The Microsoft Partner opportunity for Infrastructure modernization Saurabh Mathur PTS, Microsoft Canada
Modernization opportunity The cloud is enabling compelling new business models for Microsoft partners Reduced capital expense Fast time to market Elastic scale Global availability Consumption-based billing Roughly one quarter of SBs and one half of MBs plan to shift their budgets to more cloud spending over on-premise spending. With Microsoft, you re in control of how you want to deploy: - AMI 1 1 AMI-Partners, March 25, 2013. U.S. SMB Trends & Server Market Insights. Physical Server Virtualization Cloud 2
The Windows Server 2003 challenge! <60 Days Remaining Millions of 2003 Instances Still Running Worldwide 30-90 days Server Migration 60+days Application Migration Huge partner opportunity for hardware & software refresh and from assessment & migration services Opportunity across Windows Server 2003, SBS 2003, SQL Server 2005 and older versions of Exchange Optimistic migration estimates for small to midsize business Windows Server 2003 End-of-Extended Support JULY 14 th 2015 3
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WS2003 What end of support means No No No Now updates compliance safe haven is the time to act Start Impact Windows 37 critical planning on 2003/R2 updates both your servers released migration Impact will not on and transforming Increased your datacenter today Discontinued physical pass in 2013 a compliance for and Windows audit Server Microsoft Small operations costs support for many virtualized 2003/R2 Business Server applications servers 2003
You can earn revenue & margin when upgrading your customers servers Selling Approach: 1. Upgrade customers to Windows Server 2012 R2 2. Explain the benefits of virtualization already built in to Windows Server! 3. Cross-sell hybrid cloud solutions like Microsoft Office 365 & Azure
Partner uses Server Upgrade & Cloud opportunities to drive revenue. Genatec has successfully upgraded many customers to the Windows Server 2012 R2 operating system running on one or two new HP ProLiant servers. With a simple two-server cluster configuration and taking advantage of storage efficiencies in Windows Server 2012 R2, Genatec can give customers real-time high availability and disaster preparedness without the need to spend tens of thousands of dollars on specialized hardware and software. PARTNER PROFILE Years in business: 16+ Central location: Montreal, Quebec Employees: 38 Target customer: SMB We recommend Hyper-V in every scenario because of all the capabilities it packs, Cerrone says. By using Hyper-V, we can easily upgrade server hardware or make changes to the server configuration without causing downtime. increased revenues by 25 percent by upgrading customers to Windows Server 2012 R2 and Office 365 - Domenico Cerrone Director of IT, Genatec Increase Revenues by 25 Percent, Gain More Reliable Revenue Stream Save Customers Money, Deliver High Availability Generate New Business from Customer Savings
Microsoft Azure overview
Microsoft Azure An open and flexible cloud platform that enables you to quickly build, deploy, and manage solutions across a global network of Microsoft-managed datacenters. Build applications using any language, tool, or framework Integrate public cloud solution with the existing IT environment 99.95% monthly SLA Automatic OS and service patching App services Compute Storage Network Caching Identity Service bus Media CDN Integration HPC Analytics Virtual machines Websites Cloud services SQL database HDInsight Tables Connect Virtual network Usage-based services Traffic manager Mobile services Blob storage 10
Storage, backup, disaster recovery: what s the difference? Storage Backup Disaster Recovery Store any type of data in the cloud Elastic & Massively Scalable Accessible from anywhere any application Supports Diverse Set of Operating Systems Protect files quickly and simply the first line of defense Replicate only changes of data to a secondary offsite location Quickly restore files when accidentally deleted or lost Maintain files and data for long term retention Minimize business disruption Keep a replica of the entire server infrastructure and keep it updated in near real-time Get applications and services back up and running in minutes $0.025 GB/mo $0.21 GB/mo $57 VM/mo 11
Azure Backup Recover data in case of disasters (server destroyed/stolen, disk crash) Recover data in case of data loss scenarios such as data accidentally deleted, volume deleted, viruses Microsoft Azure portal Simple installation and configuration Reduced cost for backup storage and management Ideal for small businesses, branch offices, and departmental business needs Sign up Billing Registration Microsoft Azure Backup Service Backup/ Restore Use either the Microsoft Online Backup Service Agent or the Online Backup Windows PowerShell cmdlets Windows Server 2012 R2 Inbox engine Inbox UI Windows Server 2012 R2 backup (extensible) Azure Backup Agent IT Pro 12
Disasters in Canada? 2012 Calgary Floods Total damage estimates exceeded $5 billion 2013 Toronto Ice Storm Total damage estimates $200 Million 2013 Toronto Floods Total damage estimates $850 Million 2003 Blackout- 10 Million People 1998 Ice Storm $1 Billion 13
Azure Site Recovery Microsoft Azure Site Recovery Earn recurring revenues by offering disaster recovery as a service (DRaaS) Orchestration & Replication Avoid the massive capital expense of building your own infrastructure Primary Site Windows Server Sell powerful, affordable DR in the cloud Offer your SMB customers peace of mind with cloud-based disaster recovery Use Azure as your DR site and leverage automated VM protection & replication Leverage remote health monitoring and customizable recovery plans Deliver a DR plan and offer ongoing testing and reporting services 14
P2V V2V VHD Database Hosting apps on Microsoft Azure (VMs) Reduce or eliminate hardware costs and maintenance Virtual Machine Get database portability across on premises and cloud with compatible virtualization Non-Virtualized Windows Server Hyper-V VHD Virtualized No application changes required simply virtualize and move Back to solution slide 15
How you transact it
Azure in Open key concepts SKU Terms Eligibility Single Azure Credit SKU on the price list Each SKU = $105CDN in the Azure Portal Can purchase unlimited units & multiple units are issued onto single OSA Key No minimum or limit for the number of OSA Keys a customer can activate Prepaid service, can purchase additional credit any time Can be used against any eligible consumption-based Azure service Azure Credit expires 12 months from activation date, Have up to 5 years to activate. No returns once service is activated in the Azure Portal All Open programs and customer types Existing Online Service (OLS) in Open process Available in countries with Azure Direct and Open Volume Licensing Program Partners 17
Monetary commitment concepts Use case: 250GB of Microsoft Azure Backup for 12 months; ~$50/month Each redemption creates a unique 12-month consumption period Previous commitments are exhausted first Unused amounts cannot be rolled over into future periods Jan 2015 Customer purchases $600 of Microsoft Azure Period 1 Nov 2015 Balance: $200 Alert email to customer / partner Balance: $50 Dec 2015 12-month expiration, No rollover for initial $600 Nov 2016 Dec 2016 Licensing scenario 12-month consumption period starts when subscriptions are redeemed No limit to number of redeemed subscriptions Configurable alert emails Period 2 Customer purchases $1200 Balance: $1250 12-month expiration 18
Three partner scenarios for Azure in Open Scenario Resell Hybrid Resell & Managed Services Managed Services Scenario description Partner resells credits to a customer. The customer manages the Azure services and account themselves. Partner may or may not help with activation, setup and renewal timing. Partner and is managing Azure services and account as a coadministrator. The Customer is also involved in the service and/or account management and accesses to the portal. Partner is providing a customer solution and/or a managed service solution, and is doing the full support and management of the Azure underlying services. Licensee Customer Customer Partner Administration Customer is sole Administrator Partner / Customer Co- Administrators Partner is sole Administrator Partner creates Subscription for each customer Balance Management Customer signs up to receive low balance alerts via email and tracks consumption in the portal. Customer contacts a partner to buy more. Partner and customer sign up to receive low balance alerts via email and track consumption in the portal. Partner recommends new purchases. Partner signs up to receive low balance alerts via email and tracks consumption in the portal. Partner makes new purchases. 19
Managed services Can an ISV or MSP buy Azure in Open in their own name and deliver a SaaS Application or a Managed Service to end customers? Requirements Azure is subject to Online Service Terms across EA, Direct & Open Customer Solution Application or set of applications that adds primary and significant functionality to the Microsoft Azure Services and that is not primarily a substitute for the Microsoft Azure Services Or Managed Services The MSP has the sole ability to access, configure, and administer the Microsoft Azure Services, The MSP has administrative access to the virtual machines The end-customer has administrative access only to its applications or virtual machines View the full Online Service terms here: http://www.microsoft.com/licensing/products/products.aspx. 20
Sales scenarios for a modern infrastructure
Customer scenario #1 The customer is a civil engineering company with 20 employee They are doing static calculations for large building companies & architects Most users working on high-power on-premises workstations They want to keep data on-premises for speed of access to large CAD plans The team exchanges data with customers though online services, like DropBox, and they need to ensure only certain people have access to the data Long-term data storage is a legal requirement 22
Scenario #1 Hybrid, extend on-premises with some cloud Cloud Extension Active Directory, File & Print onpremises with Windows Server 2012 R2; Backup 2 Windows Servers to Azure, using Azure Backup Augment on-premises workloads with some Cloud services Backup data to the Cloud Use WS Essential experience to manage Office 365 user for productivity workloads (Mail, Lync) Keep LOB applications on-premises Extend local AD into the Cloud for single sign-on to 2,500+ popular Cloud Apps (Office 365, DropBox, and much more!) Office 365 for all communication workloads and collaboration LOB application, running on top of Windows Server 2012 R2 locally 23
Partner profitability with Microsoft Azure
Why a partner should prefer Azure Budget Realignment Frees up CapEx needed for low margin hardware for other, higher margin services Reduce nonbillable time Eliminate consultant travel time and drive up utilization rates Strategic Relationship A shift from the break-fix IT guy toward cloud strategy and on-call service availability Increase Margins Aggressive investments in channel incentives create a higher upside on the sale Geographic Reach Removes reliance and expectation that someone needs to be physically present to solve issues increases valuation 26
The core avenues of revenue Microsoft Azure Cloud Services Build Azure VMs & Virtual Networks Manage Continued Evolution of Managed Services The Worldwide Managed Services market will grow from $143B in 2013 to $256B in 2018* *Markets & Markets, 2013 PaaS IaaS 27
The revenue streams Project services Managed services IP services Transitioning workloads, setting up the service, testing, etc. 8 6 4 2 0 Billable packaged services. Solutions and services, as a service. Ongoing annuity. 8 6 4 2 0 Value based, unique IP. Packaged product services. 8 6 4 2 0 28
But where does it fit in your managed services practice? Maximizing profitability: Investing properly in demand generation Rapidly acquiring customers Focusing on higher margin annuity services Maximizing Average Revenue Per User Build a Foundation with Office 365 $1,500/year in Managed Services Fees Grow Revenue with Microsoft Azure $5,400/year in Managed Services Fees Entrench yourself as a full Outsourced IT provider with Microsoft Intune $15,000/year in Managed Services Fees $5/user/mo as Delegated Admin $150/server/mo per workload 3 workloads in example $50/user/mo for Device Management (aka Helpdesk) 29
Why transacting isn t enough Customers Required to Drive $100,000 in Net Revenue 83 E3 Customers with 25 Seats at 12% Front End Margin + 8% Rebate 151 Intune SA SKU Customers with 25 Seats at 12% Front End Margin + 8% Rebate 260 Azure Customers with one $105 token per month at 12% Front End Margin + 20% Promotional Rebate *All examples are based on Open Licensing 30
Cost Project services 2 Backup Azure Site Recovery 10 Deployment & Configuration Can vary widely but typically 2-5 days of set up time Common bill out rate of $125/hr ($1000/day) higher for specialized partners 8 Days *1,000/day = $8,000 At 42% gross margin = $3,360 Complexity 31
Managed services $125 - $200+ Per Server LOB App Management Disaster Recovery Data Backup Patching, Security Infrastructure Services 4x $150/server *12 months = $7,200 At 50% gross margin = $3,600 32
Impacts of Microsoft Azure on managed services Partners like you are achieving it today Higher Margin SCALE UP Increase your billing rate by getting highervalue projects Microsoft Cloud Solution Provider More profits for you, more value to your customers Traditional HW/SW resale SCALE OUT Serve more customers in more places with the same staff Higher sales 33
Anatomy of an Azure Deal: Phases Backup to Cloud AD & File Server Vertical App Azure Configuration Azure Backup Azure Standard VM Azure Standard VM w/ SQL Azure Cost $50/mo $100/mo $600/mo Margin (20%) $120 $240 $1,440 Deployment ($1k/day) $2,000 $5,000 $5,000 Annual Managed Service $1,500 $1,500 $1,500
Okay, but why would a Customer go for this? TCO Chart of Accounts Direct (Budgeted) Indirect (Non-Budgeted) Assets Labor Operations Downtime Opportunity Servers Tier 1 HD Data Center Req. Updates Time to Procure Infra. Storage Backup Tier 2 HD Tier 3 HD Prod. Support Power Rackspace Bandwidth Unscheduled Outages Scheduled Updates Set up & Installation Op. System Applications Outsourcing Server Migration Benefit provided by Azure Benefit provided by Partner 35
Microsoft has a vision of infrastructure and platform services that are not only leading stand-alone offerings, but also seamlessly extend and interoperate with on-premises Microsoft infrastructure... The IaaS and PaaS components within Microsoft Azure feel and operate like part of a unified whole
Next Steps
Azure SMB Partner Resources in one place: http://aka.ms/azure-surestep All Windows Server 2003 EOS resources & materials in one place! www.microsoft.ca/server2003upgrade-partner