In planning for Cloud Profitability from Day One, Larry Walsh from 2112 group will showcase the cloud infrastructure opportunities available to MSPs and how the ProfitBricks public cloud can be leveraged via the channel to increase profitability through strategic planning and execution.

1. Planning for Cloud Profitability from Day One
November 2015

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Introduction ProfitBricks in 2015
Mission Painless Cloud Computing Infrastructure service which enables
existing IT teams, to deploy their applications and get all of the
benefits of the at an IT budget friendly price.
Details HQs in Berlin, Germany, San Antonio, TX and Boston, MA
135 Employees
Investors Achim Weiss –CEO
Andreas Gauger –CMO
United Internet (UTDI: Market Cap: $8 Billion)
Technology KVM Based – Cloud Computing IaaS service, built on InfiniBand
network interconnects with an efficient, performance optimized
platform with minute based metering and billing, deployed on
premium commodity hardware and housed in top-tier data centers.
Product IaaS – Compute, Networks, Storage with Data Center Design and
Management Software

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Other Cloud Providers
ProfitBricks:
Painless Cloud Infrastructure
Painless Cloud Infrastructure

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Migration without adaptation – ProfitBricks cloud infrastructure behaves
like physical hardware with all the advantages of the cloud
No learning curve – ProfitBricks lets existing teams’ knowledge sets and
processes be used to achieve rapid success with the cloud
24/7 Phone support – USA based Cloud Architects and SysAdmins
always on standby
Price/Performance Guarantee: “We guarantee that any workload
deployed on ProfitBricks will cost less than the same workload running at
the same performance level on the IaaS platforms of Amazon, Google or
Microsoft.”
Painless Cloud Infrastructure
1
2
3
4

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“We are going through the greatest
transformative period in the history
of our industry.”
- Everyone

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OBVIOUS
Changing Expectations
The future is about outcome-based
systems & services, not individual products
Business Models
Costs and Budgeting
Technology & Information
Management Consumption
Speed
Work/Life Balance
Automation & Accessibility
NOT OBVIOUS
Unbridled Possibilities
Expectations
Social Impact
Risk and Risk
Innovation
Imagination

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• Software as a Service (SaaS)
• Platform as a Service (PaaS)
• Infrastructure as a Service (IaaS)
• Business Process as a Service (BPaaS)
• Managed Clouds
Why Clouds?
Enter the Clouds

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Why Customers Want Cloud
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43% reduce IT capital expenses
40% reduce cost of IT operations
23% increase operational productivity
22% increase agility & competitiveness
21% improve performance
15% access new technologies

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Cloud Computing Is a Growing Market Opportunity
42% of businesses say cloud computing is top 5 spending priority
30% Compound growth rate of infrastructure services between 2013 & 2018
11% shift in budget allocations away from traditional IT to cloud services
80% of all enterprises by 2016 will have some investment in infrastructure services
59% of all cloud-based workloads will be software services by 2018

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Cloud Computing Is a Growing Market Opportunity
SaaS
$133B
PaaS
$12B
IaaS
$5B
BPaaS
$10B
Source: Forrester Research

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Technologies with High Growth Potential
0% 10% 20% 30% 40% 50% 60%
Managed Print Services
Converged Infrastructure
Software-defined networking
Unified communications and collaboration
Servers/data center
PCs/notebooks/netbooks
Data networking (routing, switching)
Business software
Other (please specify)
Data storage
Virtualization
Application development
Mobile device management/BYOD
Internet of Things/machine-to-machine applications
Printing and imaging
Wireless networking
Mobile devices (smartphones, tablets, handhelds)
Business analytics / Big Data
Voice services/bandwidth/connectivity/Internet access
Backup, continuity and disaster recovery
Data security
Cloud infrastructure/services

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0% 10% 20% 30% 40% 50% 60%
Marketing
Acquisitions
Other
Developing products independently of vendors and service
providers
Developing hosted services
Adopting more vendor hardware/software products for resale
Partnering with application vendors and service providers
Partnering with hosting providers for cloud services
Creating branded products with vendor products as components
Partnering with service providers to deliver cloud/application
services to our customers
Creating services with vendor products as components
Channel Growth Investments

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Cloud Computing’s Appeal
• F l e x i b i l i t y
• A g i l i t y
• S c a l a b i l i t y
• U b i q u i t y
• A d a p t a b i l i t y
• U p d a t a b i l i t y
• C o s t s

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Cloud Costs and Revenue
Product

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Cloud Costs and Revenue
Product Cloud

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CapEx vs. OpEx
Revenue
Time
CapEx
OpEx
Compounding
Recurring
Revenue

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R . I . P
Hardware & Software
On-prem failed over to the cloud

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Cloud as a Replacement
Servers Backup Storage
Software Security Communications

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Average solution provider earns as much as 1/2
to 2/3 of their gross revenue from managed
services
Cloud as a Revenue Generator

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Cloud as a Systems Catalyst
Cloud Computing
Devices
Applications
Networks
Analytics
Storage/Backup
Output/Presentation
Transport
Security
Administration&Operations
Training&Support
ManagedServices
Consultation&Advisory
CapEx
OpEx
(CapEx) +
((OpEx)*(Time))
=
Total Accretive Value

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Cloud as a Solutions Component

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Operating Deficit
Cloud Challenge
Revenue/Cost
Time
1
Operating
Costs
Recurring
Revenue

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Cloud Challenge
Revenue/Cost
Time/Accounts
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2
3
4
5
6
7
8
Operating
Costs
Recurring
Revenue
Cash Flow
Positive
• Cash flow turns
positive when
recurring revenue is
greater than
operating expense
• Cloud service
achieves ROI when
revenue covers
operating expenses
and initial investment
costs
• Profitability happens
when recurring
revenue generates
more than
investment and
operating expenses

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Compounding Cloud Revenue
Revenue&OperatingExpenses
Time
• Continuous addition
of new accounts or
account expansion
that leads to
increasing revenue
• Scaling resources
faster than services
consumption
• Maintaining a low
account attrition rate
• Commitment to sales
and marketing of
services and value
• Focus on customer
experience and
outcome-based
value

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Planning for Profitability
• Pick a Cloud, but Not Any Cloud
 Keep start-up costs down by leveraging existing
expertise and resources
 Build cloud practices based on existing technology
and customer experience
 Create value by incorporating existing resources
with cloud capabilities

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Planning for Profitability
• Identify Customer
 You can operate globally, but the world is not your
customer
 Understand and profile customers to establish
sales scenarios and customer interactions
 Define who is not your customer and why

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Planning for Profitability
• Select a Cloud Model
Advise
Refer
Resell
Build
Support
Manage
Operate
Investment

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Planning for Profitability
• Select a Recurring Revenue Model
 On-demand
 Weekly
 Monthly
 Quarterly
 Annually
Revenue model will determine
sales needs and operating
parameters for planning
expenses and investments

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Planning for Profitability
• Plan Transition – Don’t Do a Crash Change
Revenue&OperatingExpenses
Time
Cloud
Legacy Products
Inflection Point
• Do not stop selling
legacy products; use
legacy revenue streams
to pay for future
investments
• Plan a steady,
progressive transition
from legacy revenue to
cloud/services revenue
• Set milestones and goals
for expanding cloud
revenue and measuring
performance
• Accept that this process
takes time – up to 3
years

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Planning for Profitability
• Make a Plan, Set Goals, Draw a Road Map
 Create a vision that translates to value
 Set goals – revenue and development
 Know how you’re performing
 Decide when to expand capacity
 Maintain and exceed returns on investment
 Draft a plan that sets the operational parameters, roles and
responsibilities, and performance expectations
 Establish what you want to be when you grow up

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Yes
78%
No
7%
Don’t know
15%
Yes
58%
No
25%
Don’t know
17%
Should You Have a
Growth Strategy?
Does Your Company Have a
Growth Strategy?
SOURCE: 2112 Channel Forecast Report 2015, January 2015
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Planning for Growth

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Planning for Profitability
• Commit to Sales, Not Just Technology
 You are first and foremost a sales organization
 Cloud services model is dependent on sales first,
technology second
 Create a sales culture with management,
governance, planning, expectations, and
accountability
 Demonstrate sales capabilities to vendors

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Planning for Profitability
• Commit to Marketing
 Cloud capabilities are worthless if no one knows
who you are, what you’re doing, or what you’re
capable of
 Communicate value to vendors and customers alike
 Use all available resources
 Commit to sustained marketing and
communications; no “one and done” efforts

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Wash, Rinse, Repeat

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Drive to the Next Level
• Goal Setting
• Business Planning
• Focus & Expertise
• Investment
• Risk Acceptance
• Execution,
Governance
& Accountability
• Evaluation &
Adjustments
• Repeat, Repeat,
Repeat

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QUESTIONS

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“The secret of change
is to focus all of your
energy not on fighting
the old, but on building
the new.”
- Socrates

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Larry Walsh
lmwalsh@the2112group.com
@lmwalsh2112
@the2112group
Website
www.the2112group.com
2112 Blog
www.the2112group.com/blog
Information contained in this publication has been obtained by sources and methodologies of The 2112 Strategy Group, LLC, and are considered to be reliable but not warrantied. This publication may
contain the opinions of The 2112 Strategy Group, which are subject to change from time to time. This publication is copyrighted by The 2112 Strategy Group, LLC. Any violation of the limited terms of
reproduction or redistribution of this publication, in whole or in part, whether in hard-copy format, electronically, or otherwise to persons not authorized to receive it, without the express consent of The 2112
Strategy Group, LLC, is in violation of U.S. copyright law and will be subject to an action for civil damages and, if applicable, criminal prosecution. Any questions should be directed to The 2112 Strategy
Group at (347) 770-2112 or info@the2112group.com.

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Getting Started
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Check out the new
ProfitBricks
Cloud Computing:
Channel Go-To-Market
Guide, produced
by The 2112 Group