Microsoft, Avant, Datapipe: Public Cloud More Profitable Than You Think

Cloud computing

James AndersonIs public cloud actually profitable?  That’s the question four channel leaders will discuss at Channel Partners Evolution, Aug. 14-17, in Washington, D.C.

Rich Cannon, senior director of industry marketing for Microsoft Worldwide Hosting and Cloud Services, Drew Lydecker, president of Avant Communications, James Tansey, vice president of global channel sales and alliances at Datapipe, and HOSTING President Bill Santos will participate in a panel called “How Do I Make Money With Public Cloud?”

Microsoft's Rich CannonCannon, Lydecker and Tansey gave Channel Partners a brief preview of their talk.

The interview transcript has been edited for length and clarity.

Channel Partners: What’s the biggest misconception partners have about public cloud?

Rich Cannon: Their margins are lower than in selling licensing. They actually will have a better lifetime value of customers and greater loyalty with a subscription business.

Drew Lydecker: There [are] two from a partner’s perspective. One, that it’s not easily monetized — meaning it’s not a market that channel partners right now believe they can make money in and be a part of. And the second thing is that most people don’t realize right now how big and how fast the managed public-cloud sector is becoming. And that’s mostly because it’s very new, but it’s being adopted in the market at an alarming late, because very few end customers have the capabilities and the expertise in-house to be able to go to the large public cloud market and be extremely productive in it.{ad}

Avant's Drew LydeckerJames Tansey: From what I’ve seen in the industry, a common misconception for many partners is the assumption they cannot make money with a public cloud solution. While that may have been true in the past, managed service providers (MSP) like Datapipe now provide layers of services to fit each client’s specific needs. These value-added services can include security, managing compliance issues, or assisting with migrations to the cloud. What many partners don’t realize is that working with an MSP helps increase their bottom-line revenue and develops stronger relationships with their customers. 

CP: And when it comes to generating revenue with it, what do businesses get wrong with public cloud?

RC: They just resell it rather than creating specific offers and value proposition[s]. It’s one thing to sell “Azure site recovery”; it’s another to sell a disaster-recovery service.

DL: Historically, Amazon or Microsoft has had a program that’s direct that allows partners and trusted advisers to go out into the marketplace and make a commission similar to what they would on a normal cloud solution. What the managed cloud provider’s been able to do is wrap different services around the public cloud … For instance, Datapipe is a famous company for doing the production and development in AWS, and the full production would be on their bare metal and their shared infrastructure, and they would wrap a …


… managed layer overall of it, which would allow the partners to monetize not only the AWS but the managed services [sic.]. It’s huge. It’s a double-edged sword in a good way. Not only is it huge for the partner to be able to bring this to market and make money off of it, but at the same time it’s huge because partners don’t even realize this is out there but desperately need it. This is a huge thing in the market where as soon as the customer finds out that they have the ability get a fully managed AWS, fully managed OpenStack, fully managed Azure and the ability to go onto bare metal, private cloud, international – all from one source – it’s a major coup in the marketplace for both the customer and for that channel partner or trusted adviser.

Datapipe's James TanseyJT: Many businesses try the lift-and-shift approach, which rarely works. Clients have complex needs and often require professional services to migrate to public or even hybrid cloud solutions. Choosing the right business partner can make all of the difference. A partner with a global presence and with experience in managed services can provide faster, less problematic implementation and results in increased revenue streams and cash flow.

I can’t stress this enough — strategic planning needs to be the first priority. There are many variables to consider when migrating to the cloud, including whether or not to use a provider and, if so, which one. This one decision can have a large impact on revenue results. Consider the challenges that your vertical market may face; know that enterprise clients often have vastly different needs. Global presence, compliance, security, access and proximity to your data also need to be factored into the equation. You cannot move to the cloud, let alone expect to make money, without a detailed cloud strategy.{ad}

CP: How has your company applied the lessons you’ll be teaching about public cloud?

DL: It’s been incredible to see. As a cloud leader, from an Avant perspective, and really becoming the largest distributor of cloud services, we get to see trends on a yearly basis or on a monthly basis. Through our research house that we have internally through our engineering staff, we have never seen a trend in the cloud marketplace happen as fast as managed hyperscale is — the managed public cloud sector. This is a trend that we’ve seen happen overnight virtually, and the more people get comfortable with it – both from the trusted adviser and then from the customer perspective – the more it is consumed at a faster and faster rate.

RC: My role at Microsoft for the last 10 years has been about enabling resellers in the U.S. and now around the world to be profitable and scale. If anything, they underestimate the opportunity and the work involved to get it. Anyone growing at below 40 percent year-over-year is missing out. I have applied these lessons through a team of marketers who have built the [Microsoft] channel for cloud to a multibillion-dollar business.

JT: Datapipe is recognized as a pioneer of managed services for public cloud platforms and has been helping channel partners increase revenue streams since 1998. We understand the complex nature of public cloud, and have learned it is necessary to provide services through world-class interconnected data centers with comprehensive cloud, compliance, security, governance, automation, and DevOps solutions. We take the time to understand a client’s unique business requirements and implement a customized approach for architecting, migrating, managing, and securing their public cloud solution. Datapipe enriches the channel partner experience, working closely with clients to develop true partnerships — our success is found in the improved success of our client’s business. 

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