Sunday, June 28, 2009

We're Moving to The Cloud - Part One

    Note: To be kind, I'm not going to link up every reference I've made to my speculations about the future, about our industry, and building five-year plans. Please read the entire Small Biz Thoughts Blog. Suffice it to say:

    1. My prediction on the future of server architecture is happening NOW. SMB Consulting will change dramatically in the next six months. Are you ready?

    2. I am eternally grateful that I was fully vested in Managed Services when the economy collapsed. Yes, revenue went down. But it hit a base and did not go below that.

    3. Virtualization rules. If you're not doing it, Get started on Virtualization Today

    4. The Cloud is next. RUN - do not walk - to the Cloud.


In case you haven't been paying attention, here's your future:

- Hosted Servers
- Hosted Workstations
- Hosted Line of Business Applications
- You need SQL/CRM/Sharepoint? Hosted.
- Phones: Hosted
- etc.

In other words, you're going to sell a lot fewer servers in the future. And a lot fewer workstations. And fewer Office open licenses.

And less of everything.

At the same time, Microsoft, HP, Dell, Staples, AT&T, Google, and KPEnterprises are going to do what they can to push technology deeper into a market filled with smaller clients.

Why KPEnterprises? Because we hereby publicly acknowledge that there are no borders. If your credit card is good, I don't care whether you're in Sacramento, West Sacramento, San Francisco, Connecticut, Texas, Paraguay, England, France, or the Philippines.

Between my staff and all the outsourced I.T. connections in the known universe, we can literally do anything, anywhere.

A huge divide is taking place as the Cloud quickly moves in over the landscape. Very soon the world will consist of two large classes of service providers:

1) Providers who never want to interact with a client no matter what. These are the SaaS vendors. Sell, Sell, Sell. "Can't use what you bought? Cancel your subscription. We don't care." These people make a bunch of money by making a little money from a bunch of strangers. Client base: thousands or millions.

2) Providers who are willing to "touch" clients, explain how to right-click, help people figure things out, work through problems together, etc. Most of the readers of this blog have been in this category. Whether you stay there is up to you. There's still lots of money to be made.

So, even though you won't be selling as many servers, workstations, and licenses, you're still the people who will provide the service that makes all this stuff happen. People in this second category make their money combining services with labor. Labor and services will be sold to an increasingly larger client base (Microsoft and the others listed above will see to that).


Your Next Business Plan

Right now I'm laying out the future of our company.

As quickly as we can, we're adopting a new line card that looks a lot like this:

- We resell hosted web services. For some clients, this includes email.
- Microsoft or LAMP (Linux, Apache, MySQL, PHP). We don't care.
- The hosting provider will service these products. We help as needed.
- Our costs are monthly.
- Our revenue is recurring monthly.

- We resell hosted servers. SBS, Windows 2008, Sharepoint, Exchange, etc.
- Licensing through SPLA.
- We service.
- Our costs are monthly.
- Our revenue is recurring monthly.

- We resell hosted desktops. Thin/Chubby clients.
- Licensing through SPLA.
- We service.
- Our costs are monthly.
- Our revenue is recurring monthly.

- We resell hosted phone systems (virtual PBX)
- Phone company provides service. We help as needed.
- Our costs are monthly. (or we receive a commission)
- Our revenue is recurring monthly.

- We resell an on-premise cloud system (99% probability that it's the Zenith Infotech solution)
- Three year commitment. Monthly payments.
- Our revenue is recurring monthly.
- We service.
- Licensing through SPLA.
- Virtual Servers on premise.
- Virtual Workstations on premise.

- We will install an "on-premise cloud" at our colo facility and sell specific services off of that.
- Three year commitment. Monthly payments.
- Our revenue is recurring monthly.
- We service.
- Licensing through SPLA.
- Virtual Servers from our colo.
- Virtual Workstations from our colo.
- Additional services (e.g., backup/replication) from our colo.

- We resell select hosted line of business applications.
- Application provider services these products. We help as needed.
- Our costs are monthly. (or we receive a commission)
- Our revenue is recurring monthly.

- We resell Anti-Virus on a per machine per month basis.
- We service.
- Our costs are monthly.
- Our revenue is recurring monthly.

- We resell hosted spam filtering on a per user per month basis.
- We service.
- Our costs are monthly.
- Our revenue is recurring monthly.

- - - - -

MSP Mentor asked the question of whether Pure Cloud MSPs are possible.

Absolutely.

We don't anticipate going pure cloud. There's still a vital business in helping companies with their servers.

But I can absolutely see a pure cloud model working. This is especially true if you are willing to outsource the hands-on work to other partners flung across the globe.

Pack your bags, Honey, we're moving to the cloud.

Next up: The Finance Model for Moving to the Cloud

:-)



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Posted by karlp at 8:26 AM
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9 comments:

  1. < sarcasm >
    I've never considered you much of a technology consultant, seeing how you have employees, and with this post I must request that you turn over your trusted advisor boy scout badge at once.

    My two customers trust me, explicitly, to advise them and care for their infrastructure. If my customers don't see the infrastructure, how can they trust it? They can't! And how can they trust someone that recommends it, you obviously don't care about your customers data. I've been in this business for 60 years and I can tell you that nothing establishes trust like security. That's why I don't let my clients even use off site backup. Or tapes. Those tend to walk out you know. Or RAID1, what if someone took the spare drive? That is the kind of service that has earned me two clients this year and over five clients in the history of my business.

    Repeat after me:
    TECHNOLOGY DOES NOT CHANGE TRUST!

    There will always be a need for a managed local area network. How do you outsource crawling under a dusty desk to check the wires or drilling the asbestos filled ceiling to India smart guy? Think Dell or Gateway are going to come in here, I'd love to see them try!

    Seriously shortsighted Mr. Palachuk.
    < /sarcasm >
    ReplyDelete
  2. < Chuckle > Seriously, Karl. Don't hold back! Tell us how you REALLY feel. < /Chuckle >

    I appreciate your posts. They are so much more intelligent than my own. As always, you give us a sane insight into your thinking that pleads with us to come along.

    You were right about managed services and bent over backwards to help those like me start to down that road in a practical way. After 2 years of digesting your posts, seminars, and books, I have finally started to build my MS practice. Others contributed, of course, and my final thinking was a blending of all, but you are certainly the cement in that concrete. Thanks!

    Now you are starting us down another road... It is difficult to believe all that you say, but your credibility certainly makes me want to give you the benefit of the doubt. Silver tongued devil...

    Looking forward to your Part 2 :)
    ReplyDelete
  3. Ken - Welcome to the future.

    I've been presenting this vision of the future to a few clients. They get it (primarily because they don't understand the technology).

    And we're selling Managed Services on top of everything else. So that piece doesn't go away.

    Clients generally have the view that we're taking technology they don't care about or understand and "doing something else with it." One guy was relieved to hear that we're still doing Managed Service because he's been drinking the preventative maintenance koolaid for a number of years.

    :-)
    ReplyDelete
  4. So you'll become a selling company instead of a service company? That's a big change, bigger than I think many are willing to admit or properly plan for.

    My biggest hesitation on re-selling cloud solutions, is that the hosting provider refuses to take any responsibility. We're asked to turn over a lot of service revenue but to keep the responsiblity. This is still a bleeding edge item. Perhaps not technically but certainly as a business model.
    ReplyDelete
  5. Amy, I'm not sure what you mean by selling vs. Service.

    We'll be reselling different platforms on which our customers run their businesses. Other than that, we're still providing service.

    In fact, we're still providing managed services.

    The primary change is that the "systems" will exist in a hosted environment rather at the client's office.
    ReplyDelete
  6. Microsoft Compliance literally called me last week to go over my SPLA numbers. I got to asking them about hosted desktops, they said that currently, it is not something you can virtualize and offer through SPLA. How do you plan to get around that Karl?
    ReplyDelete
  7. Anthony: I'm a little surprise the MS folks didn't point you in the right direction. Kind of like the IRS. We won't tell you what you can do, so let's focus on what you can't do.

    Right now, the answer to desktops is VECD or the Desktop Optimization Kit.

    See my Simple Little Pocket Guide to Virtual Licensing -- Desktops.

    Basically, virtual desktops are made legitimate by the licensing that exists on the machine that accesses the virtual machine.

    I pray that Microsoft will soon abandon their absurd policies regarding desktop operating systems with regard to licensing. (Another debate altogether.) Perhaps virtualization will force their hand.

    :-)
    ReplyDelete
  8. You guys are lucky to have the infrastructure to support cloud computing. Here in New Zealand we don't - our broadband speed is abysmal and network outages are common.

    Well the positive is that I can watch on the side lines and see how cloud computing develops for you folks. If it takes off then I'll have an advantage when NZ finally upgrades their infrastructure. But for now... managed services. ;)

    Mike.
    ReplyDelete
  9. Tell it Karl!

    I built a whole business network down here in SC based on this same concept. Down here in the hurricane belt, business continuity is a HUGE sell! Hosted VoIP, Sharepoint, Exchange, we did it all! Business owners still need someone to design it, set it up and manage. I'm "learning up" on the Virtualization piece right now. Workstations are disposable anymore. Why not create them on the fly?! MS licensing will come around soon enough. MS will be selling their OS a la carte in the future! Too many opportunities for them to resist!

    Keep teaching/sharing! Love the site!
    ReplyDelete

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