
The team mentioned POS, Inventory, HR and Loyalty programs. Do you have those on the AX platform? Those would make some excellent sticky add-ons.
"So we have an Internet T1 service that connects you securely to one of 4 data centers, Mr. Prospect. Do you currently have a payroll service? Are you looking to upgrade your POS? Are you worried about security on your credit card data (PCI compliance)?"
That's where the conversation has to go. Even though the customers just want the access - as cheap as possible - Agents will have to steer the conversation to: applications on top of that access (AOTTA).
So back to MPLS with Type II access. Ethernet is delivered over a Type II DS3 from the LEC. T1 is delivered over the ILEC copper pair. DSL is a resell of the ILEC product offering. Then for outliers to attach to the MPLS network, there is an IPSec GRE tunnel with BYOB (bring your own broadband). Blended Access.
EarthLink is a Sprint MVNO, but it is more for 3G access where there isn't DSL to attached to the MPLS. Also, for the MPLS customers that want to have one bill that included cellular.
Something else I learned: ELNK bought STS because Rolla knew the Mark Amarant, CEO of STS, and STS had a reputation for best practices in on-boarding customers in the Hosted PBX realm. That's smart, because Hosted PBX (like VDI, another product that ELNK is rolling out), requires a detailed on-boarding process from pre-sales through post-sale, including mapping extensions to desktops, extension attributes, handset type, employee training and some on-site installation. EarthLink is not selling Hosted PBX as a stand-alone. You have to buy access from ELNK.
So in summary word of the day: "Blended Access".
Key association: Multi-location multi-access MPLS.
Can Agents sell VDI?
I wrote about how there is a big difference between selling Cloud and selling Telco. Telecom agents sell WAN. VAR's play in the LAN. Agents usually stop at the Demarc, right along with the telco.
Once you get into the LAN, it becomes a complex sale and requires a lot of digging. More questions. More pre-sales surveys. Maybe even testing. Plus when you change stuff that affects the users/ employees, now you have a culture shift. For Agents, that want to get ink and move to the next one, VDI, Hosted PBX, and SAAS sales just aren't a good fit.
For a while longer, T1 Slingers can make some money - less money - selling cableco and T1's with some Ethernet thrown in for good measure. Eventually, Agents will either have to sell Apps, Managed Servcies or Cloud, or suffr.
One issue with VDI: how do you even get into a conversation about VDI?
VDI changes the culture of an office right from the get go. Today, users want to play with whatever website or app they want on whatever device they want. On VDI, while they could have some of that freedom, some of that will go away, control of those items ceded back to the IT department. Virtual Desktop makes backup and repair simpler. It means that employees can work from anywhere with the same desktop.
Still, selling VDI or managed IT is a different process than selling TDM telecom. It's about apps, head count, downtime, productivity, licensing, security and continuity. That's a different sales process than replacing PRI's or upgrading a T1 to Metro E or even swapping a T1 for a cable modem with 3G backup.
What will it take for Agents to sell VDI? For one, an Agent that WANTS to! That gets it and wants to sell it. Then it requires product and sales training. A lot of it. (I'm available to provide that, just so you know.) Lastly, it will require a provider that knows who they are selling to and why, that is devoted to the Channel. Stay tuned.
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