Getting Started on a Cloud Partner Transformation Plan

By David Pool – ISSI Senior Consultant

A big challenge that established partners face when deciding to offer cloud services and solutions is they lack a comprehensive strategy for the new business. At ISSI, we often encounter partners with this issue. It can cause lost time and money—and a lot of frustration from company executives—when a cloud business falls short of expectations.

The reasons for this are as varied as the companies involved, but they usually have one thing in common: a failure to understand that creating and managing a successful cloud business for the long term requires a very different business model than those used in an otherwise profitable Managed Services business.

Implementing a cloud business requires multiple important steps that must be considered in advance. These include broad support from senior management, effective communications across the business about the opportunities for engaging prospects, and retooling customer relationship and customer service solutions to meet the requirements of helping customers operate in the cloud.

Let’s look at some examples.

The importance of a cloud business model

We worked with a European Managed Services Provider that has an established, very successful business. It operates in multiple countries and is profitable through phone services, connectivity, providing Office 365 licenses, and more. In other words, its business was built largely on what are now considered traditional IT and telecom solutions.

When the company decided to get into the cloud business, it launched in just one country—and more importantly, without its senior management and directors fully understanding that the new cloud business had unique requirements. The business became siloed. Cloud expertise was fragmented across different locations, and ineffective cross-team communications led to missed sales opportunities.

The core problem? The company carried over the mindset of and business model based on profiting at the front end with hardware and software solutions, which delivered high margins. But in the cloud, most profits and higher margins come from professional services across the lifecycle—in other words, educating the customer about the business and technical benefits of cloud at the front end, servicing customers on the back end once their cloud solution is running, and continuously optimizing workloads to take advantage of new public cloud capabilities.

In another example, we worked with a new organization that resulted from the merger of several CoLo/hosting businesses. The new owners were ambitious and wanted to get into the cloud business as fast as possible. When they launched it, however, the new venture floundered.

When we worked with the company and looked under the hood, the problem became clear: The new firm had a great managerial team, but the company as a whole still operated like it was several different businesses. Groups worked in silos with distinct sales teams and service catalogs, with very little cross selling of different services across the organization.

ISSI worked with them to take a step back and create a clear business plan, using the cloud as the catalyst to first carry out their own digital transformation. That served as the foundation for bringing a comprehensive set of cloud services to the market. This resulted in the Partner onboarding onto several Cloud Partner specialization programs, in recognition of the new capabilities it has been able to build and successfully launch.

We also encounter smaller partner organizations that have trouble launching a cloud business. The challenges of SMBs, though, stem less from institutionalized business practices and more from faulty assumptions and a lack of solid up-front planning. This can be addressed by taking the time early on to establish a business plan that spells out detailed requirements for the people, systems, and the go-to-market selling strategies needed to create a profitable cloud business.

Playing to win in the cloud

Running a cloud business clearly presents enormous opportunities, but partners need to be prepared to reset their assumptions and expectations. As I’ve suggested here, there are big and sometimes unbridgeable gaps in the business models used for traditional IT services versus cloud businesses.

When working with partners, our approach is twofold. First, we value the precepts of the Lafley and Martin “Playing to Win” strategy framework.1 These are high-level concepts that all successful businesses should master, from articulating a winning aspiration, to the where and how you will win, to putting the right capabilities and management systems in place.

For success in the cloud, partners need a comprehensive strategy that includes many factors. These include talent management, security and governance, service catalogs and service management, training for sales and marketing departments to sell cloud services, and comprehensive business planning that supports long term, recurring success with existing customers and access to new prospects and markets.

For more information about how ISSI can help with your cloud partner transformation, contact us at: sales@issi-inc.com