Microsoft reported 59% growth in Microsoft Azure last quarter. Did you grow your practice by 59% in the same period?
Over the past few months, there have been numerous articles, webinars, podcasts, and open forums on Facebook and Reddit talking about the impact of Covid-19 on the MSP ecosystem. Some MSPs have unfortunately had to scale down their practice dramatically or even close their doors as their small and medium business customers were shuttered. At minimum, all MSPs need to rethink their path to continued profitability.
At a time of worldwide tragedy and upheaval, it could be viewed as inappropriate to speak about making money. Numerous individuals have written that in public forums. As a vendor to the MSP ecosystem, I try to promote Nerdio as a way to enable MSPs to build a work-from-home solution for their customers while at the same time offering “general assistance” to MSPs during this difficult time. But if there is one thing the Covid-19 crisis has laid bare in the MSP ecosystem, it is the following: If you are an MSP and not managing your customer’s infrastructure in the cloud, you are missing a train that left the station long ago. You likely do not have immediate access to your customer’s IT environment and are left at a disadvantage during this crisis relative to your MSP peers who have embraced the cloud.
Why do MSPs balk at moving their practice to the cloud and Microsoft Azure? There are three primary reasons:
- They lack a technical resource who knows how to architect and manage a customer environment in Azure; hiring that person is too expensive.
- They find Azure to be too complicated and are scared off by the breadth of Azure’ services.
- They are concerned that consumption-based pricing is too risky and cannot be packaged in a fixed-cost way similar to an on-premises environment.
While those are legitimate and real challenges, they should not prevent an MSP from building a cloud practice in Azure. Automation platforms like Nerdio will help you deploy, price, manage, and optimize Azure environments without the need to hire an expensive Azure engineer. Microsoft has put in place rich offers and licensing programs that give MSPs a discount of up to 80% off the list price of Azure. I am here to tell you that we have already seen thousands of MSPs who easily deploy, manage, and make money with Microsoft Azure. And with the recently released Windows Virtual Desktop, empowering work from home solutions in Azure with a native Windows 10 operating system has never been easier from a technology and licensing perspective.
With that, why are MSPs still not moving to the cloud? I would posit it is a fourth reason or challenge that we often run into and it is called “MSP Inertia” where an MSP says “I have always done it this way and don’t want to change the way I do things.” MSPs argue they are used to deploying and managing and securing their customers on-premises and they simply do not want to change that model. MSPs also say “I am generating recurring revenue on a managed services model on-premises. Why do I want to change things up?” MSPs are comfortable doing things a certain way and are concerned about how they can move to the new reality of the cloud on behalf of their customers.
When talking about cloud computing, people often refer to products as one of three things—Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS). Over four years ago, most MSPs saw the writing on the wall when it came to productivity software. It no longer made sense to manage an on-premises Exchange Server when Microsoft was investing considerable resources developing Office 365 (now known as Microsoft 365). Today, more than 80% of MSPs have moved most of their customers to Microsoft 365—the company’s most popular SaaS product.
Imagine where your MSP practice would be if you still were managing an Exchange Server during a crisis, pandemic, or natural disaster and that server went down? Wouldn’t you feel a bit embarrassed that you had not brought your customers to the cloud with Microsoft 365? Even without a crisis at hand, wouldn’t you have a hard time explaining why your customers cannot benefit from the breadth of technology in Microsoft 365, including collaboration with Teams, enhanced security, and much more?
Now is the time for all MSPs to build a strong IaaS practice on the back of Microsoft Azure. It is time to take that same leap of faith you did several years ago with Office 365 and bring your practice fully to the cloud with Microsoft Azure.
A mental model you can use when thinking about when to move customers to the cloud is as follows:
- Step 1—All new customers you onboard into your practice should be 100% from Day 1.
- Step 2—Take your existing customers and design a hybrid approach to first bring them to the cloud with Microsoft 365 and then move their infrastructure to the cloud with Microsoft Azure
- Step 3—Fully migrate all remaining customers to the cloud as their on-premises equipment needs to be retired or breaks.
The promise of Azure and the public cloud is not a vision to be realized some years from now. It is the here and now for MSPs who want to stay in the game. It is the investment you must make to remain competitive and to deliver the most value to your customers. And it is the way to prepare for a new world of work where your customers demand and insist on the best work from home solutions that you as their MSP must deliver.
Not betting on Microsoft Azure and ignoring the opportunity to move your customers to the cloud will certainly leave you uncompetitive and wondering why you delayed this decision or succumbed to MSP Inertia.
Joseph Landes is the Chief Revenue Officer at Nerdio. Joseph joined Nerdio in November 2018 after a 23-year career at Microsoft where he led high-performance sales and marketing teams around the world including the US, India, Brazil, Russia, and Germany. He loves talking to partners about how to build successful cloud practices in Microsoft Azure and was named a CRN Channel Chief in 2020 for his work evangelizing the cloud and Nerdio’s contribution to the channel.