I was in attendance at TCA Conference in Leicester in February. The event was a great success, as was the CompTIA Reseller Forum which took place before it. There were some interesting points of view and opinions on offer from the numerous IT Providers in attendance – ranging from Computer Repair Shop Owners, to one-man-band Consultants, all the way up to larger SMB Managed Services providers.
I noticed two recurring themes during the day – talk on the relationship between Vendors and Resellers, and Cloud Computing and it’s impact on the SMB IT industry.
I was also fortunate enough to be asked to be a speaker at the Conference, and Cloud Computing came up as a topic of discussion during that segment too, with a nod to the Vendor/Reseller relationship debate that I’ve mentioned. One of my fellow speakers talked about Microsoft Business Productivity Online Suite (BPOS) and gave his opinion, which mirrors the vast majority of resellers I’ve spoke to about BPOS, in that it’s an awful proposition that eliminates margins made on hardware sales and has low levels of recurring revenue for resellers, and effectively hands our clients to Microsoft to have a direct relationship with – cutting us out of the loop.
Whilst I understand these views, I disagree with them.
Lower Barrier to Entry
For our clients, services such as Microsoft BPOS and other Cloud offerings means greater choice with lower barriers to entry. There are little or no Capital Expenditure costs involved with setting up a Cloud Infrastructure using a service such as BPOS, and they can be setup very quickly and easily.
Ask any of your clients whether they’d prefer to write a cheque for a typical £3000+ Microsoft Small Business Server installation as a Capital Expenditure or whether they’d prefer a few quid a month Operating Expenditure, and I’m going to take a good guess that they’ll for the monthly option.
You might think clients won’t understand what Cloud Computing is all about – but if they use Facebook, they’ll already get it.
Clients don’t care how services such as Microsoft BPOS work, they’ll just understand that it solves the same set of problems that an on-site server does, but with less of the headaches and a drastically reduced cost to them.
Microsoft BPOS and Cloud Computing for clients is definitely a good thing.
Losing Hardware and Software Margins
For us as IT Consultants and resellers, services such as Microsoft BPOS mean we’re no longer going to be selling big bits of tin with expensive Server Operating Systems and Client Access Licenses (CALS) attached. We’ll no longer make that 15-25% margin plus billable project time on installations. We can no longer sell Managed Services for ongoing maintenance and updating of those servers. Instead, we’ll be referring our clients to Microsoft, who’ll give us between 6-12% of the ongoing revenue they make as a referral fee.
That all sounds bad for us as Consultants and Value Added Resellers, right?
I for one don’t think so. Things are radically changing, for sure, and if change scares you, then you’re only human. But if you’re working in the IT industry and actively resist change – then I think you’re in the wrong industry entirely. The IT industry is built on the fact that technology and business models are *always* changing!
Cloud Computing is good for clients
I’d suggest that instead of looking at Microsoft BPOS and similar services as killing the industry as we know it, realise that cloud computing is a good thing for our clients and embrace it. Realise that whilst you probably won’t be installing and maintaining as much expensive tin, that clients will still need your expertise as they always have. Clients will (for now!) still need PC’s and the associated services that go with them. They’ll still need your help with those services. They’ll still need advice and guidance.
What’s more, realise that if you don’t offer them that expertise and those Cloud offerings, then competitors such as Google will. Often for free.
Don’t stick your head in the sand
Instead of sticking your head in the sand and hoping that Cloud Computing and solutions such as Microsoft BPOS will go away, I think you’re better off understanding it all and realising that by giving your clients and prospects a choice between Cloud and in-situ services, you’re more likely to be working with them for a long time to come. Look for the value-adds in the relationship, and understand that you may need to start viewing the value of the client in terms of the lifetime relationship rather than big-ticket Projects.
Clients might bring up objections to BPOS such as “Where is my data stored”, “Do Microsoft own the data or do I?” and “How can I be sure things are secure?”. If those are genuine concerns to the client and you’re offering both cloud and in-situ services, you’ll have all bases covered.
I think that 2010 into 2011 will be one of the last years that clients will be looking to upgrade their server hardware. After this set of Hardware refreshes, they’ll be looking to Cloud Solutions such as BPOS. Not in every case, as many clients will still need in-situ servers for Line of Business (LoB) applications and the like, but at the very least I think you’ll start to see more hybrid scenarios, where many services such as e-mail and collaborative tools are cloud based, and LoB apps are on local servers.
The long term role of the IT Consultant
Long term I see the role of the IT Consultant becoming more akin to that of a Business Consultant – we’ll help clients less and less with pipes and plumbing, servers and hardware, software and security, and more and more with business processes and understanding how technology can help their businesses become more efficient. In other words, less the “computer guy” and more the “go to guy”. If you’re concerned about simply becoming a reseller of other companies services, start looking to how you can add value to your clients businesses using your expertise in this way.
Of course I could be wrong, and Microsoft could steal all our clients with offerings such as BPOS. But I don’t think they will. Time will tell!