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SMB Nation has been serving the Bainbridge Island area since 2001, providing IT Support such as technical helpdesk support, computer support, and consulting to small and medium-sized businesses.

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Building Your Reputation as a Trusted Advisor

By: Pete Engler

The reasons a customer chooses to do business with a value added reseller (VAR) often extend beyond the menu of available product and service offerings. The decision can also be influenced by the brands (or vendors) that the VAR represents, and the geographic region served. Reputation of the VAR also comes into play – and can be one of the most influential deciding factors, especially when there are competing VARs vying for a customer’s business. As a VAR, your position in the marketplace and the reputation you’ve earned could make the most significant difference in closing a sale with a new customer.

As a VAR in the technology space, it’s not uncommon to offer a multitude of different products in order to better position yourself to help solve a customer’s business need. Although, an expanded selection can cloud the customer’s decision or leave him confused and unsure of the best route to take. Helping your customer make the best decision and helping ensure your revenue continues growing really depends on your ability as a VAR to position your business and service expertise over the product(s).

What exactly does it mean to position your VAR business and services over products? First, a VAR needs to be an industry and business expert. That means having the capability to properly evaluate a business and its needs efficiently and determine the best solution path to implement. This seems obvious but it can be tricky due to the changes in the buying process. Consider that prospective buyers in business-to-business settings have typically completed 57 percent of their due diligence work before they engage a sales representative, according to a Harvard Business Review survey. Today’s buyers are more prepared and further down the sales funnel before engaging sales support due in large part to the infinite resources and peer reviews available online. This means customers are also further down the decision path before seeking out a VAR’s service and experience during the sales, installation and support process. If a prospect has already set his mind on a particular solution, but it’s really not the best fit, it makes your position as an advisor more challenging. Your expertise can certainly help prevent the customer from making a costly decision, but you first have to convince him that there’s a better alternative.

Being a trusted advisor for your prospects and current customers does require industry and solutions knowledge, but it’s more than rattling off product specs. The customer probably already has that information as part of the early funnel due-diligence. As mentioned previously, your role is to conduct a careful evaluation of the business's needs, so any problems can be identified and addressed, all within budget constraints.

Business owners are masters of their core business functions, but when it comes to choosing the right technology, they can overlook key solution integration details, pricing and feature gotchas, and other lesser-known deployment and maintenance considerations. That’s why they depend on you. Your expertise as a trusted VAR is critical to recommend and implement the technologies that keep their business running on a daily basis, and help the business avoid having to go through a trial-and-error selection process.

Once the sale is complete, your role as trusted advisor moves to the installation, maintenance and troubleshooting phases. This is where you and your team’s capabilities are tested most and where the greatest opportunity exists for damage to your reputation. If the install does not go smoothly, confidence is weakened. After the solution is installed and should an issue arise, you must move to resolve them quickly. Training of your customer support teams on the products and solutions installed is also imperative. Nothing erodes confidence more than an uninformed support staff that is unable to adequately resolve issues.

In the end, it’s your ability to manage any unexpected system hiccups and minimize headaches in the long-term that will solidify your reputation as an expert that can be depended upon by your customers. Building a reputation as a trusted advisor isn’t a tough thing to accomplish; but it is dependent upon your ability to consistently match the right solutions with each prospective customer, deliver expertise through competent and trained employees to install and maintain the solution, and provide top-notch customer service. The benefits of having a solid reputation as a trusted advisor are many; and it’s conceivable that you could grow your VAR organization exclusively on referral business.

Pete Engler is the channel marketing manager at Digium, a business communications company based in Huntsville, Ala., that delivers enterprise-class Unified Communications.

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State of the Channel 2015: Cloud Turns from ‘Threat’ to ‘Opportunity’

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By: Carolyn April, Senior Director of Industry Analysis at CompTIA  -

The tech industry, like most others, has its fair share of pundits. Some predict gloom and doom if the stock market has a single down day or jump on every vendor or provider setback as if it were a long-standing trend. Then there are the channel optimists, who emphasize the positive points around industry news and put a rosier spin on any negative concerns. A commonly accepted business practice is to listen to both camps for their views and reasoning before developing your own conclusions, especially when your investments and reputation depend on the decisions you make with that information.

Overall, most IT professionals remain optimistic about the future of our industry, even in the face of tremendous change and new business challenges. In fact, six out of ten channel firms have a positive outlook on what the future holds for the channel in general, according to CompTIA’s 5th Annual State of the Channel research project. Five years ago, many VARs, solution providers and other industry professionals were concerned about their long-term business prospects with cloud computing gaining traction. The turnaround in the channel’s outlook is quite significant.    

Cloud computing is now cited as the chief reason to be optimistic about the channel’s future since, among other things, it opens doors to new opportunities. Whether or not there is reason to be this hopeful remains to be seen. But, according to our most recent study, channel companies are seeing the cloud as less of a threat. They are discovering that cloud isn’t a single business model; it gives them the chance to plug in at various points. They can sell SaaS, integrate cloud with on-premises solutions, broker and aggregate cloud options, develop applications and offer complementary managed services and other support options.

On the flip side, the cloud also has its skeptics. A subset of our study respondents remain pessimistic and about future of the channel and cite cloud a one reason. This is especially true of those channel firms that sell primarily to very small end customers. Why? Among these small-sized clients, cloud solutions offer a no-brainer alternative to on-premises hardware and software solutions (where many VARs still prosper). Likewise, one third of channel firms indicated that a wider availability of purchasing options and customer self-sufficiency were sources of concern for the channel’s future. This may be behind many of the smallest channel companies rethinking their customer value proposition. For example, 26% of firms with less than 10 employees currently list pure consulting services as their main source of revenue. If their end customers decide to convert to an all cloud model, these small VARs have to create support service offerings to help guide their clients’ decisions. Those opportunities seem to make the most sense. 

While cloud has the promise to simplify things for some customers, others continue to struggle with the growing complexity of IT. That’s great news for channel companies. The third platform technologies (mobility, cloud, big data, and social media) perplex many small businesses today, so IT firms that can help design, implement and support these solutions are truly relevant.

Companies with those capabilities should be optimistic. Of course, there are other reasons why the study respondents had a positive outlook on the channel’s future, including:

• Wider variety and use of technology by all types of customers and end users

• Increasingly complex solution and service options

• Larger demand for vertical industry expertise

These are market realities that provide channel companies with a reason to be optimistic and a number of roles to fill. The opportunities are theirs for the taking if they take the appropriate steps. With solid recruitment efforts and effective training programs, it will make it easier for channel firms to focus their efforts on emerging and more sophisticated technologies.

VARs and MSPs should also be making continual improvements in the business practices. A makeover of sales and marketing strategies can help bring in new customers from different verticals. Back office automation can help reduce billing and cash flow issues, and other tools can improve customer service and support operations. Channel firms that embrace an “as-a-service” way of life typically have a more optimistic outlook.

There’s plenty to be positive about in the IT industry right now. Based on all the information we compiled during the latest State of the Channel survey, a majority of firms are definitely more optimistic than they were five years ago. The real question right now seems to be “will that positive outlook continue?” Time will tell.  

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Guest Blog: Cloud Definitions and Opportunity

By Marilyn Carr
Sponsored by Ingram Micro and Microsoft, this paper is part of a series developed by IDC to educate organizations on the cloud opportunity and
provide guidance on how to succeed in the cloud marketplace.

Cloud and the 3rd Platform of Computing

In 2008, IDC started to notice the IT industry was at the beginning of a hyper-disruption – one of
those massive shifts that comes along every 20–25 years. In 2011, we had seen enough to give it a
name: the 3rd Platform. The new era of technology is built on the four technology pillars for
innovation and growth: cloud, mobile, big data, and social technologies (see Figure 1).
Of these four pillars, cloud perhaps represents the biggest disruption. That's because it changes
the way companies consume and pay for access to technology. But more and more these days,
companies are realizing that, beyond a better way to consume software, the cloud offers them
brand-new ways to solve their business problems. Simply consider some of the file synchronization
services that allow someone to see his/her files on any device, anywhere. New capabilities like this
and others are unleashing the imaginations of companies across the globe, tackling business
problems with the cloud that were previously unsolvable.

This IDC Market Spotlight begins with definitions of cloud and its various forms and then goes on to
outline the vast and growing adoption of cloud technologies. If you want a better understanding of
what cloud is and how fast it's growing, please read on.

The Era of the 3rd Platform

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What Do We Mean by Cloud?

A lot of people have a general understanding of what the cloud is. But they get confused once they dive into the details. Let's first have a look at the different flavors of cloud, which will help clarify the various options available.
IDC's IT cloud services taxonomy is based on the widely used U.S. National Institute of Standards and Technology cloud services categories: infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS) (see Table 1).

 

 

 

 

IDC's IT Cloud Services Taxonomy

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The cloud market is highly diverse. At the highest level, the two types of deployment models for cloud services are public and private:

  • Public cloud services are shared among unrelated enterprises and consumers; open to a largely unrestricted universe of potential users; and designed for a market, not a single enterprise.
  •  Private cloud services are shared within a single enterprise or an extended enterprise, with restrictions on access and level of resource dedication and defined/controlled by the enterprise (and beyond the control available in public cloud offerings). Private cloud services can be onsite or offsite and can be managed by a third party or in-house staff. A self-run private cloud is a cloud service that an enterprise owns and operates itself. The enterprise may have acquired the hardware and software components required to build a private cloud and assembled it (or had a systems integrator do so). A managed private cloud is an enterprise-owned cloud service that is operated by a third-party services firm. This is a less common model and parallels traditional onsite managed services arrangements in which the customer uses third-party staff to operate its traditional on-premise IT environment.
    • A virtual private cloud (VPC) service is a premium version of a public cloud service, with tiered options for greater privacy/security and customer control. Physical resources are not dedicated to a single customer — allowing the service provider and the customer to benefit from public cloud economics.
    • A dedicated private cloud (DPC) service is provided on dedicated/isolated physical resources to a single enterprise or an extended enterprise.

Two other often-discussed cloud services deployment model terms are hybrid cloud and community cloud:

  •  Hybrid cloud: The term hybrid cloud is used to describe the consolidated coordination/management of multiple cloud services. Hybrid cloud services include "public/public," "public/private," and "private/private" combinations. IDC does not classify collaborations between cloud services and non-as-a-service IT as hybrid cloud services.
  • Community cloud: A "community cloud" is a multi-enterprise cloud service that's been commissioned by, and is controlled by, a group of enterprises that have shared needs, control/specify the functionality of the services, and share the cost burden.

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The cloud services deployment variables include:

  • Where the cloud service is located (on the customer's site or at a third-party service provider)
  • Whether the cloud service is consumed as a shared or a dedicated service (public versus private)
  • The type of provisioning (completely dedicated, completely shared, or private cloud provisioned from the public cloud shared resource pool)
  • The management options, which may include both internal IT and external service providers

Consideration of all the aforementioned variables means there are several pros and cons to weigh before deciding what shape your cloud solution will take, and the context of the variables will likely change over time. That's why it is important to create a road map for incorporating cloud into your technology portfolio, something that is best developed in consultation with a cloud subject matter expert.

IDC also describes cloud services through the key attributes that an offering must manifest to end users of the service (see Figure 3). Cloud services require support of all of these attributes. This checklist of attributes can be used when evaluating cloud offerings from potential service providers to ensure that you are actually getting what you think you are getting.

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Current Cloud Adoption and Projected Growth

Cloud is an essential part of the much broader, and bigger, impact of the shift in IT and its applications. Big data, mobile, and social technology solutions are all heavily dependent on the cloud services delivery model. In effect, these solutions can't exist without the cloud model as the underlying platform. In turn, cloud services growth is highly dependent on the other three 3rd Platform technologies. Look for growth of cloud services to be positively impacted by breakthroughs in mobile, big data, and social technologies and solutions starting this year and beyond. Conversely, major breakthroughs in these areas will require (and drive) major investments in cloud technologies and services.

We now are entering what IDC calls the "innovation stage" of the "3rd Platform" (and cloud) marketplace — in which we predict that a tripling community of developers will create a 10-fold increase in the number of new killer cloud-based solutions in the next four to five years. Many of these "killer apps" will be innovative and disruptive industry-focused solutions, created and marketed on industry-specific cloud services platforms and marketplaces, run by leaders in each industry seeking to attract communities of thousands of innovators to create valuable new services. Line-of-business executives will drive many of these cloud investments as cloud services become much more valuable and strategic to enterprises. This is very good news for those adopting cloud solutions because it means they will continue to benefit from innovations that will spur productivity and strategic advantage, enhancing the return on investment.

The "greater cloud market," including cloud services and all the hardware, software, and services enabling cloud services, will hit $118 billion in 2015 and grow to over $200 billion by 2018. Public IT cloud services spending, a major part of the greater cloud market, accounted for $56.6 billion in 2014 and will reach over $127 billion in 2018 at a compound annual growth rate (CAGR) of 22.8%, or about six times the rate of overall IT market growth.

In 2018, public IT cloud services will drive nearly 20% of the $640 billion aggregate spending in applications, development and deployment tools, infrastructure software, storage, and servers. Collectively, public IT cloud services will account for 55% of spending growth. Clearly, cloud is a very significant part of how companies are consuming technology today.

SaaS, which accounted for 70% of 2014 cloud services spending, will continue to dominate public IT cloud services spending, as most customer demand is, understandably, at the application level. PaaS and cloud storage services will be the fastest-growing IT cloud services categories, driven by major upticks in developer cloud services adoption and big data–driven solutions. IaaS will remain the second-largest IT cloud services category — boosted largely by cloud storage's 31% CAGR from 2014 to 2018 — even as intense price competition and looming consolidation pressure IaaS price points.

North America accounted for 68.1% of IT cloud services spending in 2014, but that share will drop to 61.6% by 2018. In Europe, the second-largest region, share will rise from 20.7% in 2014 to 24.2% in 2018 (see Figure 4).

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Essential Guidance

Cloud is a substantial transformative force impacting all areas of IT supply, composition, and consumption for all buyers and sellers. IT buyers are shifting steadily toward cloud-also and cloud-first strategies. In fact, IDC predicts that 70% of CIOs will adopt a cloud-first approach by 2016. Nearly all are reconsidering their IT best practices to embrace hybrid cloud construction and operations, secure data management, end-to-end governance, updated IT skills, improved multivendor sourcing, and a host of other key topics. The ballooning of supply — a huge increase in the number and diversity of cloud services available — is leading to vastly increasing customer demand as IT decision makers look well beyond automation (IT's traditional realm) and into new possibilities for data management, customer and employee engagement, application development and testing, and a range of other net-new possibilities. Smart IT leaders will focus on this guidance.

The cloud has changed the fundamental nature of computing and how business gets done, and it will continue to do so through 2020. In fact, IDC predicts that, by 2020, clouds will stop being referred to as "public" and "private," and ultimately they will stop being called clouds altogether. It is simply the new way business is done and IT is provisioned.

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Guest Blog: Building a Cloud Practice: The Role of IT Services

By Marilyn Carr, sponsored by Ingram Micro and Microsoft

The Evolution of IT Services

IT consulting and integration services and custom application development are core revenue components for most solution providers. Unless they were born in the cloud, IT consultants usually add cloud-related technology and services to their portfolios rather than do a wholesale replacement of their traditional services. This is also in line with the reality that most cloud implementations live in an environment where there is a mix of on-premise, hosted, and IaaS, PaaS, or SaaS technologies.

This IDC Market Spotlight provides some key insights based on IDC's discussions with solution IDCproviders that have built successful cloud revenue streams and have IT services as an important part of their business model. These insights are not intended to be silver bullets but rather points to ponder as you consider the cloud strategy that will work best for your unique business and circumstances.

Strategies for IT Services in the Cloud

There are several ways in which IT consulting and managed services can adapt to take advantage of cloud business opportunities, and there is no doubt that opportunity abounds. In the sections that follow, we describe some of the approaches that solution providers report have been successful.

Be a Cloud Adviser

The cloud has reached a level of maturity where more and more business applications and functions can be comfortably transitioned. But not every aspect of a customer's computing environment is necessarily ready for an optimal deployment in the cloud. For many customers, simply keeping up with the number and nature of cloud options available to them is overwhelming. Solution providers are in a unique position to help customers understand how they may benefit from transitioning their applications or infrastructure to the cloud as well as take advantage of net-new functionality that only the cloud can provide.

Solution providers can play a key role in explaining cloud opportunities and challenges, and translating the technology industry's jargon and buzzwords into business terms that customers understand, perhaps in the form of an initial consulting engagement to develop a strategy for the cloud based on the customer's existing infrastructure and capabilities. One approach is to focus on the near-term ROI and savings benefit of the cloud while also helping map out a long-term strategy to transform and modernize a customer's overall technology position. As one solution provider explained:

"Clients rely on us not only to position the cloud architecture but to validate that it's going to work as described. We have a lot of due diligence to do in making sure that all the failover mechanisms are there and that we account for every possible scenario."

Whether or not you can charge for these initial types of cloud advisory engagements is a key question. Some solution providers can charge a fee, while others assign the cost to the presales effort, knowing the potential value of a long-term recurring revenue customer.

Focus on Iterative Consulting

IDC believes the days of the large, monolithic IT consulting and integration project are numbered, if not already gone. The emergence of cloud and other rapid deployment technologies, coupled with the economic downturn that permanently squeezed budgets, means that most organizations do not have the capacity for or interest in taking on enormous projects. Also consider that line-of-business managers are playing a much larger role in IT investments, and their return-on-technology lens is measured in weeks and not months or years.

Many solution providers are adapting to this changing reality by designing their integrations to be more agile and iterative, delivering smaller "modules" of consulting, which show immediate results, and then moving on to the next logical steps. This gives customers control over project timing and costs and allows them to see the benefit of the first phase before committing to the next phase. IDC has found that in the long term, solution providers can make the same amount of revenue over the lifetime of a customer while defining and executing consulting projects in smaller chunks.

In many cases, cloud solutions serve as the perfect door opener for these deeper engagements because of the ability to start small and build out from there. The ongoing nature of this process, resulting in a number of smaller successful implementations along the way, can lead to a tighter, higher-satisfaction relationship with the customer and uncover a continuous string of opportunities.

Shift the Needle Toward Integration

The very nature of cloud-based and SaaS applications means they are up and running very rapidly and solution providers typically do not need to spend as much time modifying and configuring them. This gives IT consultants an opportunity to focus on higher-value services that ensure a customer's applications work together and communicate efficiently and places integrators in a very favorable position.

Ensuring good communications, and seamless data management, among disparate applications is a top priority for most businesses, and this includes integrations between existing on-premise applications, legacy on-premise applications that are being moved to the cloud, and new cloud-based applications that are introduced into the environment. IDC sees the role of integrating applications, and deciding which applications make sense in which delivery models, taking on greater prominence for many IT consultants and integrators. The requirement for integration also elevates the importance of technical architecture because combining cloud with on-premise solutions may involve heterogeneous technologies.

Be Your Customer's IT Department

While one approach to the cloud is to differentiate yourself by focusing on an industry or a specific business process, another is to stick to providing exceptional IT-focused solutions with a high service level for the right price. Some partners nickname their approach "IT department as a service."

There is a wide continuum of IT support services a solution provider can offer, from fielding ad hoc help desk calls to proactive maintenance and everything in between. Although it has always been a good business model, providing a comprehensive outsourced IT management and support service makes even more sense with the cloud. That's because cloud-based outsourcing involves much less capital investment from and lower operating costs for solution providers than on-premise outsourcing. Solution providers that adopt a cloud-based approach can replace declining or disappearing installation and configuration revenue with SaaS and IaaS solutions.

Many solution providers are already recognizing the potential in building out managed services capabilities. However, that doesn't mean it is too late and that the field will be too crowded to make an impact. There are a number of different approaches and tactics that provide lots of room for differentiation, from providing remote monitoring and management of the client's environment to providing outsourced help desk support, including the configuration and ongoing maintenance (moves, adds, changes, etc.) of applications. As two solution providers noted:

"First, it was cost beneficial to move the customer's business continuity services to the cloud. It is sort of a precursor. Now we're in the process of moving their phone systems to the cloud. This year and next, a lot of our focus is trying to move infrastructure."

"Managed services for us is managing all aspects of an organization's IT infrastructure, whether it be their help desk, their email, their servers, or anything else related to IT. We also offer a service where our president or our vice president becomes their virtual CIO. We help with the customer's vendors and contract relations. We don't make the decisions for them, but we're their adviser if they have any questions."

Managed correctly, this type of relationship can be greatly beneficial in terms of the ability to build long-term relationships with customers that can be continually expanded into new dimensions. In the words of one solution provider:

"One thing about being the IT department is it's a lot easier to go to the customer and say, 'You have to do this project.' In the old model, we had to sell them on it. Now, they know what's going on. They understand. We're a main department in the company. We're telling the other departments, 'If you want to keep growing, you have to do this project.'"

Leverage Remote Delivery

More and more solution providers are figuring out how to execute remote delivery of their IT services, because the less they have to be onsite with the customer, the less expensive it is to deliver the service. Senior engineers can provide oversight for several projects simultaneously rather than being tied up for months on end at a single client. This promotes scalability and also provides a training opportunity for new staff. As two solution providers said:

"The cloud reduces our support costs — which is our No.1 cost — while giving our clients better technology. We can be more remote and mobile while we're providing a higher level of service to our clients. That's from our business perspective. The customer also wins because they get better uptime, scalability, and mobility."

"It's shifted our business model quite dramatically in how our engineers are able to support our clients because we are able to do far more remotely."

For one, staff costs can go down by spreading out the higher-paid technical architects across more clients and using more cost-effective resources to execute on the bulk of the work. In addition, solution providers that are effectively using automation to increase their efficiency can improve their gross profit margins.

A center of excellence "remote delivery center" can be used to cover many different geographies without incurring travel costs. Cloud helps enable highly repeatable engagements, which is key to profitability. Many solution providers are using Microsoft Intune as a key tool in the transition to managed services and remote delivery. The virtually centralized approach also makes it possible to optimize staffing levels and train younger talent on specific repeatable tasks. Plan remote delivery methods with lots of leverage in mind, and plan for exactly how staff will be mentored to perform well in the high-leverage model.

Standardize Your Offerings and Pricing

Many solution providers are becoming proficient at creating and selling ongoing services that fit the recurring revenue model. These services were often previously sold on a one-off or transaction basis. The most obvious examples are around support relationships where a solution provider offers a bundle of support hours for a particular customer for a discounted rate every month. A prepurchase of a bank of monthly hours establishes a commitment to spend a certain amount as well as gives the customer peace of mind that someone will be available when it has a need. A similar scenario that's growing in popularity is for ad hoc professional services or even application development services. These services could help with security or Microsoft SharePoint administration or with workflow design and development. The customer benefits by securing its favorite systems engineer or developer, while the solution provider benefits from a profitable, ongoing revenue stream.

Successful solution providers report that one key to success is the ability to offer a menu of prepackaged offerings that can adapt to various client needs, from a basic level that allows metered consumption of support to a "gold plated," all-encompassing outsourcing and support service. Solution providers pursuing this model engage customers on a subscription or retainer basis to provide both proactive and responsive support for the client's entire IT infrastructure.

Fixed-price services are a great way to go as customers feel better about signing up to a scope and a price that are set. You just have to make sure the scope is clear and all of your underlying costs are known and stable. You also have to prepare for some customers that may not be a good fit for your offering and even politely decline their business and move on to those that are a better fit.

If a customer is going to say "no" in the end, it's better to get to that realization sooner than later. As one solution provider explained:

"We are now doing more and more fixed-price engagements all around SharePoint. Much more off the shelf, much more 'cloud' in its kind of style — its sales style and provisioning. What we do is what we do. We do it really well. And if that doesn't suit you, that's fine."

There is still lots of room for time and materials project work within the context of a cloud/recurring revenue business model. That's because customers will often need strategy advice, process redesign, or migration planning and mitigation. However, if you want to stay true to the business model, you might have to walk away from one-off project work for companies that are not currently annuity customers to avoid reverting to "peak and valley" revenue.

Essential Guidance

A change as significant as cloud always brings a need for readjustment or even reinvention of the way you do business. In terms of IT services, many things can change.

Cloud is prompting a move from extremely customized services to packaged IT service offerings. But don't confuse this with undifferentiated services. It is important to design the services "menu" with a view toward how it will provide both customer value and competitive advantage.

Consultant roles and staffing will need to evolve. In many cases, senior staff will need to interact more with line-of-business staff and have more true "consultative" conversations in the course of delivering services. They will also need to spend more time managing and mentoring highly leveraged delivery resources.

The nature of managed services will change with cloud, but traditional activities are quite compatible with cloud and may in fact be a catalyst. Managed service providers (MSPs) understand ongoing support and recurring revenue, so they will fit into cloud more easily than other types of companies.

However, MSPs should embrace cloud and not worry about how it may cannibalize existing services.

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