Step One – Change your mindset
I’ve spoken to over 300 hosting service providers the past few months and there is one overwhelming theme I continue to hear, “I didn’t realize there was such great demand for IT-as-a-Service until I changed my business model”. The underpinnings of this statement come from the ‘Ah Ha!’ moment when a CEO has an epiphany regarding a service provider/hosting business model for scale/replication of services vs. continuing a business with its core value in consulting services. One is a business built to scale the other is heavy in consulting and customization. These partners tell me they have turned the corner for creating a larger base of customers based on a replicated service delivery model. The business, they say, has a greater amount of demand and at the same time is more profitable.
In order to create a scalable services business, the mindset of the company has to change first. You might have fifteen to twenty businesses you serve today. For each of these businesses you may supply custom services that include all manner of custom code development, support and engineering. Good enough. But the ratio of labor to revenue is linear. That means for every new customer you add, you’ll need a set number of increased engineers and support center personnel. In the meantime, there is a shop just down the street that has decided to follow a different model. Because he has a set bundle of services he can replicate his revenues by signing new customers and at a fraction of the cost. Why? Because a set service bundle gives him the flexibility to sign multiple customers using the same infrastructure. This decreases the cost of sales and the cost of support. The shift in sales opportunity goes from 1:1 to 1: N where N = the number of new customers with the same support infrastructure.
Step Two – Grow your business exponentially!
Once you’ve “changed your mindset” you now have the opportunity to exploit the model by getting in front of the many, many customers who want and need your services. The research shows that there are some 30 million SMBs out there who would love for you to give them a bundled services offering and take the burden off of their business. It’s not difficult. Just start with a bundle that includes Exchange, Office and Disaster Recovery for these applications. You may say, “Hey that’s a commodity business. I don’t want to be in a pool of commodity service businesses. I need differentiation!” Fair enough, you do need the differentiation, so do it with the user experience providing a superior SERVICE. I have a good friend in the industry who tells me that his customers come back to him month in and month out because he gives them the best service for a fair price. Imagine that, a service provider who actually provides service AND scale.
Next you need to sign as many businesses as your support system will allow in a 12 month period. The most successful service providers in this space today are migrating 3-5 businesses per week. That’s right. Don’t fall off your chair, it’s happening today. I’ve spoken with hosting providers who have told me they believe that number is impossible. Their average migration is one business every 6-10 weeks, not 3-5 per week. Well, if that’s the case with your business, you need to go back to step one and figure out how you’re going to change your model. It can be done and we have seen our best partners doing it.
Step Three – Cultivate your base
Once you’ve got a base of 100-150 businesses migrated, and you are delivering on the promise of a “Cloud” enabling IT for Business Productivity you can go back into these companies and upsell them on specific Line of Business (LOB) applications that you have added to your portfolio of services. That’s right, the applications you’ve added, and not the custom application your customer has for you to spend hundreds of hours migrating to your datacenter. For instance, in the Financial Market Segment Sage and QuickBooks are two of the most prolifically used applications. So start with these if your focus is the Financial Sector. Pick 2-3 applications in a specific market vertical and become the expert at rapidly delivering those applications to the hundreds and thousands of end users in each of the businesses you’ve signed in Step Two.
Now as you continue to cultivate these businesses it will give you an opportunity to negotiate new terms based on the higher value of the LOB applications. Remember, the more custom you get, the less number of companies you will be able to sign, migrate and cultivate. This is a fine line, so stick to the model and only offer hosted applications you can replicate to other businesses.
Need more help? Become a Citrix Service Provider and take advantage of our CSP Marketing Toolkit. Need help in settting up your datacenter. Once you are a partner you can take a look at the Citrix Developer Network site. We also have videos you can use as a part of your selling process.