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SMBs Embracing Office 365, But Migration Can Fatten Margins

Lorna GareyChannel partners not selling Microsoft Office 365 – and helping migrate data and users to the service – are leaving a rich source of revenue untapped. That’s one finding of new research by AMI-Partners, which projects that U.S. SMB spending on cloud email and productivity suites will triple by 2019, from roughly $1.9 billion in 2014 to $6.5 billion. That’s a five-year CAGR of 28 percent.

AMI isn’t alone in its optimism. IHS Infonetics also projects healthy growth across the software-as-a-service spectrum. Public cloud services, including enterprise sales, will be a $200 billion market by 2018, says the consultancy, up from about $80 billion this year. Of that $200 billion, SaaS alone represents about $80 billion, the largest sector by far. The remaining $120 billion is split three ways, with IaaS and CaaS at about $45 billion each and PaaS grabbing the scraps.

But while simply reselling Office 365 and other productivity tools is a good business, when it comes to SMBs, it’s value-added services that deepen the partner and customer relationship and improve margins, say Todd Schwartz and Evan Richman, co-CEOs of SkyKick. The company, which sells exclusively through the channel, provides products and services to help partners move customers seamlessly from on-premises versions of Microsoft productivity software to Office 365.

Schwartz told Channel Partners that migrating even a relatively small company can take a partner 40 hours; the labor cost for planning, discovery, account setup and other steps scale up with customer size. SkyKick’s software can reduce the time needed to move to the cloud significantly, by as much as 90 percent in some cases.

AMI profiled migration software from SkyKick and competitor BitTitan, as well as Microsoft’s free utility, and found that use of these tools increases partner margins from 11 percent, when simply reselling Office 365, to 24 percent with the added support. The report also found SkyKick scored highest in satisfaction among more than 100 channel partners included in the study; it led significantly in features including …

… ease of use, time savings and risk mitigation.

The keys to margin growth are speed and automation — the more thoroughly and quickly the software can discover and provision accounts, update DNS and other settings, move data to the cloud and communicate information to end users, the more customers a partner can convert to 365 with existing staff, said Richman.

Overall satisfaction with end-to-end project automation among partners in the AMI study was 93 percent for SkyKick, 55 for BitTitan and 43 percent for Microsoft’s utility, a showing Schwartz and Richman attribute to their backgrounds – both held leadership positions on Microsoft’s Office team, and the company is a preferred technology partner – and their focus on making the software easy for channel providers to use without a training investment.

AMI says 16 percent of small businesses and 32 percent of midsize shops plan to migrate their on-premises email and productivity suites to Office 365 over the next year. If you’re among them, take note: Registered Microsoft Partners with a valid MPN partner IDs and Office 365 internal-use rights licenses can try the suite for free for a limited time on their own internal migrations; orders must be placed by the end of June.

Follow Editor-in-Chief @LornaGarey on Twitter.

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