Build a Successful Solution Provider Business Plan for Cloud Computing: A Practical Guide for Solution Providers


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Build a Successful Solution Provider Business Plan for Cloud Computing: A Practical Guide for Solution Providers

  1. 1. U I C K S TA R T G U I D O W E R E D B Y :Build a Successful SolutionProvider Business Plan forCloud ComputingA practical guide for solution providers
  2. 2. a successful solutionprovider business plan forcloud computingThe momentum behind cloud services continues to gain strength, thanks to thecost and flexibility advantages the delivery system offers businesses of all size.Consumer awareness, acceptance, and spending are all on the rise, and solutionproviders have a tremendous opportunity to capitalise on these trends with avariety of service options and platforms. Over the past five years, cloud computinghas shifted from a few web-based services to a large portfolio of business productsand models. According to Gartner Research, the global cloud-services market willexpand significantly, from $46.4 billion (£29 billion) in 2008 to more than $150billion (£93.8 billion) by 2013! A number of companies are even expected to removetheir IT infrastructure completely, with approximately 20 percent of businessesapproaching a near-100-percent cloud model by 2012.The conversion for solution providers isn’t as easyas registering all their clients with the vendor thatoffers the proper web-based application. The cloudconversion requires a deep evaluation of your clientsand vendors and assessment of how recurring revenueopportunities will affect your overall business model.To ensure long-term success, solution providers have todo their homework and follow industry best practices.Without proper planning and the right investments, youcould seriously jeopardise revenue, profit margins, andeven clients.The Transition and and Google are great examples ofthe cloud computing market opportunity, with SaaS(software as a service) models that a number ofbusinesses use to address specific organisational needs.In 2009 alone, IDC attributed $13.1 billion (£8.2 billion)in worldwide sales to this segment of the cloud market,expected to reach $40.5 billion (£25.3 billion) by 2014.While SaaS has emerged as a revenue leader in thisspace, IaaS (infrastructure as a service) is growingsignificantly. Amazon may be the most recognisedname in this segment, but more than 40 rivals arenow competing for channel partnerships and end-userbusiness. The latest cloud model, PaaS (platform as aservice) is quickly gaining ground as a method of creatingand hosting new and existing cloud-based applications.Converting physical software applications into web-based solutions doesn’t typically lead to an increase intechnology sales and can actually decrease a solutionprovider’s profit margins and overall revenue. That’s thenature of recurring revenue—shifting an annual cost toa monthly charge for your clients and ensuring a steadycash flow through long-term contracts. There are anumber of cloud services models and, depending onyour investment in infrastructure and support, differentlevels of profit potential.Solution providers that aren’t already dedicatingcapital, time, personnel, or training resources to cloudservices are falling behind the industry. According
  3. 3. P O W E R E D B Y :3quick start guideCloud Computingto CompTIA research, a significant part of the channel isproceeding carefully with modest investments (less than10%), possibly due to the burden of shifting businessmodels. This caution hints at a slow implementation onthe provider side, while the study also suggests three outof four end users plan to increase their cloud computingspending in the coming year.Fifty-three percent of end users intend to raise their cloudcomputing investment by 10 percent or more, which illustratesthe opportunity for solution providers who invest in thetechnology delivery systems. Nearly two-thirds (64%) plan toincrease their spending by more than 5 percent in the comingyear, while 72 percent expect to expand the type and numberof web-based services they employ.Both solution providers and end users place “simplicity” and“abstraction of complexity” last on the list of terms theyassociate with cloud computing, according to CompTIAresearch. This suggests that the technology simply hasn’tachieved the expected goals of the either group, i.e. tomove infrastructure and operations off-site, to be managedremotely, and to allow them to achieve greater efficiencyof scale. The low rankings of these two attributes suggestthat, while both groups recognise that cloud computingwill eventually bring about simplified administration andtechnology usage, they still have not fully adopted nor dothey completely understand this complex process. Makingthe transition to cloud computing will require solutionproviders to obtain additional integration skills to link existingIT infrastructure with a host of cloud and on-site systems.This presents challenges beyond the required technologyexpertise and will require retraining in operations, sales,finance, and other practices in their own services business.Of course, these same needs exist for end users and presenta large opportunity for VARs and MSPs. Once the cloud andintegration skills are integrated into your own business, theycan be redeployed to support client needs.The limited understanding and definition of the cloudcreates another business opportunity for those who havethe consultative abilities to lead clients into the transitionaltechnology platforms. Nearly 40 percent of channelorganisations are not involved with offering or using cloudcomputing internally. For those who acquire the skills andknowledge to provide web-based applications, training, andsupport to businesses, the opportunity is real.Eight Steps to Cloud Success1. Research your cloud optionsSolution providers have the ability to offer a plethora ofservices and applications to their clients, and the list of cloudoptions continues to grow. The first step is to determine theproper portfolio that will address the business and technologyneeds of your customers, including your own professionaland value-added services. VARs and MSPs can act asbrokers and referral agents to cloud computing vendors andaggregators, receiving a commission or fee in return (onetime or at regularly scheduled intervals). A cloud businesscan be augmented with migration and customisation services,including the combination of web-based applications with on-premise systems.• Consulting services• Managed IT services• Cloud integration/deployment/testing• Capacity planning• Cloud monitoring/management services• Brokerage/aggregator• Cloud analytics/businessIntelligence• Database• Development/testing• Analytics/businessintelligence• General purpose• CRM• Storage/backup• Managed security• Call centre• Help desk• ERP• Business productivityapplications• Document/contentmanagement• Security (e.g. spammanagement)• EmailWhat Types of Cloud Services and ApplicationsShould You Consider?
  4. 4. Determine your capabilities and role(s)Once you determine what you want to offer, you needto evaluate your company’s ability to deliver each of theservices. While some solution providers may be able tocreate, host, and deliver each part of their cloud portfolio,it is not necessarily to their advantage to do so. Becausethe complexity, infrastructure requirements, and cost maybe prohibitive to most channel businesses, leveraginga network of vendors or aggregators could be the bestoption. The other option is to create a hybrid portfolio. Forexample, a solution provider might be capable of hostingand delivering an email-management application via thecloud, but, due to endless regulatory compliance changes,decided to resell a vendor’s data storage services. Anumber of those offerings can be “white-labeled” withreports and billing that seamlessly integrate with a VAR’sor MSP’s portfolio.When solutions are difficult to replicate, profit marginsare typically higher. If a service provider has theskilled staff and ability to host and support a complexapplication in the cloud, he might be well advisedto pursue that business opportunity. But creatingand supporting a number of these “virtual softwareofferings” requires an investment in skilled professionalsand an advanced infrastructure that, frankly, isn’tworthwhile for the majority of VARs or MSPs. Solutionproviders should research the costs and benefitsbetween building and hosting their own cloud servicesand partnering with a peer organisation or vendor toresell their offerings.Another factor to consider is your client supportoptions. Does your organisation have the technology,skills, and reach to meet all the maintenance and repairneeds of your customers? This involves several levels ofexpertise:1. Consulting: assessing client business needs andsuggesting solution options2. Plan and design: outlining the proper technologysystems and implementing strategy3. Delivery: preparing the cloud offering for distribution4. Implementation: transferring, deploying andcustomising the customer’s data5. Operation/management: monitoring and maintainingperformance of all systems (an ongoing process)Cloud computing is not radically changing thelandscape of companies in the IT channel, but theflexibility of technology delivery allows solutionproviders to take a greater role. The ultimate consumerdoes not change, and SMBs will continue to look toVARs, MSPs, and IT consultants to help them meettheir business needs. Cloud computing allows solutionproviders to transform their role in the IT channel—evento become a vendor of these services to their peers.3. Determine the best service model foryour businessSolution providers can select from three cloudcomputing service models: software as a service (SaaS),platform as a service (PaaS), and infrastructure as aservice (IaaS). While the differences may seem minute,the client and solution provider site-technology needsdo vary. Delivering each of these services requires awide variety of skills, knowledge, and training.Cloud-based solutions are, by nature, less complex andeasier to deploy than their on-premise counterparts,which makes them easy to sell directly. The opportunityfor solution providers is to distinguish between simpleweb-based applications and comprehensive “business-class” offerings that require additional customerconsultations. With this in mind, you have to balancethe complex needs of your clients’ organisations withthe pricing pressure of less capable applications. Thatrequires a thorough review of service models, including:• Software as a Service (SaaS): applications runningon a cloud infrastructure via a thin client or browser.It includes services such as web-managed email(i.e. Microsoft Exchange or Google Gmail), CRMsolutions (i.e. or SugarCRM), andoffice productivity applications (Google Apps).Vendors providing such services are reselling theirofferings through solution providers who can adddeployment, migration, training, and support serviceson top of the core offering. Of the three major cloudcomputing service models, SaaS has the widestadoption among end users (69% are using) andchannel organisations (49% are selling).• Platform as a Service (PaaS): an environment uponwhich users can develop and deploy services forconsumption. PaaS providers include MicrosoftAzure,’s, and Google’s App
  5. 5. P O W E R E D B Y :5quick start guideCloud ComputingEngine. The channel can either use PaaS to develop itsown unique offerings or resell capacity and support toorganisations that require PaaS services. For the channel,PaaS is about exercising expertise to leverage platformsand support cloud-based platforms.• Infrastructure as a Service (IaaS): sharing of infrastructureresources for running software in the cloud that wouldordinarily be deployed and operated on-premise. IaaSprovides consumers with processing, storage, networks,and other fundamental computing resources needed to runtheir applications. Solution providers can be providers andbrokers of these services.4. Assess deployment model optionsAfter determining the services to be offered and themode of delivery, the final step is to determine how thetechnology is set up. Some solution providers have thedesire or existing infrastructure to offer their own cloudservices, while others partner with vendors to offer all orpart of their portfolio of web-based applications. A finaloption is to create a cloud infrastructure within your client’sbusiness, accessible only to its employees and approvedpartners. Most VARs and MSPs take the vendor-partnerroute, though some have created a combination of theirown SaaS offerings and third-party cloud services. Cloudcomputing applications, platforms, and infrastructuresshould guarantee interoperability, open standards, andaccessibility to resources and data that ensures continuedreturn-on-investment and business value. Deploymentmodels include:• Private clouds, where businesses build and operate theirown internal cloud infrastructures, though they can beconstructed, managed, or hosted by third parties. Thechannel plays a critical role in the development of privateclouds by providing consulting, design, deployment,implementation, and ongoing support services.• Community clouds, which are typically shared by a numberof organisations and support a specific community withsimilar concerns. This deployment model is rare butconsists of a web-based infrastructure shared among asmall set of businesses (such as a consortium), establishedto securely exchange information or transactions. Mostfrequently hosted and managed by an independent thirdparty to support numerous constituents, community cloudspresent an opportunity for channel providers who canbuild, manage, resell, and/or support these cloud models.• Public clouds, that are owned by private entities andused among common industry businesses and groups.The infrastructure (network, compute, storage) isaccessed and shared over the Internet, resulting in cloud-based and remotely delivered services. Public cloudsare critical elements to cloud computing, which channelcompanies can leverage to support their customers.According to CompTIA research, many cloud solutionproviders use the public cloud (26%) and their own datacentre to deliver their services. Only 9 percent of channelproviders are pure resellers of a vendor’s cloud offerings.• Hybrid clouds are a combination of two or moredeployment models, such as private and public web-applications. These are the most common form ofcloud computing implementations, leveraging publicresources, private services, and even legacy, on-premiseinfrastructures. Integrating and enabling hybrid cloudsprovides consultation, integration, and support servicesopportunities for solution providers.5. Develop service-level agreements (SLAs)One of the most critical components of a cloud computingpractice is its SLAs, including the agreements that aresigned with vendors and other partners and the guaranteesprovided to customers. A majority of web-based servicesare delivered and administered by third-party organisations,so detailed performance assurances are critical to ensurelong-term viability. This is measured through service-levelagreements, which specify the expectations of the cloudconsumer and list the consequences of contract breaches.Cloud service suppliers need to furnish and review detailedSLAs with their clients and be sure that they receive andevaluate similar agreements from their cloud partners. Whencollaborating on the delivery of a portfolio of web-basedsolutions, it’s important to make sure the responsibilitiesand penalties for non-performance are clearly outlined inthe agreements. The CompTIA Member Resource Centrecontains sample SLAs, which can be adapted for use inyour cloud-services practice. Before signing agreementsfrom your vendors or cloud aggregators, it’s recommendedto have them reviewed by a lawyer to ensure that theconditions meet the needs of your organisation and clients.Cloud computing is a service-oriented offering and requiresneutrality, interchangeable modules, and near universalinteroperability. The SLAs and business contracts you signshould reflect these requirements.
  6. 6. Address your clients’ compliance andsecurity needsWhen your clients contract or subscribe to one or more ofyour cloud services, the risk and liability become theirs. TheSLA and other contracts should detail regulatory compliancerequisites such as auditing and inspection, data storage andreporting, process and procedure guidance, and response andremediation services. For resellers of cloud services, a carefulreview of vendor contracts is essential to ensure that you andyour clients are protected from unnecessary liability.One of the top inhibitors to cloud-computing adoption issecurity and privacy concerns. Through proper research andtechnology design, however, these objections can be properlyaddressed. Because confidentiality, integrity, and availabilityare essential to adoption of this delivery model, providing fulldisclosure to potential and existing clients is a critical elementof any cloud programme. Solution providers can also providetheir expertise as consultants, evaluators, and providers ofsecurity and privacy services to their customers. Compliance isan issue of concern for many SMBs, so your role here could bea true differentiator.7. Design a training and support programmeCloud computing changes the delivery mechanism of applicationsand infrastructure to your clients. That presents opportunities foradditional service and support options for IT channel businesses,including training, customisation, and consulting to help yourclients receive a high return on their investment. For example,you can plan and guide them through a migration to a cloudemail solution, ensuring that the employee transition from theirtraditional service is both smooth and transparent. You can provideon- site or remote training for customers, including the creation ofguides and other materials to help them get the most from the newsolutions and know where to go for answers to their questions.Organisations that successfully adopt new technologies, likecloud computing, require a responsive support organisation tomeet their transitional and ongoing needs. Solution providersmust evaluate the collective needs of their customers anddevise a plan to provide the support they need to make themove. You must decide whether you will provide all the supportor depend on vendors or cloud partners to share the load.VARs and MSPs must outline how each service in their portfoliowill be supported, as well as the employee and businesstraining options for customers. Don’t overlook the opportunityto partner with experienced application training organisations,if developing and providing that education doesn’t fit yourbusiness plans. Beyond a financial relationship, collaborationhere could enhance the training experience for clients and theiremployees, as well as ultimately improve the usability and valueof your cloud services.8. Execute your cloud plansCloud computing, like managed services, offers a recurringrevenue stream for solution providers. VARs and MSPstypically receive a share of service payments at predeterminedintervals. On the other hand, the automated and self-servicenature of cloud computing can actually reduce value-addedopportunities for traditional infrastructure providers. Thechannel plays a vital overall role in cloud computing, with theability to integrate multiple technologies and leverage a varietyof service models. After developing your own company’s cloudsolution, it’s time to put your go-to-market plan to good use.• Advise: Assess the infrastructure and ability to implementcloud computing technologies in your client’s business. Asan advisor, you develop an initial strategy and provide theportfolio of options.• Plan and design: Develop project and implementationplans for your customers. After the cloud infrastructuretype or cloud application is identified, you need toevaluate the client’s current assets, as well as integration,migration, and implementation requirements.• Delivery: Before the service is implemented, it mayneed to be constructed on a platform for delivery to thecustomer. With a number of vendor-hosted cloud offerings,implementation can be completed by simply activating andprovisioning the account from a remote location.• Implementation: After setting up the service, a providertypically transfers data and accounts to the cloudplatform, integrates other business applications, deploysoptional services, and customises the solution to meetthe needs of the client.• Operation/management: When the cloud service is fullyoperational, providers monitor and ensure performance of allsystems. Maintenance is performed, and updates, patches, andconfiguration changes are completed when required.• Support: The degree of service delivery depends on theprovider’s capabilities and technology specialisation. Thisstage includes ongoing helpdesk, systems administration,and training support for end users.• Account Management: This ongoing function of the deliverycycle periodically reviews the entire process and each cloudservice. An account manager advises customers on howto best utilise services, analyses usage and performancereports, and identifies areas where a client can improveoverall operations.
  7. 7. P O W E R E D B Y :7quick start guideCloud ComputingAbout usCompTIA Cloud/SaaS CommunityThe CompTIA Cloud/SaaS Community is acollaborative group of technology suppliers andcloud-computing vendors, distributors, serviceproviders, and resellers dedicated to advancing cloudcomputing in the global technology marketplace.Our community is dedicated to defining cloudcomputing technologies, business models, and bestpractices; building cloud tools and resources; creatingand administrating professional credentials; anddeliberating and resolving issues related to evolvingcloud computing challenges and opportunities.Our community is resolved to promote industryand regulatory standards that ensure the openness,performance, and integrity of cloud computingplatforms, applications, and businesses. Ourunderlying goal is nothing less than ensuring highquality and performance in cloud computing amongall marketplace constituents. For more informationabout the CompTIA Cloud/SaaS Community or to getinvolved in our community’s activities, please Computing: a model for enabling convenient,on-demand network access to a shared pool ofconfigurable computing resources (e.g., networks,servers, storage, applications, and services) thatcan be provisioned and released with minimalmanagement effort or service provider interactionVendors: includes hardware manufacturers,software developers, and originators of cloudapplications, platforms, and infrastructureCloud Aggregators: organisations that consolidatecloud applications and provide them for resalethrough the channelSystems Integrators: companies that integratecomplex technologies into useful businessapplicationsAbout CompTIACompTIA is the voice of the world’s information technology (IT ) industry.As a non-profit trade association advancing the global interests of ITprofessionals and companies, we focus our programs on four main areas:education, certification, advocacy and philanthropy. We:• Educate the IT channel: Our educational resources, comprising onlineguides, webinars, market research, business mentoring, open forums andnetworking events, help our members grow their businesses and becomethe “best in class”.• Certify the IT workforce: We are the leading provider of technology-neutraland vendor-neutral IT certifications.• Advocate on behalf of the IT industry: We bring the power of small- andmedium-sized IT businesses together as a united voice.• Give back through philanthropy: In addition to our foundation enablingdisadvantaged populations to gain the skills they need for employment inthe IT industry, CompTIA provides support to IT-based charities choosen bythe membership.Our vision of the IT landscape is shaped by more than 25 years of globalperspective and more than 2,000 members and 1,000 business partners. We aredriven by our members and led by an elected board of industry professionals.All proceeds are directly reinvested in programs that benefit our valuedmembers and the industry as a whole. Headquartered outside of Chicago,we have offices across the United States and in Australia, Canada, China,Germany, India, Japan, South Africa and the United Kingdom.About the UK Channel CommunityCompTIA communities are the building blocks of the Association’s industry-focused activities. Each group engages a group of like-minded thoughtleaders in a particular technology, market or business segment. Communitymembers discuss and develop initiatives from hot topics, trends, and industryrequirements that are then managed with the resources and backing ofCompTIA, to ultimately help them grow their business.The CompTIA UK Channel Community was formed in early 2011 followingthe acquisition of Technology Channels Association (TCA). The communitywas formed in an effort to provide a platform for resellers, distributors,and vendors to focus on developing best practices, business education andresources for companies engaged in the delivery of IT services in the UK.The UK Channel Community meets face-to-face four times a year, andmonthly conference calls keep the members up-to-date in between meetings.The group also communicates with each other through the LinkedIn forum.Non-members are also welcome to participate in the online forum, access aselection of free CompTIA education and attend events without having theright to vote. CompTIA members have full access to everything including ouronline forums, education, certifications/credentials and events in which theyhave full voting rights. For more information about the CompTIA UK ChannelCommunity or to get involved in our community’s activities, please
  8. 8.© 2011 CompTIA Properties, LLC, used under license by CompTIA Member Services, LLC. All rights reserved. All membership activities and offerings to members of CompTIA, Inc. areoperated exclusively by CompTIA Member Services, LLC. CompTIA is a registered trademark of CompTIA Properties, LLC in the U.S. and internationally. Other brands and company namesmentioned herein may be trademarks or service marks of CompTIA Properties, LLC or of their respective owners. Reproduction or dissemination prohibited without written consent ofCompTIA Properties, LLC. July 2011 2925-UK