There is an ongoing debate happening among cloud pundits, vendors and channels partners about "who is going to own (survive?) providing high value and high margin cloud solutions to businesses". Will it be legacy partners (VARs, MSPs, Telecom Agents etc) or Born in the Cloud CSPs or companies like accounting firms that have a very close relationship with the Business Managers at their clients (remember Business Managers are the new tech buyers). We'll see. One thing I do know is the newly appointed CSP will need to sell tasty high value and high margin meals aka business outcomes focused cloud solutions
Follow my logic here,
A close friend of mine, Bob, is a chef/partner at a very successful small chain of three fairly high end restaurants. He has been is the restaurant business his entire career. For years now I've sat at the bar of one of his restaurants chatting about the similarities of his business and today's technology/cloud business. Here's one of the big similarities,
To keep his business viable and grow it every day Bob must deliver "delicious, high value and high margin" meals to his customers on a consistent basis. To do this Bob needs to,
1. take individual food items and ingredients and combine them into "delicious" meals based on his expertise and his customer's (eg persona's) tastes. How about a great piece of swordfish, some rice pilaf and some great asparagus and all the spices required to make it "over the top". And to start, how about some oysters and a Caesar salad. What Bob can't do is say "here's a piece of swordfish" - customers want a meal - not a piece of fish.
Mr/Mrs/Ms. CSP - are you selling point cloud XaaS only, like O365 stand alone, or are you bundling O365 with some other high value XaaS and your high value managed services to make a "delicious meal" for your customers?
2. next thing Bob must do it is ensure his delicious meals are giving him the margin needed to make money and build a business. Bob takes every single (I mean every single!) food item cost and the associated costs of services for that meal and put them into his "food costs" spreadsheet. Bob then sets prices based on what he believes his customers will pay and margin he needs to get to have a profitable business. Bob knows that his customers will pay good money for his delicious meals (not just pieces of fish) and if he manages his costs appropriately he will get nice margins.
Mr/Mrs/Ms. CSP - how are your cloud margins? Do you really know all your cloud costs? Do you understand that your margins are in the high value bundles and most especially in your managed services?
