Jun 03, 2015
Why MSPs Should Sell SaaS Apps
Today’s post is the first in our three part blog series on “Why Managed Service Providers Should Sell Saas Applications” eBook. You can download the complete ebook here.
Let’s start with a nice hard number from Forbes: “Spending on cloud computing infrastructure and platforms is expected to grow at a 30% Compound Annual Growth Rate (CAGR) from 2013 through 2018 compared with 5% growth for the overall enterprise IT.” Put more simply—the cloud is where information technology is moving. It’s what your customers want to buy, it’s where vendors are investing their development efforts, and it’s where both vendors and customers want to store their business data. But “the cloud” and “SaaS” are not the same things. The cloud simply means centralized services and infrastructure accessed via the Internet. Software as a Service (SaaS) means replacing local applications with apps delivered via a web browser. So what does this mean for Managed Service Providers like you? Below, we discuss why MSPs should be selling SaaS.
SaaS Scales Small to Large (Just Like You)
The ideal customer for the average MSP is a business that is large enough to need sophisticated, professional information technology, but lean (not small, lean) enough that it does not wish to hire full-time in-house IT professionals to handle one or more core technology functions.
Small businesses need only a handful of email addresses and workstations, which makes the cost of deploying a full-fledged email server, or buying several complete Microsoft Office licenses, difficult to justify. Solutions like Google Apps and Microsoft Office 365 allow you to deploy small-scale email domains and office productivity suites—contracted month-to-month and metered on a per-user basis—at competitive prices while still offering a managed service.
As you move up-market, many medium-sized to large businesses still prefer to outsource management of specialized software—especially when that software is used only by specific departments or job functions. For example, if a marketing department is the sole userbase of a customer relationship management (CRM) solution within an organization, the Chief Marketing Officer may choose to contract an MSP to deploy and manage a CRM suite, rather than go through (the often laborious procurement process of) her own IT department. SaaS solutions like Salesforce or NetSuite make it possible for you to deploy and support an enterprise-grade instance of CRM or Enterprise Resource Planning (ERP) software without crossing swords with internal IT.
SaaS Gives Centralized Control
SaaS applications are designed to be managed by, at minimum, a single administrator operating through a web interface, which means SaaS apps have centralized account control as part of their core design. Moreover, nearly every SaaS solution is designed to be part of a larger ecosystem: Google Apps and Office 365 have their Marketplaces; Salesforce has its AppExchange, NetSuite has its SuiteApps. And each of these platforms give administrators the ability to install, remove, configure and control access to these apps from one place.
To compound the MSP compatibility, all of these platforms have features with MSPs in mind, allowing you to switch between admin accounts on multiple instances of the same platform, so you can easily toggle between managing Google Apps for Company A to Google Apps for Business B with a minimum of effort.
SaaS Offers a Monthly Touch Point
While many MSPs send monthly invoices for their retained services, for customers using only on-premise systems, these documents don’t often change after the initial installation and configuration. Unless a server crashes, a laptop is stolen or the customer asks for a major upgrade, invoices are paid as a matter of course with little customer review. That’s great for maintaining an MSP’s cash flow, but not so great for growing it.
With SaaS applications, price is typically based on the number of user accounts granted access to a solution. That means any time a customer needs to add, promote, relocate or dismiss an employee, they need to contact you immediately, as it affects both their security model and their monthly price for the SaaS solution. That also means you have a valid basis for making monthly calls to every customer using a SaaS solution to talk them through their invoice and inquire as to any needed adjustments to their user roster.
In our next post we will dig into the “How” of selling SaaS. In the meantime, we want to hear from you - what are some of the other reasons selling SaaS as an MSP is a good idea?