Tuesday, February 5, 2013

Virtual Infrastructure: Commodity Service or Value Enhancer?

As you integrate cloud technologies into your managed IT services practice, you will most likely find yourself evaluating virtual infrastructure as a foundation technology for your portfolio. You will find it relatively easy to position the classic benefits of cloud computing to your customers - you know them - zero capital outlay, predictable operating expenses, infinite scalability, continuous availability, access from anywhere, at any time, and so on.

Virtual infrastructure is a foundation technology because new applications can be readily built on top of flexible IT resources and you can wrap your own managed and professional services around them. What customer segment would not benefit from an on-demand resource that allows them to host all of their business applications as well as their website presence, virtualize their storage systems and desktops and, at the same time, provide an offsite backup and disaster recovery capability for their entire IT environment? The value proposition is too compelling to ignore and the recurring revenue possibilities for your business are too lucrative to leave on the table.

But is virtual infrastructure a commodity service or is it a value enhancer for a Cloud Solutions Provider (CSP) business? That’s entirely up to you and how you position the technology, how you integrate it with other services, and how you price and package it as part of a managed IT solution for your customers.

Like everything else, there is a right way and a wrong way to leverage cloud technology as a service provider. Lets start with the wrong way. If you simply refer your customers to a commodity public cloud service, turn the billing relationship over to the public cloud provider, settle for the breadcrumbs of a referral commission and fail to add value as a trusted IT advisor, then you have missed a significant opportunity to grow recurring revenue and deliver added value to your customer.

Recently, we had a guest speaker from Artisan Infrastructure address our Virtual Peer Group (VPG) to talk about this issue.  Here is what they had to say about enabling CSPs to profit from their virtual infrastructure platform.  

* They are a 100% wholesale provider - they never compete for business with their channel
* They offer a cost-plus model - the CSP sets the final customer price - not Artisan
* The CSP owns the customer billing relationship - allowing the CSP to bundle services
* They have created an ecosystem of technology partners - so the CSP can integrate solutions
* They support CSPs who are new to virtual infrastructure management, or highly experienced

We think the Artisan model is the right way to leverage cloud technology. It’s a model that allows a CSP to add value, set their own prices for bundled solutions and own the total customer relationship. Just think of the opportunities available to your company, as a trusted advisor, in designing a virtual solution, managing your customer’s cloud migration, optimizing the cost, performance and user experience of their solution and implementing an appropriate security and business continuity policy for their online environment. Then after deployment, you can remotely monitor and manage this virtual environment for a monthly fee - all without the threat of competition from the infrastructure provider.  

As you consider technology building blocks for your CSP business, think about how you can add value during the design, deployment and delivery phases and look for technology partners who enable you to profit from your role as a trusted advisor. It’s the difference between acting as a reseller of commodity cloud services and an integrator of tailored cloud solutions.

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