XChange: Revenue Opportunities From Bringing Cloud, Connectivity Together

Solution providers and managed services providers who are helping bring clients to the cloud but not adding connectivity to their solutions are leaving money on the table and risking losing their relationship with clients to carriers and other large services providers.

Anyone delivering cloud solutions to their clients need to also look at clients' on-premises needs as well said Mike Saxby, vice president of Advantage Communications Group, a Roslyn Heights, N.Y.-based broker of telecom services.

Saxby, addressing an audience of solution providers and MSPs on Tuesday at the 2015 XChange Solution Provider, held this week in Dallas, said customers want integrated solutions.

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"(They're saying) I don't care how it works. I just want it to work," he said.

The vendor landscape is changing quickly with companies building cloud models with which solution providers can engage with such activities as bundling voice and data, Saxby said. However, he said, those vendors are just as likely to go direct with clients.

"I will tell you as an IT organization, your biggest competitor today is ATT if you are selling cloud services," he said.

Offering connectivity services with cloud services provides good recurring revenue for solution providers, but this is still a fairly new opportunity with only about 10 percent of clients' telecom services so far coming from channel partners, Saxby said.

Partners who invest in bringing connectivity solutions to cloud clients will be addressing real customer needs, gaining additional revenue, enjoy end-to-end management opportunities, and gain account control that will help lessen the risk of another services provider moving in on their customer base, Saxby said.

Solution providers looking to take advantage of the market can start small, such as adding disaster recovery-as-a-services to unified communications clients, he said.

There are several ways for solution providers to engage vendors of connectivity solutions, Saxby said. They can work directly with vendors and carriers on a wholesaler, agency, or referral basis, or via distributors or master agents.

However, solution providers must be wary when bringing vendors or carriers into a client's solution, Saxby said. He cited the example of one IT partner who brought Level 3 MPLS network with carrier services and was enjoying a high recurring revenue. However, that partner had also brought the carrier into the customer site.

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In such a situation, it is a virtual certainty that the carrier will take the business direct, and the partner will lose the recurring revenue, Saxby said. "This is an area where you as an IT partner can better understand the risk," he said.

Saxby was making it clear to MSPs and solution providers that they much understand they are leaving revenue on the table by letting someone else come in to handle the connectivity services, said David Brimley, senior vice president of Phoenix NAP, a Phoenix-based provider of colocation, data center, and cloud services which partners with Advantage Communications Group.

"Service providers have an impact with their clients," Brimley told CRN. "They can recommend clients use a specific carriers or specific connectivity types from point-to-point to MPLS. But a lot of solution providers are not benefiting from telecoms. The big issue is frustration with the carriers, who are too big. It's better to work with master agents."

Large carriers like ATT, Verizon, and CenturyLink have engineering resources to help partners, but they also compete with partners, Brimley said.

"But more often than not, the big carriers are focused on large enterprises, and not on the space served by typical solution providers," he said.