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ANZ Conference 2014 Dave Sobel, Director of Partner Community, GFI MAX Managed Services in 2014: Pricing and Positioning
ANZ Conference 2014
Dave Sobel,
Director of Partner Community, GFI MAX
Managed Services in 2014: Pricing and Positioning
Who?
Dave SobelDirector of Partner Community
» Joined GFI in 2013, putting the GFI community into the executive team of MAX
» 2 years prior leading partner and community growth in vendor channel
» 10 years experience as CEO of MSP, focused on Washington DC metro
» 20 years experience in IT channel and consulting» Microsoft MVP for Virtualization» Author, Virtualization: Defined» CompTIA Community Chair and Executive Council» MSP Mentor 250 member, SMB 150» Contributing writer: Channel Insider, CRN, Tech Target, MSP
Mentor» Former HTG facilitator, member
@djdaveetwww.davesobel.com
State of the Market
» Fastest path to revenue has become critical to staying in business for SMBs with cost control still paramount.
» Expansion to new products and segments propels growth for SMBs
Source: Techaisle Global SMB Surveys, 2013
Source: Service Leadership Newsletter, July 2013
Global 2013 SMB IT Spend will be US$438 Billion.
Source: Techaisle Global SMB Market Sizing, 2013
Clients becoming more aware of cloud services
Source: CompTIA’s 3rd Annual Trends in Cloud Computing study. Base: 474 U.S. Businesses (aka end users)
Customer demand for cloud solutions
Source: CompTIA’s 4th Annual Trends in Cloud Computing Base: 400 U.S IT channel firms with Cloud offerings
Customer demand for cloud solutions
Source: CompTIA’s 4th Annual Trends in Cloud Computing Base: 400 U.S IT channel firms with Cloud offerings
The Math Problem
Let’s look at the revenue first
0
500
1000
1500
2000
2500
3000
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
On premise Revenue
Cloud Revenue
The average deal size for an on-premise opportunity is $40.5K
The average deal size for a Cloud opportunity is $21.5K
Simply replacing on-premise opportunities with Cloud opportunities will impact your business
if you do NOTHING else….Standing still is probably
not an option… Graph represents cumulative revenue over 7 years Calculates 10 deals per year at average deal sizes listed
But gross margin is really the game
The average margin for an on-premise opportunity is 24%
The average margin for a Cloud opportunity is 23%
The basic margin is roughly the same, but the total $s are still less
AGAIN, if you do NOTHING else
….Standing still is probably not an option…
0
100
200
300
400
500
600
700
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
On premise Margin
Cloud Margin
Graph represents cumulative revenue over 7 years Calculates 10 deals per year at average deal sizes listed Calculates margin using average margin listed
If you can grow your business by 15%
Cloud is fast-growing market segment
If you can transform your business and grow at 15% greater pace than your current on-premise business
BUT…this is still not the total story…
0
100
200
300
400
500
600
700
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
On premise Margin
Cloud Margin
Graph represents cumulative revenue over 7 years Calculates 10 deals per year at average deal sizes listed and grow new
customer acquisition by 15% per year Calculates margin using average margin listed
If your transformation yields Best-in-Class Margins
This is where the cloud business becomes compelling…
Graph represents cumulative revenue over 7 years Calculates 10 deals per year at average deal sizes listed and grow new
customer acquisition by 15% per year Calculates margin using BIC margin (Y1=24%, Yr2=40%, YR3+ = $54%)
And some Solution Providers are experiencing 50+% growth
… and here is what that model looks like!!!
This does not include additional services or business opportunities as a result of offering Cloud solutions
0
100
200
300
400
500
600
700
800
900
Year 1 Year 2 Year 3 Year 4
On premise Margin
BIC Cloud Margin
Graph represents cumulative revenue over 7 years Calculates 10 deals per year at average deal sizes listed and grow new customer
acquisition by 50% per year Calculates margin using BIC margin (Y1=24%, Yr2=40%, YR3+ = $54%)
Pricing Models
Value Pricing Model
• Aka “All You Can Eat”• Price based on the entire package• Price based on business benefits• Calculate downtime pricing for that customer, and
pricing is below that.
• Single flat fee• Can include Remote, Onsite, Lab/Bench, or all
• Pricing is custom and can be more complicated to calculate
Per Device Pricing Model
• Simple pricing based on device counts• Per Server, per desktop, per network, per
printer, etc
• Can lead to selling on price not value• More complicated in mobile world
Many parts to mobile ecosystem
3G/4Ge.g., Verizon, AT&T,
O2, Vodaphone
Device+OSe.g., Apple, Samsung,
WiFiCarriers, corporate or
public networks
Per User Pricing Model
• Priced base on people• Can be type (Knowledge worker versus kiosk
worker) or can be flat• Eases problem with mobile and services
Tiered Pricing, aka Gold/Silver/Bronze
• Different services in different tiers• “Middle” option easier in sales process
• Key to success is single SLA across tiers
The Pick 5 Model
• Combine a la carte with Tier• Three or more successively higher priced categories with option to
assemble a service• Pick 5 from:
• Phone Support• Remote Support• Patch Management• Managed Security• License Management• Case Management• Backup Management• Monitoring
A la carte Pricing
• Pick and choose from menu of services
• Many decisions
• Hardest to sell and maintain profitability
Monitoring Only
• Monitoring and Alerting only
• Appeals to groups with in house IT
• Easy parallel service with break/fix offerings
The By Vendor Model
• Manage by the number of vendors managed• Microsoft, Dell, IBM, AV, etc• Count the relationships, and bill based on
that.• Drives out complexity• Confusing for immature MSPs
Drivers to cloud
Source: CompTIA’s 3rd Annual Trends in Cloud Computing study. Base: 415 U.S. IT or Business executives (aka end users) using cloud solutions
More platforms = More complexity
More mobile devices than computers
Areas of focus in mobile strategy
Source: CompTIA’s 2nd Annual Trends in Enterprise Mobility. Base: 502 U.S. IT and business executives
1.0 Position: Outsourced CIO
2.0 Sell: What they want now
3.0
Goal: Managing User Experience
Position: Outsourced CIO
1.0
Top technologies SMBs view as most complex to understand
Source: Techaisle
Ways of surviving economic downturn
Source: Microsoft SMB Insight Report
»Relationship
»Differentiation
Network Assessment
New Service Provider License
Network Assessment
Prospect
Assess Engage
Why clients use an MSP
Source: Techaisle, 2012. Base: 140 respondent organizations that used more than one vendor for their cloud business applications.
Local matters
81% want local
Local matters
Personalized Remote Support
Sell: What they want now
2.0
Top solutions SMBs need
Global 2013 SMB IT Spend will be US$438 Billion.
Source: Techaisle Global SMB Market Sizing, 2013
Clients becoming more aware of cloud services
Source: CompTIA’s 3rd Annual Trends in Cloud Computing study. Base: 474 U.S. Businesses (aka end users)
Customer demand for cloud solutions
Source: CompTIA’s 4th Annual Trends in Cloud Computing Base: 400 U.S IT channel firms with Cloud offerings
Customer demand for cloud solutions
Source: CompTIA’s 4th Annual Trends in Cloud Computing Base: 400 U.S IT channel firms with Cloud offerings
Drivers to cloud
Source: CompTIA’s 3rd Annual Trends in Cloud Computing study. Base: 415 U.S. IT or Business executives (aka end users) using cloud solutions
Goal: Managing User Experience
3.0
More platforms = More complexity
More mobile devices than computers
3G/4Ge.g., Verizon,
AT&T, O2, Vodaphone
Device+OSe.g., Apple, Samsung,
WiFiCarriers,
corporate or public networks
Many parts to mobile ecosystemPrivate Cloud
Systems running on Eucalyptus or
Openstack
On-premise systems
Internet
Public CloudE.g. Salesforce,
Dropbox, or AWS-hosted system
CommunicationsE.g. Lync, Skype. Or native function
Mobile webStandard website
functionality
3rd Party appProcured through
standard app store
PeripheralsE.g. Keyboards or health monitors
Custom appBuilt internally or
outsourced
Areas of focus in mobile strategy
Source: CompTIA’s 2nd Annual Trends in Enterprise Mobility. Base: 502 U.S. IT and business executives
Difficulties of mobility adoption
Source: CompTIA’s 2nd Annual Trends in Enterprise Mobility study. Base: 502 U.S. End user companies
Mobile security a major issue for companies
Source: CompTIA’s 2nd Annual Trends in Enterprise Mobility study. Base: 502 U.S. End user companies
Challenges in supporting mobility
Source: CompTIA’s 2nd Annual Trends in Enterprise Mobility study. Base: 490 U.S. End user companies with some mobility adoption
Manage by User, not just device
Manage by User, not just device
Device provisioning methods
Source: CompTIA’s 2nd Annual Trends in Enterprise Mobility study. Base: 502 U.S. IT and business executives
1.0 Position: Outsourced CIO
2.0 Sell: What they want now
3.0
Goal: Managing User Experience
Maturity
Source: Service Leadership Newsletter, July 2013
Contact infoDave SobelDirector of Partner [email protected]: 1-919-379-6469Mobile: 1-703-582-3600
Dave Sobel
Director ofPartner Community
