As I talk to MSP customers around the world I am amazed by the variety in what they are doing with “cloud.” In past posts I have pointed out that MSPs are the biggest cloud instigators. If it weren’t for them, we probably wouldn’t see business users complaining so much about the time it takes to deploy a new server using traditional methods. So, MSPs are clearly on the cutting edge of the market. To that point, I thought I would take this holiday post to have some fun – to dig into the evolution of this market, and outline a few interesting business models that MSPs (or service providers, if you prefer) are going after. Let’s get into a few of the more interesting business models.
Imagine for a minute you are a large telco. You want a cloud business, and you want it now. The problem is you don’t want to buy an existing cloud business, and you are not sure you want to implement your own from scratch. What are you left with? This excellent franchise model. An established MSP shows up at your door, and they offer you their MSP business in a box. You get architectures, templates, hardware specs, processes, portals – everything you need that is an exact duplicate of an existing cloud business. And you get it in your data center. I call this the franchise model, because for a slice of margin and some upfront investment, you too can have a cloud business in your stocking.
Rudolph, can you help me see my way to the clouds?
Imagine you are a software vendor. You sell traditional software to your customers, and they are pretty happy with you. Then along comes SaaS, and you start to see your business decline for competitive SaaS offerings. So, instead of throwing in the towel, you find a partner than can get you a cloud offering right now. This Service provider helps you SaaS-ify your product and then hosts it for you. Now, in no time, you have your software product as a SaaS offering – complete with portal, billing and user management. It is hosted by the MSP that SaaS-ified the application, and you share some margin in exchange for market access to a whole new business. Neat. I call this the SaaSifier.
Who needs a sleigh filled with hardware when you have … The Hoster.
Let’s assume for a minute that you have the best idea for a software offering the world has seen. You want to offer it to customers, but you can’t see your way past the fact that you don’t have a data center. Well, no problem. An entire line of MSPs exists just to host your business for you. The will do everything from a traditional co-location agreement to a full managed service agreement. Just bring your services and know how, and they will handle as much of the rest as possible. How is this different than the SaaSifier? The SaaSifier takes your software and makes it into SaaS. The Hoster, on the other hand, lets you provide your SaaS application and does everything else.
In my stocking, the new action flick … The Aggregator.
How many smaller MSPs are out there? Lots. And more are emerging every day. In the non-cloud world we have a role called the Value Added Distributor (VAD) to address these customers. They have a network of Value Added Resellers (VARs) that help them reach a range of customers. VAD account managers help educate the VARs on products, run sales campaigns, provide marketing, book keeping, and sometimes services as part of the “value added” role. Today, we are seeing the emergence of a specialist role for service providers, a role we call the MSP Aggregator. These are typically geographically focused businesses who manage licenses and other services for small MSPs. Instead of a network of VARs, Aggregators have a network of MSPs. The Aggregators, then, offer value added services to their MSPs, and typically consolidate licensing and manage vendor relationships.
These are just a few of the more interesting MSP roles I have seen out there. What do you think? Are you seeing anything crazy coming up in your travels. If so, I would love to hear from you.
*Image used under Creative Commons License.