How The Convergence Of Cloud And Connectivity Is Changing Your Business
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- Bernice Sutton
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1 How The Convergence Of Cloud And Connectivity Is Changing Your Business #xsp13 #xsp15
2 Background VP of Advantage Communication Group 2015 $13M to $15M revenue; ~25 employees Wireline agency to technology consultant Differentiators - software, international, cloud, etc. Primary sales Data, Voice and Data Center/Cloud Many years of convergence research #xsp15
3 Reality Check Connectivity is a requirement of cloud/off premises solutions. Customer s want a complete integrated solution. The landscape is changing. Carriers are bundling cloud with voice and data. They also sell direct. Connectivity (wireline) is recurring revenue. Estimate; 10% of telecom revenue comes via our channel. Others are converging into your territory. #xsp15
4 Why you made the investment Customer need Additional Revenue Account control/risk End-to-end management Had vision!!! Found a RTM haven t or wont Sales demand Synergy with business Profitability/ROI Vendor/channel issues Didn t know, wasn t recruited #xsp15
5 A Look Back at Solution Provider Transformation e.g. Cisco, IBM e.g. MSP Partners, Distributors, Kaseya, Level Platforms, N-Able e.g. Microsoft, IBM, Cisco, Chartec, VMware, etc. e.g. Disti, Master Agents, Telcos, Cablecos, Citrix, etc. Reseller to Services Reseller to Managed Services Reseller to Cloud Services Seamless Voice-Data- Cloud, Mobility Reseller Transformation Over Time 2014 IPED The Channel Company 66
6 RESPONDENT PROFILE THE TYPICAL PARTNER IS A $1M VAR/CONSULTANT SERVING SMALL TO MID-SIZE CUSTOMERS AND EMPLOYING 10 PEOPLE Business Model VAR 30% Other 2% BIC 2% Telephony Agent 2% A Representative Sample of the Solution Provider Population Consultant 27% Web DMR developer3% 3% 2014 IPED The Channel Company Systems integrator 12% Custom Systems Builder 4% MSP/ hoster 11% ISV 4% Revenue 40% 20% 0% 36% 251 to to 250 5% 8% 51 to 99 4% 26 to 50 10% 9% <500K $500K to <999K 24% $1M to $4.9M 501 to % 7% 4% 4% 1% 1% 2% $5M to $9.9M 1% >1000 3% 11 to 25 18% $10M to 19.9M Vertical Market Revenue Mix (Mean %) Professional Services 1 to 2 16% 6 to 10 13% Financial Services 3 to 5 22% $20M to 49.9M Other Retail State/Local $50M to $99.9M $100M to $250M to $249.9M $499.9M 6% 8% 8% 8% 9% 9% 9% 10%14% Employees >500M 45% < $1M in Revenue; 69% < $5M in Revenue
7 Revenue by Service Software Applications Networking infrastructure incl. SDDC or SDN 16% 20% IT VARs continue their Transformation: Servers, storage & systems management sw Managed Services Other 10% 13% 14% Primary revenue drivers are HW/SW resale Managed services becoming material contributors to revenue (13%) BC/DR/Backup Turnkey IT 6% 7% Telecom and Public Cloud Services (3%) are nascent investments PBX & related 5% Voice & data carrier services Private Public cloud Virtual Desktop Integration 3% 3% 3% 2% Please tell us about the IT services your company currently sells by estimating the percentage of revenue derived from each category below IPED The Channel Company 0% 5% 10% 15% 20% 25%
8 Top Line Findings 2014 IPED The Channel Company 8
9 For Public Cloud and Network Services Four Different Sales Models are Typically Used Recommends Resells White Labels Direct Sales 2014 IPED The Channel Company 9
10 Recruitment Profiles Take on Two Dimensions: Partner Business Model and Principal/Leadership Profile 1 Strategic Business Leadership and Insight is the Primary Owner Characteristic Required for Success when adding Telco/ Cableco provided Voice- Data-Cloud Services 2 Since last published, Born in the Cloud and Systems Integration partners have matured as recruitment prospects PBX Avaya, Cisco, Mitel, Polycom Networking Cisco, Juniper, HP, etc. BDR Private Cloud HP, Dell, Sun, IBM, EMC, NetApp, Google, etc. Mobile Cloud 3 Application building or application capable partners specific to Mobile, Cloud and M2M are emerging Partner profiles targeted for success due to their comfort with managed-cloud and recurring revenue, integration models and momentum around mobile applications 2014 IPED The Channel Company 2014 Study
11 2014 Technology Stacks to Track Transformation Paths Applications Telephony Unified Comm Networking Data Center Google, Office 365 CRM, ERP Custom Mobile Developers: AWS, Azure On-prem PBX Cabling Voice & Data Managed PBX Day 1 Services VOIP Call Center Integration Mobility Integration: e.g. Lync, VDI Managed VOIP Mobile Device Mgt. Routers, Hubs Security Unified Comm SDN Comm as a Service NOW INTRODUCE BUSINESS MODELS TO UNDERSTAND TRANSFORMATION Servers Storage Systems Mgt. Software VDI IaaS, BDR, etc IPED The Channel Company 2014 Study
12 Revenue Mix Mean % Data Indicates Typical VAR Still Generating Most Revenue & Margins from Product and Project Revenue 35% 9% 26% 22% 8% Hardware & Software product resale Carrier/cable company provided carrier services Project based pre-sale, postsales consulting, integration, or implementation services Recurring revenue and/or managed services Other Average Gross Margin Mean % Base: What is your company s mix of revenue from the following business areas? 21% 100% 9% 24% 20% 7% Hardware & Software product resale Carrier/cable company provided carrier services Commission & Referral Fee Project based pre-sale, post-sales consulting, integration, or implementation services Recurring revenue and/or managed services Other 2014 IPED The Channel Company What is your company s average gross margin realized in the following business areas?
13 A Case Study: Cross-channel marketing Partner Business model: Us Focus area: Data, Voice, Internet, Data Center, Mobility, etc. Why Invest in Network Services? Customer needed to build a network to connect their data centers. Current network solution billing ~$60K MRC. Subsequently wanted to migrate and grow their data center footprint - $140K MRC. Now deployed a IaaS solution. #xsp15
14 A Case Study: Biotech Start-up Wireline Stats Level 3 MPLS network - $24K MRC AT&T MPLS network - $16K MRC Other carrier services - $20K MRC $10,000+ recurring revenue Partner Business model: IT Consulting Focus area: IT planning, Software system/integration, Cloud with heavy emphasis on medical, tax and accounting. Why Invest in Network Services? AT&T penetrated for back-up MPLS and is now threatening the core business with their cloud services. Customer would have a single technology provider. Customer solution is not ideal too costly, redundancy, etc. Additional recurring revenue #xsp15
15 Technology Services Media Company Partner Business model: Solutions/systems integrator Focus area: Storage, Networking, Compute/Cloud, Security, etc Why Invest in Network Services? 400TB + storage opportunity - $450K NRC, $9K MRC was lost because the solution was not engineered and priced with connectivity at the beginning. Primary data center only had one on-net provider. Solution ideal for new technology like dynamic bandwidth. Additional recurring revenue. Partner Business model: Managed Service Provider Focus area: Virtualization, Networking, Back-up/archive, IT support, etc Why Invest in Network Services? Customer wants outcomes! They don t care about the bits and bytes. Current network solutions is VPN over the Internet = BAD! Proprietary applications aren t working due to latency, QoS, etc. Customer wants to migrate to hosted voice, Lync, Office 365, cloud storage and managed services. #xsp15
16 Wholesale Agency Referral Agency Agency - Referral Agency - Strategic How to engage Vendors/Carriers Distribution/Master Agent End User #xsp15
17 #xsp15
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