By Ryan Will and Jo Peterson
If you are like most traditional telecom agents, you want to sell cloud services, but you haven’t done much yet, especially if your primary customers are small and medium businesses (SMBs). If you are selling cloud services to SMBs, you most likely started with a solution in your comfort zone — hosted voice, for example. You know you need to expand your cloud services portfolio, but where should you start?
You might think that infrastructure-as-a-service (IaaS) is the best next move, but virtual server technology has a language all its own. Instead, we recommend starting with business applications in the cloud.
Companies of all sizes, including SMBs, are running their business applications in the cloud with everything included for a per-seat or per-user subscription fee. Some of the most popular cloud applications are email, virtual desktops, Microsoft Sharepoint, hosted voice, etc. — applications most business users utilize every day.
And it’s possible to move many existing licenses to the cloud if the provider supports the move. This includes popular software licenses such as Microsoft SQLServer, Microsoft SharePoint, Microsoft Exchange, SAP HANA, SAP HANA One, Oracle 11g, PeopleSoft and IBM DB2, as examples.
These point solutions are a great way to start selling cloud services for a few reasons:
- Many of your current telco and data service providers are offering business applications, making this a fairly easy add-on.
- The monthly price is on a per-user basis and is usually all-encompassing, so it’s easy to figure out what it will cost your client.
- The IT buyer, who is usually your client, is often the technical resource and initial data gathering point for the project.
- It changes your client’s view of your business, moving it into the “solution provider” category and not just the “circuit provider” category.
- It opens the door to broader cloud conversations.
- It earns your firm additional wallet share.
- It offers your firm visibility into other areas within the organization or lines of business, such as marketing, finance or HR, that might be consuming cloud services.
If you aren’t talking to your client about these products, chances are strong that someone else is. That’s because SMBs represent a big opportunity. According to the U.S Census Bureau, small businesses make up 99.7 percent of U.S. employers. The Office of Advocacy defines a small business as one having fewer than 500 employees. Fifty percent of these firms have less than 100 employees. Small firms accounted for 64 percent of the net new jobs created between 1993 and 2011. That’s 11.8 million of the 18.5 million net new jobs. Chances are several, if not many, of your clients fall into the official definition of SMB.
And, in case you weren’t paying attention, SMBs are buying cloud. Agents often think that large customers are the only ones embracing cloud services, but this just isn’t the case. “In mature markets, SMBs use an average of five cloud services now, expected to grow to nine services by 2016,” according to Parallels SMB Cloud Insights 2014 study.
The study also found that in the United States, the SMB cloud market grew from $18.9 billion in 2012 to $24 billion at the end of 2013 and is forecast to grow at a 17 percent CAGR through 2017. Of that $24 billion, business applications make up $7.1 billion, up from $5.4 in the previous year’s study. The researchers noted a 17 percent year-over-year increase in business applications use. The SMB market clearly has an appetite for this type of solution and the market is growing rapidly.
What are SMBs buying? The four solutions that most SMB firms will consider moving to the cloud are:
- Hosted email
- Hosted virtual desktops
- Hosted SharePoint
- Hosted voice
So you’ll want to become familiar with each of these services, beginning with their costs:
- Hosted Exchange/email — Depending on the bells and whistles you add, the cost is about $8-$10 per user per month. Hosted email comes in at much less, averaging $3-$5 per user, per month. Many providers let you mix and match the two flavors of email. Additionally you can add archiving for about $3 per mailbox.
- Hosted virtual desktops — This can run $30-$70 per month, per user. Some solutions come with some additional bells and whistles, such as hosted Exchange, instant messaging, etc., which can push the price up a bit.
- Hosted voice — This service ranges from $20-$30 per month, per user, not including call center functionality or a large amount of long-distance traffic.
- Hosted SharePoint — This collaboration app costs $80-$150 per month, per user; additional storage can increase the price.
Selling all of these services to a customer can bump up the average deal size. Let’s do the math based on 40 users:
Imagine being able to sell at least one of these services into 20-30 percent of your existing customer base. The overall ability to increase your customer wallet share with cloud business applications is substantial. In addition, the customer thinks of your firm as even more of a go-to resource than they do today. The even better news is that this conversation can be a starting point for further cloud conversations.
Ryan Will is managing partner and president, cloud and data center services, for master agent Converged Network Services Group (CNSG). He is responsible for leading growth primarily in the Southeast and South Central U.S. He also leads CNSG’s cloud/data center strategy. During his more than 18 years of industry and professional services, Will has worked in — and for — organizations to build a wide variety of collaborative sales and marketing deliverables.
Jo Peterson is the vice president of converged cloud and data for Clarify360, a division of Teleproviders, a southern California master agent. She joined the company in 2009 as a regional sales manager with responsibility for aligning a go-to-market strategy for cloud services. Peterson also is the founding co-chair of Cloud Girls, a vendor-neutral community of female technology advocates dedicated to educating themselves, their companies and their customers about cloud services.
Learn more in the session, “Thinking Outside the (In) Box: Core Cloud Technologies for SMB Customers,” at Cloud Partners, a Channel Partners event, Sept. 8-10, in New Orleans.