SMBs Have Adopted Cloud Services
There’s no doubt about it. Cloud services are a tremendous hit with SMB customers. Whether they are running applications in a public cloud or whether they are leveraging private cloud services from a managed or cloud service provider, the great majority of SMBs are increasing their use of cloud services* and MSPs are benefiting.
This trend does represent a double-edged sword. On the one hand, MSP clients may be reducing their needs for managed servers or managed application services such as email because they plan to move applications to a public cloud or software service provider, e.g. migrating from an in-house Exchange server to Exchange Online via Office 365. On the other hand, there is a growing opportunity for MSPs to both assist clients with their migration process as well as to offer related managed services. As time goes on we expect to see a broad range of cloud-related service offering, including:
- Migration services. For example, many SMBs need help onboarding to new services, migrating data and managing user accounts.
- Managed cloud-based back-up services. For clients concerned about the security of their data in the public cloud, MSPs are offering private cloud solutions. Data can be backed up on a regular basis, files or whole systems can be recovered and disaster recovery services can also be provided.
- Hosting. While strictly speaking not necessarily a cloud-based service, hosting allows MSPs to move servers and other infrastructure items to a centralized location from where it can be more easily and cost-effectively monitored and managed. It’s a relatively small step, conceptually at least, to migrate clients over time from their own dedicated resources to more cost-effective infrastructure components (e.g. server blades) provided by the MSP. Depending on requirements and circumstances, these components may be dedicated (private cloud) to individual clients or shared between clients (public cloud).
- Private and public cloud services – see hosting above.
- Cloud user management services. While many applications are now attractively offered by public cloud service providers, managing usage, data and access remains a challenge for smaller organizations. As use of cloud services increase the problem often becomes one of closely administering and optimizing usage and costs. In the case of email, Office suites and collaboration software services, activating user accounts in a timely fashion, archiving files and managing passwords can be a time consuming and expensive without a centralized cloud management solution.
- Application support. Inevitably as SMBs consume more cloud services, the information management challenges will increase; data migration from one app to another, data storage and back-up, data security and validation, data access and use. Savvy MSPs are already developing the skills to better enable clients to benefit from cloud services.
- Cloud monitoring services. Dealing directly with large cloud service providers when problems arise can be time consuming. MSPs can help their SMB clients by monitoring service availability and performance and interfacing directly to cloud service providers when issues occur.
One thing that is clear from the Kaseya 2014 Pricing Survey, cloud-services can be a lucrative source of revenue. By capitalizing on the trend towards cloud-service adoption while offering more customized services and service management, MSPs are generating significant revenues from cloud-services today. The charts below indicate the price ranges MSPs are using for some of the cloud related services they are currently offering. These, by no means, describe the entirety of the opportunity.
For example, for Cloud Exchange email service, 47% of respondents charge between $5 and $10 per mailbox per month.
For Back-up services, many Kaseya MSP customers are receiving more than 25 cents per GB per month.
Over 80% of MSPs offering private cloud services are generating more than $200 per virtual environment/machine per month.
Perhaps the most interesting result here is the amount of money that can be made for cloud monitoring services. While around a third of respondents are charging less than $500, another third are charging over $1000 per month, with over 20% charging more than $1500!
We recommend MSPs use this data to inform your pricing decisions. If you consider your service to be broadly in line with competitive offerings then it should be priced in the average range. However, if you are offering more comprehensive or advanced capabilities you may be able to justify charging much higher fees.
Pricing MSP services for growth and profitability
These topics and much more are discussed in detail in our webinar Pricing MSP Services for Growth and Profitability. The webinar highlights the results of the Kaseya 2014 MSP Pricing Survey which were released in December 2014.
* 2015 State of The Cloud Report, Rightscale
Author: Ray Wright