April 12, 2021
MSPs and the Private Cloud: Investing in Tools to Maximize Growth
Alan is the CEO of HyAlto and is leading the company's mission to become the global leader in service provider cloud management platforms. He brings more than 30 years of technology experience to his role with a proven track record helping service providers grow their business based on cloud technology.
If you are a managed service provider (MSP) active in the infrastructure as a service (IaaS) or platform as a service (PaaS) spheres, is your rate of growth keeping pace with the growth of the market? If not, why not and what can you do about it? Before digging into some case study examples for insight, let’s benchmark what kind of growth rates we are talking about.
In its November cloud usage report, Gartner restated the kind of growth numbers that we have been seeing in forecasts from a number of market research firms over the past several years. Between 2020 and 2022, Gartner forecasts growth of about 36 percent for software as a service (SaaS), 57 percent for PaaS, and almost 60 percent for IaaS.
On the other hand, Datto reported in its Global State of the MSP Report that a majority of MSPs are concerned that economic uncertainty due to the pandemic will likely have downstream effects for their own business revenue, cash flow, and receivables.
How MSPs Can Maximize Growth and Minimize Risk
What investments can MSPs make to take advantage of the IaaS growth opportunity as well as mitigate the risks that accompanied the global pandemic? It typically involves three interconnected issues:
- A front office and back office stuck in outdated manual processes reliant on spreadsheets when it comes to fulfillment, orchestration, and billing.
- Lack of automation, whether internal or client-facing.
- A rigid multi-year contract model for MRR (monthly recurring revenue), that fails to provide the client with the same flexibility to adapt to change as provided by a public cloud. This model also misses out on opportunities to upsell.
Let’s explore each of these through the experiences of three of our MSP clients and how they each grew their private cloud businesses with the HyAlto Cloud Management Platform.
Case #1: “We want to make billing less manual”
A prominent international MSP served hundreds of small to medium enterprises with an MRR of $175,000 per month. With outdated manual processes, the MSP routinely required a Tier 3 technician to go through all of its control panels each month to sort out billing—about 70 to 80 hours taken away from client-facing activities.
With HyAlto, the MSP was able to achieve more accurate billing more quickly – without having to waste the time of a technician. This spanned client usage of VMware’s vCenter and vCloud Director and their PSA.
The MSP identified and addressed revenue leakage of 10 percent per month. Within the first year of using HyAlto, it recovered $210,000 in lost revenue.
Case #2: “We want to grow our private cloud business, but it won’t scale”
Many MSPs offer white glove services but their lack of automation limits growth. A North American telecom service provider that had expanded into the MSP business suffered from this challenge.
The telco provider deployed the HyAlto portal and dashboard to allow clients to access a catalog of standardized services and pricing and automatically update usage by each client for each billing period. Clients could now source the private cloud resources they needed, on-demand, without having to go through a lengthy order fulfillment and orchestration process involving multiple sales reps and engineers.
As a result, the telco’s private cloud business with an MRR of $350,000 increased its core revenue by seven percent within one year. In addition, the telco had the capacity to upsell an additional $670,000 annually (for an overall revenue increase of 16 percent) with Disaster Recovery-as-a-Service (DRaaS) services.
Case #3: “We want our private cloud to have public cloud flexibility and pricing”
A European-based MSP wanted to deliver pay-as-you-go private cloud services with accurate hourly, daily, or monthly rates and usage tracking, along with time-based discounts, to compete on an even footing with public cloud providers.
In other words, the MSP sought to escape the outdated contract model that locks a client into a multi-year contract at a fixed rate for fixed services. They wanted the capability to adapt services, and service levels, on the fly for each client and reduce the risk of losing business to a public cloud provider.
HyAlto’s portal integrated with their PSA to automatically update all service usage for each billing period and make all that possible. This enabled a private cloud business with an MRR of $65,000 to increase core revenue in the first year by 22 percent. This MSP also took advantage of the opportunity to now upsell with DRaaS for an additional $95,000 per year in revenue.
Deliver Your Clients Flexibility
And now we are proud to be certified and integrated with Datto Autotask PSA. MSPs that use Autotask PSA and also deliver services from VMware can streamline and optimize their customer billing through automation with our integration.
By investing in automation and new client-engagement models, an MSP can scale a private cloud business, increase profitability, and effectively compete with public cloud providers.
The past year has demonstrated that the time to make that move is now. The good news for MSPs is that this is doable and affordable with HyAlto and Datto Autotask PSA. The HyAlto multi-tenanted platform delivers a private cloud integration, automated usage monitoring, and self-serve convenience that will drive revenue growth for MSPs and deliver more value to their clients.