Partnering With Microsoft in the Cloud (VAR)

7/31/2019 Partnering With Microsoft in the Cloud (VAR)

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Partnering with

Microsoft in the CloudValue-added Resellers


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Partnering with Microsoft in the CloudValue-added Resellers

The Cloud OpportunityWhy Customers Are

Moving to the Cloud

Why VARs Should

Move to the Cloud

Cloud Opportunities for

Value-added Resellers

How to Make Money with

Cloud Solutions

How to Build a

Cloud PracticeCloud Resources

Cloud Opportunity Guide for Value-added Resellers 2https://partner.microsoft.com/global/productssolutions/productssoftwareplusservices

Table of Contents

Table ofContents

The Cloud Opportunity Executive SummaryDenition of the Cloud

3

5

Why VARs Should Move to the Cloud Expanded ReachIncreased Revenues

Greater Velocity and Scale

8

9

9

Why Customers Are Moving to the Cloud Why Customers Are Moving to the Cloud6

Cloud Opportunities for Value-added Resellers Cloud Opportunities for Value-added ResellersOffering Opportunities and Examples

Cloud Practice Differentiators

10

11

15

How to Make Money with Cloud Solutions How to Make Money with Cloud Solutions16

How to Build a Cloud Practice How to Build a Cloud PracticeMarketing

Sales

Finance

Operations

17

18

20

22

23

Cloud Resources Get StartedMore Cloud Resources

24

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https://partner.microsoft.com/global/productssolutions/productssoftwareplusserviceshttps://partner.microsoft.com/global/productssolutions/productssoftwareplusservices


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Why Customers Are

Moving to the Cloud

Why VARs Should

Move to the Cloud




Cloud Solutions

How to Build a

Cloud PracticeCloud ResourcesTable of Contents


The Cloud Opportunity

The CloudOpportunity

This guide is designed to provide value-added resellers (VARs) with an overview of the wide range of cloud opportunities availableto them, including examples of how other VARs have built successful cloud practices. The term value-added resellers describes awide range of partners that combine software and sometimes hardware with services such as integration, customization, training, andimplementation to provide solutions for their customers. VARs can include partners that:

Although VARs serve customers of all sizes across all market segments, many of them tend to work with smaller organizations (200or fewer employees) that have little to no internal IT staff. These smaller companies face many of the same challenges as their largercounterparts, including the need to limit IT expenditures while increasing their competitiveness, but with fewer resources at hand. Forthese smaller organizations, the cloud provides a way to manage IT spend while gaining agility and scalability.

Specialize in cloud-based solutions

Focus on vertically specialized solutions

Offer managed services including outsourcing

Resell and service solutions on a time and materials basis.



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Why VARs Should

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Cloud Solutions

How to Build a




Moving to the Cloud

The cloud represents a huge opportunity for VARs, including

Attaching value-added services such as managed services and packaged offerings to complement cloud solutions and createpredictable, recurring revenue.

Augmenting existing services offerings such as customization, integration, training, business process consulting, and migrationservices by selling Microsoft cloud solutions.

Driving upgrades such as using Windows Intune to drive sales of Windows 7 or using Ofce 365 to upgrade older versions of Ofceand drive upgrades from older versions of Ofce to drive to Ofce 2010.

Upselling and cross-selling new solutions such as using Ofce 365 to promote Microsoft Dynamics CRM Online.

The IT cloud transformation represents a signicant market opportunity, but it also requires that VARs change the way they package,sell, resource, nance, and manage their businesses. This guide includes action plans as well as resources to help partners launch andenhance their cloud services practices. It includes the following topics:

The CloudOpportunity(continued)

The opportunities available to VARs who offer cloud services.

How VARs can make money in the cloud.

Approaches for selling, marketing, and managing a cloud services-based business.


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Why Customers Are

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The CloudOpportunity

Denition of the Cloud

The cloud generally refers to an approach to computing that is about Internet scale and connection to a variety of devices andendpoints. In its simplest form, cloud computing typically involves services that are delivered from a data center in one location toa server or personal computer (PC) in another location via the Internet, or the public cloud. The term private cloud describesenvironments that emulate cloud computing on private networks behind a rewall or on premises at a company site.

The cloud is characterized by three different offerings:

Infrastructure as a Service(IaaS)

Delivers computer infrastructure typically a virtualized environment as a service. IaaS allows organizationsto buy IT as a fully outsourced service, on a utility or pay-as-you-go basis.

Platform as a Service(PaaS)

Delivers a computing platform as a service. PaaS offerings provide for the development and deploymentof applications without the cost and complexity of buying and managing the underlying hardware andsoftware. IDC estimates that the PaaS opportunity will surpass the $14 billion mark in 2013.1

Software as a Service(SaaS)

Delivers applications and their associated data ondemand. SaaS applications are hosted in the cloud andaccessed via the Internet. According to Gartner, SaaSis forecast to have a 17.7percent compound annualgrowth rate (CAGR) through 2013 in the aggregateenterprise application markets, nearly ve times the

projected CAGR of 3.6 percent for the total applicationmarket.2 This includes high-demand workloadssuch as web conferencing, collaboration, contentmanagement, messaging and productivity, andCRM and ERP, as shown in Figure 1.3

Figure 1: High-demand workloads

High Potential SaaS WorkloadsKey Workloads predicted To Have High Cloud Offerings

Key Wor kl oads i n De mand P er ce nt ag e o f Work load D el iv er ed T hr ou gh t he C loud

10%

10%

20%

20%

30%

30%

40%

40%

50%

50%

Web Conferencing

HR and Workforce Management

Collaborative Software

SCM

E-mail/Ofce and Personal ProductivitySoftware

Security Software

Content Mgmt/Document Mgmt

Business Intelligence

Industry-specic Application

B2B/B2C Services

CRM

Accounting Utilities /Software /ERP

2009 2012

CRM and ERP 37% and 26%

Collaboration 46%

Web confrencing 48%

Content/documentmanagment 39%

Messaging and productivity 35%


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The Cloud OpportunityWhy VARs Should

Move to the Cloud




Cloud Solutions

How to Build a



Why Customers Are

Moving to the Cloud

Why CustomersAre Moving to

the Cloud

Smaller businesses present a compelling opportunity for partners that offer cloud services. Although small-business customers have manyof the same basic IT needs as larger organizationssuch as communication, security, reliability, storage, and desktop managementtheyoften lack the resources of larger organizations and have limited ability to make major capital investments. This discrepancy of IT need andresources provides partners opportunities to sell cloud services for a number of reasons:

Why Customers Are Moving to the Cloud

Lower initial capital costs and predictable recurring expenses. Cloud services virtually eliminate the need for large infrastructure

investment, allowing smaller customers to obtain IT services without major capital expenditures. Because cash ow is a top concern for many of these organizations, small businesses are ideal candidates for prepackaged cloud solutions offered at predictablemonthly rates. For VARs that want to enhance their cloud businesses, prepackaged services provide an opportunity to serve agreater customer base without increasing headcount.

Greater agility and scalability. The cloud provides greater agility and scalability to adapt to changing workloads and needs withhigh availability and quicker deployment.

Enhanced ability to focus on other strategic initiatives . Because cloud services generally result in lower IT expenses and greatercapabilities, they allow businesses to place more focus on strategic initiatives.

Access to enterprise-class software and capabilities. Cloud services provide small business customers with access to enterprise-classsoftware that in the past may have been out of reach for them.


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The Cloud OpportunityWhy VARs Should

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Cloud Solutions

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Why Customers Are

Moving to the Cloud

Smaller organizations are increasingly shifting parts or all of their IT to the cloud. By some estimates, two out of three of all smallbusinesses are already using some form of cloud services. By 2015, Forrester forecasts that the overall global market for public IT cloudservices will be worth nearly $160 billion, which is more than six times the 2011 estimated market worth of $25.5 billion, as shown inFigure 2.4 Clearly, partners who invest now in building cloud services and competencies have great potential for future growth.

Why CustomersAre Moving to

the Cloud(continued)

Figure 2: Growth in public cloud sales

BPaaS

$180

$160

$140

$120

$100

$80

$60

$40

$20

$0

Totalpublic cloud

markets(US$ billions)

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

B Pa aS ( $) 0 .1 5 0 .2 3 0. 35 0. 53 0 .8 0 1 .2 6 1 .95 2 .93 4 .2 8 6 .0 0 7 .6 6 9 .0 8 1 0. 02

SaaS ($) 5.56 8.09 13.40 21.21 33.09 47.22 63.19 78.43 92.75 105.49 116.39 125.52 132.57

PaaS ($) 0 .05 0 .12 0 .31 0 .82 2 .08 4 .38 7 .39 9 .80 11.26 11.94 12.15 12.10 11.91

I aa S ( $) 0 .06 0 .24 1 .0 2 2 .9 4 4 .9 9 5 .7 5 5 .8 9 5. 82 5 .6 5 5 .4 5 5 .2 3 5 .01 4 .7 8

SaaS

PaaS

IaaS


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Why VARs Should

Move to the Cloud

Why VARs Should Move to the Cloud

Expanded Reach Cloud solutions provide corporate-ready IT solutions to organizations of all sizes. In the cloud, the samecommunication and collaboration solutions that serve Fortune 1000 companies can be affordable forsmaller businesses, at a predictable monthly cost, with security, redundancy, scalability, and reliability builtin. With cloud solutions, VARs can sell-in to organizations that in the past may not have been able to justifythe initial investment required for on-premises corporate-class solutions. For those customers who haveaging infrastructure and dated software, the cloud provides a clear upgrade path, for less up-front cost. Andbecause cloud capability is delivered as a service, it provides a device-agnostic solution for companies thatwant to deliver IT services to telecommuters, eld teams, oor staff, or other workers physically removedfrom the ofce. With a wider range of options, VARs can reach new customers as well as offer existingcustomers a more efcient way to do IT. Because they are delivered via the Internet, cloud solutions alsomake it easier for VARs to expand their horizons. With Windows Intune, for example, VARs can providesupport virtually, removing geographic limitations.

Why VARsShould Move

to the Cloud

Cloud services offer VARs many ways to grow their businesses. They can expand market share and increase their customerreach. With cloud services, they can broaden their portfolio of value-added services and increase their attach rate for higherrevenues. The cloud can also help deepen customer engagement while driving customer satisfaction and loyalty and generatingpredictable, recurring revenue. The cloud makes it possible for VARs to achieve greater capacity and scale at less cost.


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Why VARs Should

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Greater Velocityand Scale

The cloud increases the speed and scope of business. Because cloud services dont have to be physicallydeployed, VARs can get customers up and running faster. Whether they are vendor-hosted or partner-hosted, cloud solutions shift the infrastructure burden away from resellers, so VARs can add newcustomers and increase new implementations without adding infrastructure or headcount, freeing upresources for training, marketing, and other ways to realize growth.Why VARs

Should Move

to the Cloud(Continued)

Increased Revenues Cloud solutions create an opportunity for VARs to offer more value-added services to their customers,such as customization, integration, training, business process consulting, and migration. They alsoopen the door for additional add-on solutions, such as mobility, recovery and data protection, securitymonitoring, and mobility solutions. These complementary services and solutions can be packaged andsold for a monthly fee in parallel with the software-as-a-service subscription model. This creates recurringrevenue and the opportunity for still more points of integration that in turn can deepen customerengagement and strengthen customer loyalty.

Many of these add-on offerings can take advantage of existing knowledge and skill sets. For example,VARs with Microsoft Exchange and Microsoft SharePoint expertise can create Tier 1 end-user and ITprofessional management and support packages to provide end-to-end support at a set cost. Otherpotential add-on offerings include consulting offered on a prepaid basis for help with document

management, intranet productivity, external communications, and business process and workowconsulting. Online services also help remove one of the largest variables that contribute to mistakes andscoping issues: hardware reliability and sizing.


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CloudOpportunities

for Value-addedResellers

Cloud Opportunities for Value-added Resellers

The cloud offers partners many ways to provide value to their customers, at all stages of the sales cycle, as shown in Figure 3.For example, partners can provide consulting services to help organizations understand how cloud solutions can meet theirneeds. Or they can package and sell help-desk support services after the initial solution sale. From pre-sales to post-sales, thecloud can help increase the length and scope of engagements, deepen the level of commitment, and in turn build greatercustomer loyalty while increasing overall billings.

Pre-SaleAssessment

Evaluation

Planning

SalePackaged

services

ManagedServices

Post-SaleHelp-desk and

IT support

Training

Business processconsulting

Figure 3: Cloud opportunities throughout the sales cycle


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Create new value-added solutions such as packaged services and managed services.VARs can combine Microsoft technologies with their own service and support offerings at a xed monthly rate to provide outsourced IT as aservice at a price that is affordable for many organizations. Or resellers can partner with hosting service providers to create managed servicesofferings that combine Microsoft technologies with other cloud solutions on a subscription basis that can grow with their customers as theirneeds require.

Cloud Opportunitiesfor Value-added

Resellers(Continued)

Offering Opportunities and Examples

Microsoft cloud solutions provide a range of opportunities for VARs. The following outlines some of those opportunities, with examplesdrawn from real-life partner experiences.

In just six years, a Belgian IT rm that focuses on businesses that have 25 to

150 PCs has grown its cloud services consulting business by 25%, increasing

both its customer base as well as its revenue base.


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Windows Intune is designed to make it easy for partners to create a managed services offering without having to build additional infrastructureor secure more resources. Because Windows Intune operates in the cloud, VARs can offer PC management and security services to customersbeyond their normal geographic reach. Windows Intune also helps partners gain insight into their customers IT environment so they candrive more value-added services and further increase revenues, with Windows 7 Enterprise upgrade rights and optional Microsoft DesktopOptimization Pack (MDOP) upgrade rights.

A reseller based in Central America has developed a managed desktop

services offering based on Windows Intune. The company has reduced

the time it spends providing desktop support by 80 percent while

increasing its revenues by 10 percent in just the first year, widening its

margins and expanding its business.

A Canadian VAR has developed a managed services offering based

on Windows Intune. The company has increased its revenues without

incurring significant cost, which has allowed it to keep its rates

lower, providing a competitive advantage among the small customers

that make up the bulk of its business.


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Cloud Solutions





Attach cloud solutions to existing services.

Partners that have developed specic core stack or industry expertise can complement their existing business models by adding cloudsolutions to their offerings. For example, partners that have built their business around communication and collaboration solutionshave an opportunity to sell-in Ofce 365, in particular to smaller organizations that typically have not had the resources to invest in andmanage robust communication and collaboration solutions. Partners that specialize in CRM have a similar opportunity with MicrosoftDynamics CRM Online. For partners who offer IT support services, Windows Intune provides a way to deliver PC management andsecurity support remotely via the cloud to more customers without incurring more cost, while generating recurring subscription-basedrevenues. Additional opportunities for VARs exist by partnering with cloud-based independent software vendors (ISVs) and hostingservice providers that offer line-of-business (LOB) and vertical solutions that align with specic customer segments.

A British firm that specializes in communication solutions based on

SharePoint has added Ofce 365 to its offerings. The addition has helped

generate more revenue as well as broaden its customer base for its

bread-and-butter SharePoint services.


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A VAR that targets smaller organizations found that its customers

were postponing upgrades to newer solutions because of cost. These

same customers proved more likely to migrate to Office 365 becauseit costs less. As a result, the partner has seen an increase in email

migrations, which in turn has helped them build stronger customer

relationships and foster repeat business, particularly for their

value-added services.

Organizations running Microsoft Ofce 2003 and Ofce 2007 with older versions of Exchange, or companies that are using POP3deployments, Ofce 365 provides a signicant upgrade for a low up-front cost with less ongoing maintenance cost. It combines the MicrosoftOfce Professional Plus desktop suite with Microsoft Exchange Online, Microsoft SharePoint Online, and Microsoft Lync Online. A recent studyfound that VARs achieved higher margins with Ofce 365 than they did with on-premises deployments of SharePoint or Exchange, third-partyhosted versions of SharePoint or Exchange, or other hosted communications and collaborations solutions.

Windows Intune provides additional inventorying and licensing upsell and cross-sell opportunities. For example, VARs can use WindowsIntune to gain deeper insight into their customers needs, increasing the potential to manage and distribute third-party applications forincreased revenue.

Up-sell and cross-sell solutions.

f


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Cloud Practice Differentiators

Public Cloud SolutionDifferentiators

VARs that offer public cloud solutionswhether Microsoft-hosted or VAR-hostedcan market theirability to provide additional services, such as assessment, evaluation and planning services, design andconguration services, and deployment and implementation services, for which proximity can be adeciding factor. Public cloud solutions also provide a number of key benets to customers, includinga balance sheet free of non-revenue-generating assets, fewer capital expenditures, less investment ininfrastructure, and faster time to value.

Private Cloud SolutionDifferentiators

VARs that offer private cloud solutions can stand out from the competition by targeting customers in industriesthat must comply with corporate, industry, and government regulations such as health care, nancial services, orthe public sector. VARs who serve these customer segments can partner with hosting service providers to sell-inprivate cloud solutions to provide a broader set of solutions that increase their competitive advantage.

Hybrid Cloud SolutionDifferentiators

Many organizations will choose to deploy a mix of private and public cloud solutions, as well astraditionally licensed software. Partners who serve these kinds of customers can feature their wide rangeof skills and experience, as well as their ability to advise their customers on which mix of solutions areright for them. These partners can also use vendor reputation and reliability as a key differentiator.

The cloud offers VARs many ways to differentiate their services, whether they offer public, private, or hybrid cloud solutions.



Microsoft offers the VAR channel the widest array of cloud offerings of any single vendor and the greatest exibility for ways to structureservices, with a range of choices for public, private, and hybrid cloud solutions. This creates ways for VARs to add cloud functionality to

existing software assets or to provide services that allow customers to move between cloud and on-premises systems as best suits their needs.

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Cloud Solutions

How to Make Money with Cloud Solutions

How to MakeMoney with

Cloud Solutions

The cloud offers VARs many avenues to protability, from reselling and hosting cloud solutions to developing and servicing cloud solutions.Increasing the percentage of attached services is critical to VAR success in the cloud, whether they are offered on a time-and-materials basisor as managed or packaged services. These value-added offerings can include maintenance and end-of-life services, on-site and remotesupport, planning and pre-delivery solutions, and implementation and deployment offerings. Packaged services, when charged as a monthlyfee, enable partners to build up long-term, predictable cash ows that, over time, can complement the annuity revenues realized throughcloud solutions.

Different cloud practice business models provide different operating margins, as shown in Figure 4. That said, independent of the specialty ofthe VAR, partners selling cloud services have a higher operating margin than VARs selling on-premises solutions beyond the rst year. Thereare two reasons for this. First, cloud solutions are easier to deploy, so they cost less to the reseller in terms of expended effort, which builds

margin. Second, cloud services typically are sold as subscription services with recurring revenues, whereas on-premises solutions often resultin up-front revenues at the time of sale.

In a survey by Monitor Group, which based their analysis on amultivariate business model, the operating margin of VAR partnersselling cloud solutions was between 7 and 14 percent higher thantheir counterparts selling on premises. The study identied fourdifferent kinds of VARs, including Managed Service Provider (MSP)/Time & Material (T&M) Hybrid VARs that provide remote support onxed price contracts; T&M VARs that focus on on-premises hardware,software, and systems; and Solution VARs that offer custom solutions.In the study, MSP/T&M Hybrid VARs reported generating a 62percent operating margin in the cloud beyond year 1, whereas their

counterparts selling on-premises solutions achieved an operationmargin of only 55 percent. Similarly, T&M VARs that were engagedin the cloud reported operating margins of 49 percent, or 9 percenthigher than their counterparts on the on-premises side.

The difference in operating margin is particularly pronounced withSolution VARs, because solutions tend to have higher margins overreselling. This is yet another example of why it is critical for VARs toattach value-added solutions to cloud services.

Whatever their business model, the more VARs perceive cloudsolution sales as a generator for other value-added services, thegreater their chances become for long-term growth.

PREMISE-BASED SALE YEAR 1

T&MVAR*

MSP/T&MHybrid VAR*

SolutionVAR

Revenues $104,884 $118,361 $50,623

Costs $87,642 $88,244 $39,752

$17,241Operating Profit $30,117 $10,871

16%Operating Margin 25% 21%

OFFICE 365 YEAR 1

T&MVAR

MSP/T&MHybrid VAR

SolutionVAR

Revenues $39,107 $54,984 $28,607

Costs $22,918 $24,480 $13,126

Operating Profit $16,189 $30,504 $15,481

Operating Margin 41% 55% 54%

Figure 4: Recurring revenues for cloud-based resellers

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Moving to the Cloud

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Value-added ResellersCloud ResourcesTable of Contents


How to Build a

Cloud PracticeHow to Make Money with

Cloud Solutions

How to Build aCloud Practice

How to Build a Cloud Practice

The cloud presents a high-volume, high-velocity game. Although traditional IT sales depend on building relationships with the ITdecision-makers who have the operations budget to approve big projects, cloud solutions level the playing eld. Expenses fundedthrough capital rather than operating budgets are incremental, with no dependence on infrastructure. To fully realize the potentialof the cloud, VARs need to generate more leads and quicken the pace of sales, shift their investments from inventory to sales andmarketing, and plan for recurring revenue streams.

Figure 5: How the cloud changes partnering

Sell big projects for

one-time up-front revenueto IT professionals

Create customized quoteswith focus on quality of leadsand deal size

Focus on developmentand implementation

Invest in infrastructure

and inventory

Sell smaller seed and feed

projects for recurring revenueto business decision makers

Use competitive rate cardpricing with focus on quantityof leads and sales velocity

Focus on consulting, integrationand services

Invest in sales and marketing

Partnering BEFORE the cloud Partnering IN the cloud

Sales

Marketing

CustomerEngagement

Operations &Finance

The cloud as the new center of gravity creates broad changes across all partner businesses, from sales and marketing to customerengagement and operations and nance, as shown in Figure 5.

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Cloud SolutionsCloud ResourcesTable of Contents


How to Build a

Cloud Practice

How to Build aCloud Practice(continued)

Marketing

Cloud solutions place a premium on achieving critical mass with demand generation. The ultimate goal is to drive more deals at a lowercost. A recent study by the Monitor Group showed that as VARs integrate cloud services into their offerings, keeping sales and customeracquisition costs low is key to building stronger margins.

Partners should consider increasing their investments in online marketing tactics where many prospects for cloud-based businesssolutions are more likely to nd them. These include search engine marketing (pay-per-click advertising) and search engineoptimization (achieving high rankings in organic searches). Partners successfully selling cloud solutions are more likely to spendon average more than 50 percent of their marketing spend on online campaigns, whereas traditional on-premises partners spentsignicantly less on the same lead generation tactics, as shown in Figure 6.

Traditional Online

OnlineTraditional

Cloud

On

Prem

0% 50% 100%

Telemarketing (External)

High Impact Direct Mail

Postcard Direct Mail

Letter Direct Mail

Exec Briefings

Phone Follow Up (Internal)

Webinars

Email Nurture Marketing

Search Engine Optimization

Pay-per-Click Campaigns

Figure 6: Marketing tactics by campaign

Partnering ith Microsoft in the Clo d


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By focusing exclusively on Microsoft Dynamics CRM Online implementations

for small and medium businesses, one VAR has been able to grow rapidly and

develop a global customer base. The company uses the 30-day trial period to

develop customized online POC for prospects and has achieved a 50 percent

conversion rate of leads to sales.

A cloud services broker that targets small-to medium-sized businesses uses

telemarketing and weekly webinars to develop sales leads. To keep costs low,

the company uses LinkedIn and Twitter to drive interest in the webinars and

then surveys attendees online to further qualify leads.

Reducing marketing-driven customer acquisition costs can also be accomplished through more focused and precise market segment orvertical demand-generation activities that result in increased response rates and generate more qualied prospects.

Partnering with Microsoft in the Cloud


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Sales

VARs can speed sales by adopting rate cards that offer xed pricing by seat and/or solution rather than creating customized quotes.For example, for customers who have up to 50 seats, a partner could provide basic packaged services for $28 per seat and thenincrease the cost of additional services per seat up to $85 for IT support and training, as shown in Figure 7. Published pricing and setscope will also help foster transparency and engender loyalty between customer and partner.

Packaged services, again sold through set pricing, can also accelerate sales while improving margin. IDC benchmarks show that

partners that provide packaged IP typically realize nearly double that rate for their solutions than partners who provide the same kindof services as one-off solutions.vii

VARs also have an opportunity to adopt best practices that can help shorten the sales cycle when selling cloud solutions such asOfce 365. These include taking a structured approach to targeting and lead qualication, using the advantages of adopting cloudsolutions to start the conversation rather than waiting for an upgrade cycle, and using online methods to educate customers aboutcloud benets. For example, VARs that follow up on sales opportunities in advance of upgrade cycles can reduce the time spenthaving the initial discussion in half, from two weeks to one week, as shown in Figure 8. Similarly, using webinars to provide proof ofconcept can reduce the product demo and proof of concept stage from four weeks to one week, as shown in Figure 8. By changingthe way they target, engage, education, sell and close cloud solution deals, VARs can shorten the sales cycle by as much as half thetime from more than 11 weeks to just six weeks.

The move to volume sales also necessitates a change in sales compensation. Rather than incentivize based on deal size, partnersshould consider de-emphasizing commissions for initial sales and reward for annual contract size, renewals, and subsequentadd-on services. To map to the ongoing revenues generated by cloud services, compensation should also be incremental.


Example Rate Card

$28

$22

$16

$58

$48

$38

$85

$74

$63

Seats

0-50

50-100

100+

Figure 7: Sample VAR rate card

Basic Services

Help desk, break/x

Per seat/month

Advanced Services

Basic + IT support

Per seat/month

Premium Services

Advanced + training

Per seat/month



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There are a number of ways that partners candeliver cloud services. For example, partners canoffer standardized packages of services (managedservices) around Microsoft cloud solutions to keepoverhead cost low while building recurring revenuestreams. Another way to increase revenue is throughvertical integration, by offering additional value-addedservices such as outsourced solutions, where partnersmanage cloud-based IT infrastructure on behalf ofcustomers. The cloud offers partners the opportunityto expand their traditional IT managed and outsourcedservices (such as backup and disaster recovery solutionsor patch management) to include cloud-specic servicesmentioned earlier in this guide. Partners can also offerservices that span delivery mechanismsfor example,partners can offer managed services as an add-on tooutsourced solutions.

Cloud solutions are also well suited to online distributionmodels such as online marketplaces. These can includevendor-driven sites such as Microsoft Pinpoint and theMicrosoft Dynamics Marketplace, third-party onlinemarketplaces such as those organized by distributorsor by vertical through trade groups, or via a partners

own e-commerce enabled website.

One company that offers Ofce 365 has found that engaging directly with

business decision-makers rather than their IT counterparts removes the extra

step of seeking funding and approval, thus speeding up the sales process

signicantly. This, in turn, has freed up resources to qualify and sell to new

prospects, increasing its customer base.

How to Build aCloud Practice(continued) Figure 8: Best practices for accelerating sales

SALES STAGE

2 weeks

Variable; oftenwaiting

Well-developed lead qualification checklist Lead seeding & follow-up plans

No structured approach toassessing customer receptiveness

Targeting& Lead

Qualification

1 week

2 weeks

Starting conversations in advance of refreshand timing discussions for other milestones

Waiting to have clouddiscussions until customeris considering refresh/upgrade

InitialConversation

& Sales Hooks

1 week

2 weeks

Leveraging own or vendor webinars, demos

and calls to maximize benefit exposure ininteractive settings

Fears of customer resistance

tied to internal IT desires forpremise-based equipment

CustomerEducation

1 week

4 weeks

Skipping PoC altogether given thescaleable nature of Office 365

Giving "pre-demos" in earlier webinars, etc.

Dedicating time and resourcesto lengthy PoCs or repeat demos

Product Demo& Proof of

Concept

Focusing BDMs on cost savings, no-regretsaspects of scalable Office 365 solutions

Phasing roll-out to get initial buy-in3 days

3 days Treating Office 365 as investmentakin to premise purchase withassociated budget approvals,review, etc.

Quote Prep& Closing

TIMING COMMON INHIBITORS OPPORTUNITY ACCELERATORS

11+weeks

6weeks

Average sales approach Best-in-class sales approach



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Finance

As cloud services shift the cycle of payments from one-time, up-front lump sums to recurring revenue streams, cash ows for cloudservices will likely differ from more traditional business models. Establishing a nancial plan based on a specic cloud servicesstrategy is a foundational element of a cloud services business.

Reseller organizations will also need to shift their investments from technical infrastructure to marketing. To increase the volume andvelocity of sales, partners will need to invest in marketing engines, including the development of pay-per-click campaigns, searchengine optimization updates, data-mining tools, and marketing automation tools for lead routing.

Partner organizations in transition to building a cloud practice will also need to invest funds in training. VARs that have notestablished a value-added services practice will need to identify and build the skills and capabilities necessary for providing cloudservices. Partners that already offer value-added services can make use of and augment existing skills to build a cloud servicesbusiness.

A reseller based in the United States has built its managed services practice

on Windows Intune to create a nancial foundation of recurring revenues. By

moving to a managed services model, the company has increased its service

margins from 35 percent to 55 percent while keeping COGS steady.

An IT rm that specializes in cloud-based solutions has come to rely on online

marketplaces as an important lead generation tool because they deliver low-cost

but highly qualied leads and allow the rm to successfully compete with much

larger rms worldwide.




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One online services reseller has streamlined its on-boarding process

by creating business model templates that reduce the need for further

customization, deploying new customers in 60 days or less.

By building its managed services practices on Windows Intune, one IT provider

has been able to increase its SLAs without increasing costs, providing a more

competitive offering that is also more protable.

This includes:

Dening solution offerings and being able to articulate their value to IT and business decision-makers.

Developing a stable, repeatable, branded methodology for customer on-boarding and for building loyalty.

Creating cloud-based service contract with per-seat pricing and SLAs. Establishing strong account management practices that nurture long-term customer relationships that in turn reduce

turnover and support recurring revenue streams.

One of the biggest transitions for a services organization is the contract management process. In the cloud environment,organizations need to adjust to one-week, two-week, or one-month assignments coupled with a software subscription. Developing astreamlined contract management process is important, as the volume of contracts can increase.

By realizing new efciencies and focusing on volume and velocity, resellers can adapt their existing businesses to take advantage ofthe cloud opportunity.


Operations

Establishing a successful cloud-based business means evaluating each part of your business and planning for change, fromestablishing a nancial plan that integrates annuity revenue streams to dening solution offerings, establishing service levelagreements (SLAs), and creating customer on-boarding processes. In every aspect of business, the goal i s to reduce the cost of goodssold while creating repeatable practices that will support growth in revenue without an increase in costs.



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How to Build a

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Get Started

Cloud Resources

Cloud Resources

To launch your cloud practice, begin by visiting the links below:

Learn Moreby reading case studies abouthow other partners have

transitioned their businessesto the cloud.

Promote and Sellyour cloud solutions with resources from

the Partner Marketing Center and viathe Microsoft Pinpoint marketplace.

Try Outthe cloud with .

Microsoft Cloud Essentials

https://partner.microsoft.com/global/productssolutions/productssoftwareplusserviceshttp://www.microsoft.com/casestudies/Case_Study_Search_Results.aspx?Type=1&ProTaxID=3269http://users/ryan/Desktop/Sayed/11_MIC_227/11_MIC_227_Cloud%20Services%20-%20VARs/s/imac-01/Library/Caches/Adobe%20InDesign/Version%206.0/en_US/InDesign%20ClipboardScrap.pdfhttp://www.partnermarketingcenter.com/http://pinpoint.microsoft.com/http://users/ryan/Desktop/Sayed/11_MIC_227/11_MIC_227_Cloud%20Services%20-%20VARs/s/imac-01/Library/Caches/Adobe%20InDesign/Version%206.0/en_US/InDesign%20ClipboardScrap.pdfhttp://users/ryan/Desktop/Sayed/11_MIC_227/11_MIC_227_Cloud%20Services%20-%20VARs/s/imac-01/Library/Caches/Adobe%20InDesign/Version%206.0/en_US/InDesign%20ClipboardScrap.pdfhttp://pinpoint.microsoft.com/http://www.partnermarketingcenter.com/http://users/ryan/Desktop/Sayed/11_MIC_227/11_MIC_227_Cloud%20Services%20-%20VARs/s/imac-01/Library/Caches/Adobe%20InDesign/Version%206.0/en_US/InDesign%20ClipboardScrap.pdfhttp://www.microsoft.com/casestudies/Case_Study_Search_Results.aspx?Type=1&ProTaxID=3269https://partner.microsoft.com/global/productssolutions/productssoftwareplusservices


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Cloud Resources

Cloud Resources(continued)

More Cloud Resources

For more information visit the links below.

1 IDC (March 2010)

2 Gartner ID:G00171813. Market Trends: Software as a Service, Worldwide, 2008-2013 Update. November 2009.

3 IPED: Can You See Through The Clouds? The Evolution of Technology Delivery, March 2010

4 Sizing The Cloud, Forrester Research, Inc., April 21, 2011.

5

IDC (originally cited in Dynamics CRM Online Partner Protability Guide)

Learn more about Microsoft cloud services

Microsoft Cloud Power

Read about how other partners have built successfulcloud businesses

Partner Cloud Services case studies

Sign up for a Microsoft cloud partner program

Microsoft Cloud Essentials

Develop cloud skills

Microsoft Cloud Services Training Resources

Microsoft Cloud Services Partner AssessmentsWindows Azure Platform Training Kit

Deploy a cloud test environment

Quickstart for Online Services

Market your cloud practice

Microsoft Pinpoint

Drive sales

Partner Marketing Center

For more information go to the Cloud Solutions

section on the Microsoft Partner Network Portal

Build a business case for a cloud practice

Partner Protability Modeler Tool

Establish a cloud practice

Microsoft Cloud Essentials Pack

Hyper-V Cloud Practice Builder
https://partner.microsoft.com/global/productssolutions/productssoftwareplusserviceshttp://www.microsoft.com/en-us/cloud/default.aspxhttp://www.microsoft.com/casestudies/Case_Study_Search_Results.aspx?Type=1&ProTaxID=3269http://www.microsoftcloudpartner.com/https://partner.microsoft.com/global/40159477https://partner.microsoft.com/global/40151405http://www.microsoft.com/downloads/details.aspx?FamilyID=413E88F8-5966-4A83-B309-53B7B77EDF78&displaylang=enhttps://www.quickstartonlineservices.com/Pages/Default.aspxhttp://pinpoint.microsoft.com/http://www.partnermarketingcenter.com//Pages/Default.aspxhttps://partner.microsoft.com/global/productssolutions/productssoftwareplusserviceshttps://partner.microsoft.com/partnerprofithttp://www.microsoftcloudpartner.com/https://partner.microsoft.com/US/40150816https://partner.microsoft.com/US/40150816http://www.microsoftcloudpartner.com/https://partner.microsoft.com/partnerprofithttps://partner.microsoft.com/global/productssolutions/productssoftwareplusserviceshttp://www.partnermarketingcenter.com//Pages/Default.aspxhttp://pinpoint.microsoft.com/https://www.quickstartonlineservices.com/Pages/Default.aspxhttp://www.microsoft.com/downloads/details.aspx?FamilyID=413E88F8-5966-4A83-B309-53B7B77EDF78&displaylang=enhttps://partner.microsoft.com/global/40151405https://partner.microsoft.com/global/40159477http://www.microsoftcloudpartner.com/http://www.microsoft.com/casestudies/Case_Study_Search_Results.aspx?Type=1&ProTaxID=3269http://www.microsoft.com/en-us/cloud/default.aspxhttps://partner.microsoft.com/global/productssolutions/productssoftwareplusservices

Documents

Partnering With Microsoft in the Cloud (VAR)