Can we sell the Cloud in the same way as we sell hardware, software and services today? We keep a close eye on the market here at Marathon and I believe that repeatable Cloud business for the channel, through a repeatable Cloud Migration Strategy, has now come of age.
We’re seeing multiple triggers that indicate a change in direction– including End of Support (EOS) cycles for Windows Server and SQL Server 2008 and 2008 R2, expiry of big datacenter contracts and the need to quickly integrate acquired IP. Are your customers needing urgent capacity to support expansion plans, software and hardware refresh, security threats, compliance commitments or the need to deliver applications faster based on business demand?
If you thought that building a Cloud-Readiness Machine wasn’t for you – it might be time to think again….
The Cloud Migration Opportunity
As businesses of all sizes embrace digital transformation, traditional on-premises IT becomes increasingly seen as a costly, restrictive, and distracting burden. We covered this in our Guide to the Digital Workspace e-book and blog and you will remember that these examples contribute even more pressure, to reduce or even eliminate on-premises IT, by moving existing applications and services to the cloud.
We all know, the business-critical nature of many existing applications means any change, especially one as fundamental and far-reaching as cloud migration, represents a business risk. Migration must be as seamless and safe as possible and requires skills and experience that are lacking in traditional IT departments. Recognising this, current estimates are that up to half of your current customer base will seek outside expertise, to help them with their cloud migration journey!
Looking behind the BIG numbers
This trend has created a rapidly growing business opportunity for specialist IT providers. Microsoft research indicates that the global market for cloud migration services is forecast to grow from $2.4B to $7.1B between 2016 and 2021. But you have to look behind the big numbers, to see where the real opportunities are for the channel:
Source: Microsoft Playbook 2018
In a survey of partners with an existing cloud migration practice, Microsoft found that typical margins for a cloud migration project were in the 25-30% range, with most individual projects generating under $50,000 in revenue, although some generate substantially more. Over a 12-month period, these figures did not vary significantly between migration and modernisation projects, nor between customers with an enterprise or SMB focus. Making migration projects both achievable, for IT resellers and repeatable!
Don’t leave Post-Migration Revenue on the table
This opportunity does not end with cloud migration. Having moved to the cloud, applications must continue to be maintained and updated. Once again, this requires specialist cloud skills and expertise, and many customers will outsource this ongoing maintenance to specialist managed service providers. Outsourcing also enables a business to focus on their core activities rather than IT.
This creates an additional two-fold business opportunity for migration partners. First, to provide the ongoing maintenance, support, and related services for migrated applications. Second, and in the long run more importantly, to become a trusted, strategic partner in the customer’s digital transformation using the data generated by those applications to deliver insight, innovation and better customer value.
Source: Microsoft Playbook 2018
If we look again behind the big numbers, we see that the average follow-on revenues from migration projects doubled the size of these projects, in the SMB space. So, in reality, these customers generate nearly three-quarters of cloud migration business and Migration practices that focus on SMB customers tend to have shorter migration project durations, with nearly half of all projects taking 3 months or less.
In fairness, the information and data to support resellers in generating more revenue from Cloud business is often difficult to find. We’ve spent time to pull this information together so it’s quick and easy to access.
Talk to the team at Marathon for more details on building a Cloud Migration practice within your business.