Thousands of Managed Service Providers (MSPs) are asking this question.  The hosting business is burgeoning, but if there is only one degree of separation, what is the value from one MSP to another.  At a recent conference I attended Lance Crosby, the CEO of SoftLayer said it plain and simple, “We are focused on the Infrastructure as a Service model.  Making money off of hosting Exchange is not our business model.  We are the Cloud Data Center that hosting providers should be using.”  In other words, do what you do best, and let someone else spend the money to capitalize for growth.

So if focus is the key to success… and SoftLayer has become a $100 million business in just 4 short years by applying this principle… then how does a MSP get better focus?  Well let’s start with what customers are asking for.  In a recent report published by Microsoft, SMBs are focused on how to get more from their business by spending less on their IT.  Hosted Exchange is about getting more professional and going to a business grade email system.  These same SMBs are smart enough to realize that there is an opportunity cost to doing IT themselves, even if it is just to set up and maintain an Exchange server.  So they outsource this drudgery to a local hosting provider and spend the savings in headcount on another sales person or engineer or manufacturing guy.  That’s not a hard sell and so many SMBs are doing this it has actually created a herd mentality to move in this direction.  Why not use this as the spring board for other services.  Take for instance DR?

Most SMBs carry some kind of property and casualty insurance on their business, but don’t think twice about backing up their own mission critical data on CDs or an external drive sitting in a broom closet somewhere.  And so as the old adage goes, you don’t need life insurance unless you die.  Well you don’t need a disaster recovery plan until your building burns down with your back ups inside with all of your other equipment.  This is a great place to start for hosting providers who are looking for the next thing. 

Why not be your customer’s DR plan?  You already have a trusted relationship with the subscribing customer and it makes sense that you’d help him address the problem he does not know he has…. doesn’t it?

But don’t stop there!  If you are truly a “trusted advisor” then you need to talk to your customer about a bundle of services that includes a business productivity suite like Microsoft Office – an extension of Exchange and a total Disaster Recovery plan that enables him to have a peace of mind every time he walks away from the building.  Why is it important to have this discussion at the same time you ask?  Because if you offer a bundle that includes Office through single instance management, you will be able to back up the customer’s data as an extension of your datacenter.  If you’re going to capitalize with servers and RAID drives (or better yet let someone like SoftLayer do it for you)  why wouldn’t you offer a virtual Office suite and charge for subscription based applications along with the DR? The two go hand-in-hand and you will add more value to your customer with a higher margin for yourself.

To do this you have to develop a plan to sell the bundle first.  Talk to your customers about how valuable their data is and what it would cost to replace it.  Then have a discussion about how easy it would be to bundle a service so that they can get access to any of their applications on-demand and have a source for backing up all of the data at the same time.  If you do the calculations correctly, your customer will thank you for providing a plan to recovery in the event of a disaster and a way to access applications and information from anywhere… including remote locations like a home office or even on the road.

Those margins are out there waiting for you.  All you have to do is match the demand with your solution.