Cloud is a commodity, but are you?

Cloud, IT Business
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Over the past year that I’ve been off the road I’ve been working very intensely with my partners on getting them rocking in the cloud. As you may have noticed here, I have for the most part given up on the general IT provider population and have declined a very large number of invites for presentation and training because.. quite simply.. the easy cloud money will put enough people out of business in very short order as they let that v in VAR become largely minimized. So be that as it may, I have no real agenda here beyond just stating my opinion.

Let me just sum this whole thing up by saying that I’ve seen this movie before. I know how it ends. I know what happened to IT staffers that didn’t keep their skills up, what happened with massively vertical-focused shops that dealt with Y2K and cars and real estate/builders when the economy collapsed, what happened to people that were system builders and many of my fellow SBSers through the years. Cloud is a commodity and a transactional business, if you are not making a moat around it then you’ll soon find yourself out of the castle along with all your “services” the client could really do without. So let’s get started:

For most people, the migration to the commodity cloud will be the last large project of their career or business.

Cloud is a commodity, no argument there. But if you’re one of those VARs, MSPs, etc and treat it as such you’re pretty much putting up your tombstone.

There are many great reasons for someone to “sell” a client Office 365 hosting or Gmail, who can beat the appeal of a cheap mailbox. It’s what the clients are asking for: Vlad, I need the $4 mailbox. Convince me why I should pay double or triple? Hypothetical question of course, I’d hang up on someone that was that clueless. But we do get to compete against Gmail or Office 365 often so here is how we do it:

Case: Client needs Office 365. They want it. It’s $4.

Vlad: Not a problem, I can have that contract for you by the end of the day. There are some terms but let me ask you a few questions…

Few questions later, the person sort of realizes just what a crappy deal they are getting and how many compromises they are about to accept. While on the surface everything looks the same, people that run businesses or are responsible for IT departments don’t buy the bottom shelf Dell hardware specials for a reason.

And to be honest, we have not had an issue selling anything from our Exchange at $4 to the full “Office 365” stuff at over $25/month (I use the quotes around the office because it’s the same software/features that Microsoft offers it just runs off the network and the servers we control).

How Much Is Your Expertise A Commodity

I ask my partners this all the time.

Another one (credit to Lee Evans): Should your expertise save them money?

One of the misconceptions about small business is that in small business we all have each others back and we try to save one another a ton of money. Guys that thought that went out of work/business last decade.

There are two kinds of business models that are thriving today:

Cloud transactional – people selling a ton of different cloud services due to the demand and their ability to roll them out quickly.

Project and legacy models – from web design to hardware maintenance to hybrid of MSP / project based solutions.

Only one of these will survive. And if you think I’m on the side of the cloud… you haven’t been paying attention.

For the past few years we have been at an inflection point between buying stuff and buying services. The moment people buy a service (and get on it) the need for an IT person is eliminated. Smart people are partnering with companies that enable them to be the sole provider of that service – folks that don’t pay much attention are simply connecting the dots and facilitating the sale and effectively removing themselves from the IT channel. Yes, they delude themselves into thinking that their MSP contract means they are tied to the client but I hear from more and more people each day that are dismayed that their client decided to give up the office, the hardware, the infrastructure that was being managed.

Imagine offering your clients a great phone system and managing their PBX and providing service with their phones, etc. Then one day you saved them some money by moving all that stuff to the cloud but they kept their gadgets on their desks and everything was the same. Well, new release came out and there was no real need for the desk phone, their cell could do the same thing and thanks for the years of business but it doesn’t seem we need these cables, phones, contracts or warranty. Replace the phones with computers and the PBX with the cloud services and there you have what I’m seeing more and more out there.

The inflection point – preparing you for which I’ve made endless blog posts over the years – was to help you create your own plans, your own support, your own backoffice (hopefully powered by ExchangeDefender and Own Web Now). You either built it or decided it didn’t matter because you had all these other gadgets that needed to go in play. All I can hope for is that either you gave us (or similar) a shot and that your luck is different from the hordes of people that are suddenly knocking on my door.

The notion that that cloud.. is just a computer that is in some other office.. is a gross oversimplification that eliminates experience, skill set, training, investment and a common goal of providing an excellent service. But suppose all of that was indeed worth nothing, how would you explain your client what you are charging them for stuff every month?

Something to ponder as you think what your business is actually worth when put up against a commodity.

diggingyourowngraveSo I’ll say it very simply and succinctly: If you are rolling out a cloud solution where you are not in control of the account, not in control of the data, not in control of the backup and disaster recovery… You are outsourcing the part of IT the business actually cares about. I know you think your service is important, I know your tools are sophisticated, I know your knowhow is earned and your relationships are strong. But you are digging your own grave. Good luck with that.

P.S. The really ugly thing, for folks that aren’t naive, is the aspect of the cheapness and liability. In the past when clients decided to go cheap and make mistakes you at least had billable hours and projects to help them roll out of their mess. When those mistakes happen to services, and trust me cloud is far beyond flawless, who really has your back? Your clients? What sort of control do you have over the situation? How about that data? Folks consumed with the dizzying array of Azure and Amazon Web Services options and services are running around trying to do their best to sell more, find more clients, get more leads, specialize in a more lucrative vertical – but all they are doing to themselves in the process is cutting away client dependence and future profit prospects. While the liability explodes because there is no way to throw money at fixing a problem after the lawsuits start to fly. Again, something to ponder. Cause if you think you have a simple and easy answer to this.. it’s going to hurt.