Agile business models have never been more important – and for most MSPs the on-premises business is rapidly turning from predictable income stream to concerning business constraint. When it comes to cloud-based versus on-premises, the writing is on the wall – from the opex versus capex argument to better disaster recovery (DR) and enhanced security, most client businesses are heading into the cloud. So just how much longer can your business hold out, asks Mike Wardell, CEO, Giacom..
Cloud is Mainstream
When the majority of new software investment is Software as a Service (SaaS) based, any company still tethered to an on-premises only business model is radically limiting its market. And yes, while the existing client portfolio may still have a few years left to run with on-prem contracts, this is an inevitably dwindling revenue stream.
The fact is that most MSPs are coming under increasing pressure from clients for a cloud-based offering – and for good reason. SME CEOs and CFOs are increasingly aware that traditional on-prem solutions represent not only a financial compromise but also a significant business risk.
In the current uncertain economic situation, financial flexibility is essential. Given the lack of business confidence, capex is rarely an option; yet companies can also not afford to avoid investment essential to maximise new business opportunities. The opex SaaS model is compelling. Rather than the ‘just in case’ investment in storage or capacity or software licenses, the pay as you use cloud model enables SMEs to avoid wasted expenditure while providing the chance to rapidly scale up should business growth demand.
In addition to safeguarding company finances, many SMEs are also looking to the cloud to safeguard business operations. One in five small firms experienced a cyber-attack in the two years up to 2019 – that’s 10,000 attacks every day. From phishing to malware and ransomware, the speed with which the cyber-attack community evolves new threats is astonishing. SMEs simply do not have the resources in people, money or time, to adequately secure the business; nor can individual MSPs, however expert, safeguard clients’ on-prem business infrastructure.
The only way to combat this threat is to leverage the pooled knowledge of thousands of securityexperts operating collaboratively. From the use of artificial intelligence to identify unusual behaviour to email security products that can automatically remediate an identified threat by instantly removing it from every mailbox globally, cloud-based security solutions are leveraging the combined expertise of world leaders in a way that simply cannot be achieved with individual on-prem deployments.
The estimated £4.5 billion cost of these security attacks has also intensified SME awareness of the need for better Business Continuity and Disaster Recovery (BCDR). Typically such strategies have focused on the difficult issue of data backup and restore, and the time it can take to provide employees with access to vital information required to service customers.
Cloud completely changes the focus: cloud-based backup solutions enable vast data resources to be backed up in seconds and restored immediately. Organisations can instead begin to focus on the relocation of the workforce and the way dispersed teams could work together in the event of a disaster. Indeed, the adoption of cloud-based productivity and collaboration tools not only enable a far more flexible BCDR plan, they will also deliver significant day to day benefits, including flexible working policies.
For MSPs, the growing SME awareness of the benefits of cloud computing is changing the business outlook. When new services and solutions can be provisioned within hours, organisations are less and less willing to incur the cost and upheaval associated with months of on-premises deployment. Add in the importance of flexible financial models and better business protection and the writing is on the wall: most clients will want some, if not all, services to be provisioned through the cloud.
Of course, for MSPs, the change is significant: from commercial models to technical and sales skills, moving to a recurring revenue based model requires both investment and a shift in thinking. But it’s essential for MSPs to recognise the cloud as an opportunity, not a threat. Yes, there is a very real risk that customers will be lost if an MSP cannot offer a cloud solution. But this is not just about meeting a client’s immediate cloud needs.
Working with the right CSP will also enable an MSP to add valuable options to the portfolio, like adding cloud security to existing security audit services, enhancing BCDR solutions or adding collaboration tools. The cloud offers a chance not only to retain existing customers but also significant opportunities to extend the business model, adding much needed new revenue streams.