Partnering With Microsoft in The Cloud (VAR)

Partnering with Microsoft in the Cloud
Value-added Resellers

Table of Contents
The Cloud Opportunity
Why Customers Are Moving to the Cloud
Why VARs Should Move to the Cloud
Cloud Opportunities for Value-added Resellers
How to Make Money with Cloud Solutions
How to Build a Cloud Practice
Cloud Resources
The Cloud Opportunity Why Customers Are Moving to the Cloud Why VARs Should Move to the Cloud
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Executive Summary Definition of the Cloud Why Customers Are Moving to the Cloud Expanded Reach Increased Revenues Greater Velocity and Scale Cloud Opportunities for Value-added Resellers Offering Opportunities and Examples Cloud Practice Differentiators How to Make Money with Cloud Solutions How to Build a Cloud Practice Marketing Sales Finance Operations Get Started More Cloud Resources
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Cloud Resources
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Cloud Opportunity Guide for Value-added Resellers
https://partner.microsoft.com/global/productssolutions/productssoftwareplusservices

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The Cloud Opportunity This guide is designed to provide value-added resellers (VARs) with an overview of the wide range of cloud opportunities available to them, including examples of how other VARs have built successful cloud practices. The term value-added resellers describes a wide range of partners that combine software and sometimes hardware with services such as integration, customization, training, and implementation to provide solutions for their customers. VARs can include partners that: Specialize in cloud-based solutions Focus on vertically specialized solutions Offer managed services including outsourcing Resell and service solutions on a time and materials basis.
Although VARs serve customers of all sizes across all market segments, many of them tend to work with smaller organizations (200 or fewer employees) that have little to no internal IT staff. These smaller companies face many of the same challenges as their larger counterparts, including the need to limit IT expenditures while increasing their competitiveness, but with fewer resources at hand. For these smaller organizations, the cloud provides a way to manage IT spend while gaining agility and scalability.

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The cloud represents a huge opportunity for VARs, including Attaching value-added services such as managed services and packaged offerings to complement cloud solutions and create predictable, recurring revenue. Augmenting existing services offerings such as customization, integration, training, business process consulting, and migration services by selling Microsoft cloud solutions. Driving upgrades such as using Windows Intune to drive sales of Windows 7 or using Office 365 to upgrade older versions of Office and drive upgrades from older versions of Office to drive to Office 2010. Upselling and cross-selling new solutions such as using Office 365 to promote Microsoft Dynamics CRM Online. The IT cloud transformation represents a significant market opportunity, but it also requires that VARs change the way they package, sell, resource, finance, and manage their businesses. This guide includes action plans as well as resources to help partners launch and enhance their cloud services practices. It includes the following topics: The opportunities available to VARs who offer cloud services. How VARs can make money in the cloud. Approaches for selling, marketing, and managing a cloud services-based business.

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Cloud Resources
Definition of the Cloud The cloud generally refers to an approach to computing that is about Internet scale and connection to a variety of devices and endpoints. In its simplest form, cloud computing typically involves services that are delivered from a data center in one location to a server or personal computer (PC) in another location via the Internet, or the public cloud. The term private cloud describes environments that emulate cloud computing on private networks behind a firewall or on premises at a company site. The cloud is characterized by three different offerings: Infrastructure as a Service Delivers computer infrastructure typically a virtualized environment as a service. IaaS allows organizations (IaaS) to buy IT as a fully outsourced service, on a utility or pay-as-you-go basis. Platform as a Service Delivers a computing platform as a service. PaaS offerings provide for the development and deployment (PaaS) of applications without the cost and complexity of buying and managing the underlying hardware and software. IDC estimates that the PaaS opportunity will surpass the $14 billion mark in 2013.1 Software as a Service Delivers applications and their associated data on (SaaS) demand. SaaS applications are hosted in the cloud and accessed via the Internet. According to Gartner, SaaS is forecast to have a 17.7percent compound annual growth rate (CAGR) through 2013 in the aggregate enterprise application markets, nearly five times the projected CAGR of 3.6 percent for the total application market.2 This includes high-demand workloads such as web conferencing, collaboration, content management, messaging and productivity, and CRM and ERP, as shown in Figure 1.3
High Potential SaaS Workloads
Key Workloads predicted To Have High Cloud Offerings Key Workloads in Demand Percentage of Workload Delivered Through the Cloud
10% 20% 30% 40% 50%
Web confrencing 48%
Web Conferencing HR and Workforce Management
Collaboration 46%
Collaborative Software SCM E-mail/Office and Personal Productivity Software Security Software Content Mgmt/Document Mgmt
Content/document managment 39%
Messaging and productivity 35%
CRM and ERP 37% and 26%
Business Intelligence Industry-specific Application B2B/B2C Services CRM Accounting Utilities /Software /ERP
10% 20% 30% 40% 50%

2009 2012
Figure 1: High-demand workloads

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Smaller businesses present a compelling opportunity for partners that offer cloud services. Although small-business customers have many of the same basic IT needs as larger organizationssuch as communication, security, reliability, storage, and desktop managementthey often lack the resources of larger organizations and have limited ability to make major capital investments. This discrepancy of IT need and resources provides partners opportunities to sell cloud services for a number of reasons: Lower initial capital costs and predictable recurring expenses. Cloud services virtually eliminate the need for large infrastructure investment, allowing smaller customers to obtain IT services without major capital expenditures. Because cash flow is a top concern for many of these organizations, small businesses are ideal candidates for prepackaged cloud solutions offered at predictable monthly rates. For VARs that want to enhance their cloud businesses, prepackaged services provide an opportunity to serve a greater customer base without increasing headcount. Greater agility and scalability. The cloud provides greater agility and scalability to adapt to changing workloads and needs with high availability and quicker deployment. Enhanced ability to focus on other strategic initiatives. Because cloud services generally result in lower IT expenses and greater capabilities, they allow businesses to place more focus on strategic initiatives. Access to enterprise-class software and capabilities. Cloud services provide small business customers with access to enterprise-class software that in the past may have been out of reach for them.

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Smaller organizations are increasingly shifting parts or all of their IT to the cloud. By some estimates, two out of three of all small businesses are already using some form of cloud services. By 2015, Forrester forecasts that the overall global market for public IT cloud services will be worth nearly $160 billion, which is more than six times the 2011 estimated market worth of $25.5 billion, as shown in Figure 2.4 Clearly, partners who invest now in building cloud services and competencies have great potential for future growth.
$180 $160 $140 $120

Total $100 public cloud markets (US$ billions) $80
BPaaS
SaaS
$60

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$40 $20 $0
2008 BPaaS ($) SaaS ($) PaaS ($) IaaS ($) 0.15 5.56 0.05 0.06 2009 0.23 8.09 0.12 0.24 2010 0.35 0.31 1.02 2011 0.53 0.82 2.94 2012 0.80 2.08 4.99 2013 1.26 4.38 5.75 2014 1.95 7.39 5.89 2015 2.93 9.80 5.82 2016 4.28 2017 6.00 2018 7.66
2019 9.08
PaaS IaaS
2020
10.02
13.40 21.21 33.09 47.22 63.19 78.43 92.75 105.49 116.39 125.52 132.57 11.26 11.94 12.15 12.10 11.91 5.65 5.45 5.23 5.01 4.78
Figure 2: Growth in public cloud sales

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Cloud Resources
Cloud services offer VARs many ways to grow their businesses. They can expand market share and increase their customer reach. With cloud services, they can broaden their portfolio of value-added services and increase their attach rate for higher revenues. The cloud can also help deepen customer engagement while driving customer satisfaction and loyalty and generating predictable, recurring revenue. The cloud makes it possible for VARs to achieve greater capacity and scale at less cost.
Expanded Reach
Cloud solutions provide corporate-ready IT solutions to organizations of all sizes. In the cloud, the same communication and collaboration solutions that serve Fortune 1000 companies can be affordable for smaller businesses, at a predictable monthly cost, with security, redundancy, scalability, and reliability built in. With cloud solutions, VARs can sell-in to organizations that in the past may not have been able to justify the initial investment required for on-premises corporate-class solutions. For those customers who have aging infrastructure and dated software, the cloud provides a clear upgrade path, for less up-front cost. And because cloud capability is delivered as a service, it provides a device-agnostic solution for companies that want to deliver IT services to telecommuters, field teams, floor staff, or other workers physically removed from the office. With a wider range of options, VARs can reach new customers as well as offer existing customers a more efficient way to do IT. Because they are delivered via the Internet, cloud solutions also make it easier for VARs to expand their horizons. With Windows Intune, for example, VARs can provide support virtually, removing geographic limitations.

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Increased Revenues
Cloud solutions create an opportunity for VARs to offer more value-added services to their customers, such as customization, integration, training, business process consulting, and migration. They also open the door for additional add-on solutions, such as mobility, recovery and data protection, security monitoring, and mobility solutions. These complementary services and solutions can be packaged and sold for a monthly fee in parallel with the software-as-a-service subscription model. This creates recurring revenue and the opportunity for still more points of integration that in turn can deepen customer engagement and strengthen customer loyalty. Many of these add-on offerings can take advantage of existing knowledge and skill sets. For example, VARs with Microsoft Exchange and Microsoft SharePoint expertise can create Tier 1 end-user and IT professional management and support packages to provide end-to-end support at a set cost. Other potential add-on offerings include consulting offered on a prepaid basis for help with document management, intranet productivity, external communications, and business process and workflow consulting. Online services also help remove one of the largest variables that contribute to mistakes and scoping issues: hardware reliability and sizing.
Greater Velocity and Scale

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The cloud increases the speed and scope of business. Because cloud services dont have to be physically deployed, VARs can get customers up and running faster. Whether they are vendor-hosted or partnerhosted, cloud solutions shift the infrastructure burden away from resellers, so VARs can add new customers and increase new implementations without adding infrastructure or headcount, freeing up resources for training, marketing, and other ways to realize growth.

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The cloud offers partners many ways to provide value to their customers, at all stages of the sales cycle, as shown in Figure 3. For example, partners can provide consulting services to help organizations understand how cloud solutions can meet their needs. Or they can package and sell help-desk support services after the initial solution sale. From pre-sales to post-sales, the cloud can help increase the length and scope of engagements, deepen the level of commitment, and in turn build greater customer loyalty while increasing overall billings.
Pre-Sale Cloud Opportunities for Value-added Resellers

Assessment Evaluation Planning
Packaged services Managed Services
Sale
Help-desk and IT support Training Business process consulting
Post-Sale
Figure 3: Cloud opportunities throughout the sales cycle
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Offering Opportunities and Examples

Microsoft cloud solutions provide a range of opportunities for VARs. The following outlines some of those opportunities, with examples drawn from real-life partner experiences.
Create new value-added solutions such as packaged services and managed services.
VARs can combine Microsoft technologies with their own service and support offerings at a fixed monthly rate to provide outsourced IT as a service at a price that is affordable for many organizations. Or resellers can partner with hosting service providers to create managed services offerings that combine Microsoft technologies with other cloud solutions on a subscription basis that can grow with their customers as their needs require.
In just six years, a Belgian IT firm that focuses on businesses that have 25 to 150 PCs has grown its cloud services consulting business by 25%, increasing both its customer base as well as its revenue base.

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Windows Intune is designed to make it easy for partners to create a managed services offering without having to build additional infrastructure or secure more resources. Because Windows Intune operates in the cloud, VARs can offer PC management and security services to customers beyond their normal geographic reach. Windows Intune also helps partners gain insight into their customers IT environment so they can drive more value-added services and further increase revenues, with Windows 7 Enterprise upgrade rights and optional Microsoft Desktop Optimization Pack (MDOP) upgrade rights.
A reseller based in Central America has developed a managed desktop services offering based on Windows Intune. The company has reduced the time it spends providing desktop support by 80 percent while increasing its revenues by 10 percent in just the first year, widening its margins and expanding its business.

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A Canadian VAR has developed a managed services offering based on Windows Intune. The company has increased its revenues without incurring significant cost, which has allowed it to keep its rates lower, providing a competitive advantage among the small customers that make up the bulk of its business.
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Attach cloud solutions to existing services.

Partners that have developed specific core stack or industry expertise can complement their existing business models by adding cloud solutions to their offerings. For example, partners that have built their business around communication and collaboration solutions have an opportunity to sell-in Office 365, in particular to smaller organizations that typically have not had the resources to invest in and manage robust communication and collaboration solutions. Partners that specialize in CRM have a similar opportunity with Microsoft Dynamics CRM Online. For partners who offer IT support services, Windows Intune provides a way to deliver PC management and security support remotely via the cloud to more customers without incurring more cost, while generating recurring subscription-based revenues. Additional opportunities for VARs exist by partnering with cloud-based independent software vendors (ISVs) and hosting service providers that offer line-of-business (LOB) and vertical solutions that align with specific customer segments.
A British firm that specializes in communication solutions based on SharePoint has added Office 365 to its offerings. The addition has helped generate more revenue as well as broaden its customer base for its bread-and-butter SharePoint services.

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Up-sell and cross-sell solutions.

Organizations running Microsoft Office 2003 and Office 2007 with older versions of Exchange, or companies that are using POP3 deployments, Office 365 provides a significant upgrade for a low up-front cost with less ongoing maintenance cost. It combines the Microsoft Office Professional Plus desktop suite with Microsoft Exchange Online, Microsoft SharePoint Online, and Microsoft Lync Online. A recent study found that VARs achieved higher margins with Office 365 than they did with on-premises deployments of SharePoint or Exchange, third-party hosted versions of SharePoint or Exchange, or other hosted communications and collaborations solutions.
A VAR that targets smaller organizations found that its customers were postponing upgrades to newer solutions because of cost. These same customers proved more likely to migrate to Office 365 because it costs less. As a result, the partner has seen an increase in email migrations, which in turn has helped them build stronger customer relationships and foster repeat business, particularly for their value-added services.

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Windows Intune provides additional inventorying and licensing upsell and cross-sell opportunities. For example, VARs can use Windows Intune to gain deeper insight into their customers needs, increasing the potential to manage and distribute third-party applications for increased revenue.
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Cloud Practice Differentiators

The cloud offers VARs many ways to differentiate their services, whether they offer public, private, or hybrid cloud solutions.
Public Cloud Solution Differentiators
VARs that offer public cloud solutionswhether Microsoft-hosted or VAR-hostedcan market their ability to provide additional services, such as assessment, evaluation and planning services, design and configuration services, and deployment and implementation services, for which proximity can be a deciding factor. Public cloud solutions also provide a number of key benefits to customers, including a balance sheet free of non-revenue-generating assets, fewer capital expenditures, less investment in infrastructure, and faster time to value. VARs that offer private cloud solutions can stand out from the competition by targeting customers in industries that must comply with corporate, industry, and government regulations such as health care, financial services, or the public sector. VARs who serve these customer segments can partner with hosting service providers to sell-in private cloud solutions to provide a broader set of solutions that increase their competitive advantage. Many organizations will choose to deploy a mix of private and public cloud solutions, as well as traditionally licensed software. Partners who serve these kinds of customers can feature their wide range of skills and experience, as well as their ability to advise their customers on which mix of solutions are right for them. These partners can also use vendor reputation and reliability as a key differentiator.
Private Cloud Solution Differentiators Hybrid Cloud Solution Differentiators

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Microsoft offers the VAR channel the widest array of cloud offerings of any single vendor and the greatest flexibility for ways to structure services, with a range of choices for public, private, and hybrid cloud solutions. This creates ways for VARs to add cloud functionality to existing software assets or to provide services that allow customers to move between cloud and on-premises systems as best suits their needs.
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The cloud offers VARs many avenues to profitability, from reselling and hosting cloud solutions to developing and servicing cloud solutions. Increasing the percentage of attached services is critical to VAR success in the cloud, whether they are offered on a time-and-materials basis or as managed or packaged services. These value-added offerings can include maintenance and end-of-life services, on-site and remote support, planning and pre-delivery solutions, and implementation and deployment offerings. Packaged services, when charged as a monthly fee, enable partners to build up long-term, predictable cash flows that, over time, can complement the annuity revenues realized through cloud solutions. Different cloud practice business models provide different operating margins, as shown in Figure 4. That said, independent of the specialty of the VAR, partners selling cloud services have a higher operating margin than VARs selling on-premises solutions beyond the first year. There are two reasons for this. First, cloud solutions are easier to deploy, so they cost less to the reseller in terms of expended effort, which builds margin. Second, cloud services typically are sold as subscription services with recurring revenues, whereas on-premises solutions often result in up-front revenues at the time of sale. PREMISE-BASED SALE YEAR 1 In a survey by Monitor Group, which based their analysis on a multivariate business model, the operating margin of VAR partners selling cloud solutions was between 7 and 14 percent higher than their counterparts selling on premises. The study identified four different kinds of VARs, including Managed Service Provider (MSP)/ Time & Material (T&M) Hybrid VARs that provide remote support on fixed price contracts; T&M VARs that focus on on-premises hardware, software, and systems; and Solution VARs that offer custom solutions. In the study, MSP/T&M Hybrid VARs reported generating a 62 percent operating margin in the cloud beyond year 1, whereas their counterparts selling on-premises solutions achieved an operation margin of only 55 percent. Similarly, T&M VARs that were engaged in the cloud reported operating margins of 49 percent, or 9 percent higher than their counterparts on the on-premises side. The difference in operating margin is particularly pronounced with Solution VARs, because solutions tend to have higher margins over reselling. This is yet another example of why it is critical for VARs to attach value-added solutions to cloud services. Whatever their business model, the more VARs perceive cloud solution sales as a generator for other value-added services, the greater their chances become for long-term growth.
T&M VAR* MSP/T&M Hybrid VAR* $118,361 $88,244 $30,117 25% OFFICE 365 YEAR 1 T&M VAR Revenues Costs Operating Prot Operating Margin $39,107 $22,918 $16,189 41% MSP/T&M Hybrid VAR $54,984 $24,480 $30,504 55% Solution VAR $28,607 $13,126 $15,481 54% Solution VAR $50,623 $39,752 $10,871 21%
Revenues $104,884 Costs Operating Prot Operating Margin $87,642 $17,241 16%
Figure 4: Recurring revenues for cloud-based resellers
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The cloud presents a high-volume, high-velocity game. Although traditional IT sales depend on building relationships with the IT decision-makers who have the operations budget to approve big projects, cloud solutions level the playing field. Expenses funded through capital rather than operating budgets are incremental, with no dependence on infrastructure. To fully realize the potential of the cloud, VARs need to generate more leads and quicken the pace of sales, shift their investments from inventory to sales and marketing, and plan for recurring revenue streams.
Partnering BEFORE the cloud Sales Sell big projects for one-time up-front revenue to IT professionals Create customized quotes with focus on quality of leads and deal size Focus on development and implementation Invest in infrastructure and inventory
Partnering IN the cloud Sell smaller seed and feed projects for recurring revenue to business decision makers Use competitive rate card pricing with focus on quantity of leads and sales velocity Focus on consulting, integration and services Invest in sales and marketing
Marketing Customer Engagement Operations & Finance
Figure 5: How the cloud changes partnering
The cloud as the new center of gravity creates broad changes across all partner businesses, from sales and marketing to customer engagement and operations and finance, as shown in Figure 5.
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Marketing
Cloud solutions place a premium on achieving critical mass with demand generation. The ultimate goal is to drive more deals at a lower cost. A recent study by the Monitor Group showed that as VARs integrate cloud services into their offerings, keeping sales and customer acquisition costs low is key to building stronger margins. Partners should consider increasing their investments in online marketing tactics where many prospects for cloud-based business solutions are more likely to find them. These include search engine marketing (pay-per-click advertising) and search engine optimization (achieving high rankings in organic searches). Partners successfully selling cloud solutions are more likely to spend on average more than 50 percent of their marketing spend on online campaigns, whereas traditional on-premises partners spent significantly less on the same lead generation tactics, as shown in Figure 6.
Traditional
Online Telemarketing (External) High Impact Direct Mail
Cloud Traditional Online
Postcard Direct Mail Letter Direct Mail Exec Briefings Phone Follow Up (Internal)

(continued)
On Prem
Webinars Email Nurture Marketing Search Engine Optimization Pay-per-Click Campaigns 0% 50% 100%
Figure 6: Marketing tactics by campaign
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Reducing marketing-driven customer acquisition costs can also be accomplished through more focused and precise market segment or vertical demand-generation activities that result in increased response rates and generate more qualified prospects.

(continued)
By focusing exclusively on Microsoft Dynamics CRM Online implementations for small and medium businesses, one VAR has been able to grow rapidly and develop a global customer base. The company uses the 30-day trial period to develop customized online POC for prospects and has achieved a 50 percent conversion rate of leads to sales.
A cloud services broker that targets small-to medium-sized businesses uses telemarketing and weekly webinars to develop sales leads. To keep costs low, the company uses LinkedIn and Twitter to drive interest in the webinars and then surveys attendees online to further qualify leads.
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Sales
VARs can speed sales by adopting rate cards that offer fixed pricing by seat and/or solution rather than creating customized quotes. For example, for customers who have up to 50 seats, a partner could provide basic packaged services for $28 per seat and then increase the cost of additional services per seat up to $85 for IT support and training, as shown in Figure 7. Published pricing and set scope will also help foster transparency and engender loyalty between customer and partner.
Example Rate Card

Seats
Basic Services Help desk, break/fix Per seat/month
Advanced Services Basic + IT support Per seat/month
Premium Services Advanced + training Per seat/month
0-50 50-100 100+
$28 $22 $16
$58 $48 $38

Figure 7: Sample VAR rate card
$85 $74 $63

(continued)
Packaged services, again sold through set pricing, can also accelerate sales while improving margin. IDC benchmarks show that partners that provide packaged IP typically realize nearly double that rate for their solutions than partners who provide the same kind of services as one-off solutions.vii VARs also have an opportunity to adopt best practices that can help shorten the sales cycle when selling cloud solutions such as Office 365. These include taking a structured approach to targeting and lead qualification, using the advantages of adopting cloud solutions to start the conversation rather than waiting for an upgrade cycle, and using online methods to educate customers about cloud benefits. For example, VARs that follow up on sales opportunities in advance of upgrade cycles can reduce the time spent having the initial discussion in half, from two weeks to one week, as shown in Figure 8. Similarly, using webinars to provide proof of concept can reduce the product demo and proof of concept stage from four weeks to one week, as shown in Figure 8. By changing the way they target, engage, education, sell and close cloud solution deals, VARs can shorten the sales cycle by as much as half the time from more than 11 weeks to just six weeks. The move to volume sales also necessitates a change in sales compensation. Rather than incentivize based on deal size, partners should consider de-emphasizing commissions for initial sales and reward for annual contract size, renewals, and subsequent add-on services. To map to the ongoing revenues generated by cloud services, compensation should also be incremental.
Cloud Opportunity Guide for Value-added Resellers https://partner.microsoft.com/global/productssolutions/productssoftwareplusservices
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There are a number of ways that partners can deliver cloud services. For example, partners can offer standardized packages of services (managed services) around Microsoft cloud solutions to keep overhead cost low while building recurring revenue streams. Another way to increase revenue is through vertical integration, by offering additional value-added services such as outsourced solutions, where partners manage cloud-based IT infrastructure on behalf of customers. The cloud offers partners the opportunity to expand their traditional IT managed and outsourced services (such as backup and disaster recovery solutions or patch management) to include cloud-specific services mentioned earlier in this guide. Partners can also offer services that span delivery mechanismsfor example, partners can offer managed services as an add-on to outsourced solutions. Cloud solutions are also well suited to online distribution models such as online marketplaces. These can include vendor-driven sites such as Microsoft Pinpoint and the Microsoft Dynamics Marketplace, third-party online marketplaces such as those organized by distributors or by vertical through trade groups, or via a partners own e-commerce enabled website.
SALES STAGE Targeting & Lead Qualification
TIMING 2 weeks Variable; often waiting
COMMON INHIBITORS No structured approach to assessing customer receptiveness
OPPORTUNITY ACCELERATORS Well-developed lead qualication checklist Lead seeding & follow-up plans
Initial Conversation & Sales Hooks
1 week 2 weeks
Waiting to have cloud discussions until customer is considering refresh/upgrade
Starting conversations in advance of refresh and timing discussions for other milestones
Customer Education
1 week 2 weeks
Fears of customer resistance tied to internal IT desires for premise-based equipment
Leveraging own or vendor webinars, demos and calls to maximize benet exposure in interactive settings
Product Demo & Proof of Concept
1 week 4 weeks
Dedicating time and resources to lengthy PoCs or repeat demos
Skipping PoC altogether given the scaleable nature of Office 365 Giving "pre-demos" in earlier webinars, etc.

(continued)
Quote Prep & Closing
3 days 3 days
Treating Office 365 as investment akin to premise purchase with associated budget approvals, review, etc.
Focusing BDMs on cost savings, no-regrets aspects of scalable Office 365 solutions Phasing roll-out to get initial buy-in Best-in-class sales approach
11+ weeks
6 weeks
Average sales approach
Figure 8: Best practices for accelerating sales
One company that offers Office 365 has found that engaging directly with business decision-makers rather than their IT counterparts removes the extra step of seeking funding and approval, thus speeding up the sales process significantly. This, in turn, has freed up resources to qualify and sell to new prospects, increasing its customer base.
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An IT firm that specializes in cloud-based solutions has come to rely on online marketplaces as an important lead generation tool because they deliver low-cost but highly qualified leads and allow the firm to successfully compete with much larger firms worldwide.
Finance
As cloud services shift the cycle of payments from one-time, up-front lump sums to recurring revenue streams, cash flows for cloud services will likely differ from more traditional business models. Establishing a financial plan based on a specific cloud services strategy is a foundational element of a cloud services business. Reseller organizations will also need to shift their investments from technical infrastructure to marketing. To increase the volume and velocity of sales, partners will need to invest in marketing engines, including the development of pay-per-click campaigns, search engine optimization updates, data-mining tools, and marketing automation tools for lead routing. Partner organizations in transition to building a cloud practice will also need to invest funds in training. VARs that have not established a value-added services practice will need to identify and build the skills and capabilities necessary for providing cloud services. Partners that already offer value-added services can make use of and augment existing skills to build a cloud services business.

(continued)
A reseller based in the United States has built its managed services practice on Windows Intune to create a financial foundation of recurring revenues. By moving to a managed services model, the company has increased its service margins from 35 percent to 55 percent while keeping COGS steady.
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Operations
Establishing a successful cloud-based business means evaluating each part of your business and planning for change, from establishing a financial plan that integrates annuity revenue streams to defining solution offerings, establishing service level agreements (SLAs), and creating customer on-boarding processes. In every aspect of business, the goal is to reduce the cost of goods sold while creating repeatable practices that will support growth in revenue without an increase in costs. This includes: Defining solution offerings and being able to articulate their value to IT and business decision-makers. Developing a stable, repeatable, branded methodology for customer on-boarding and for building loyalty. Creating cloud-based service contract with per-seat pricing and SLAs. Establishing strong account management practices that nurture long-term customer relationships that in turn reduce turnover and support recurring revenue streams.
One of the biggest transitions for a services organization is the contract management process. In the cloud environment, organizations need to adjust to one-week, two-week, or one-month assignments coupled with a software subscription. Developing a streamlined contract management process is important, as the volume of contracts can increase.

(continued)
One online services reseller has streamlined its on-boarding process by creating business model templates that reduce the need for further customization, deploying new customers in 60 days or less.
By building its managed services practices on Windows Intune, one IT provider has been able to increase its SLAs without increasing costs, providing a more competitive offering that is also more profitable.
By realizing new efficiencies and focusing on volume and velocity, resellers can adapt their existing businesses to take advantage of the cloud opportunity.
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Get Started
To launch your cloud practice, begin by visiting the links below:
by reading case studies about how other partners have transitioned their businesses to the cloud.
Learn More
Try Out
the cloud with . Microsoft Cloud Essentials
Cloud Resources
Promote and Sell

your cloud solutions with resources from the Partner Marketing Center and via the Microsoft Pinpoint marketplace.
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More Cloud Resources

For more information visit the links below.
Learn more about Microsoft cloud services

Microsoft Cloud Power
Market your cloud practice

Microsoft Pinpoint
Read about how other partners have built successful cloud businesses
Partner Cloud Services case studies
Deploy a cloud test environment

Quickstart for Online Services
Sign up for a Microsoft cloud partner program

Microsoft Cloud Essentials
Drive sales
Partner Marketing Center
Build a business case for a cloud practice

Partner Profitability Modeler Tool
Establish a cloud practice

Microsoft Cloud Essentials Pack Hyper-V Cloud Practice Builder
Cloud Resources
(continued)
Develop cloud skills

Microsoft Cloud Services Training Resources Microsoft Cloud Services Partner Assessments Windows Azure Platform Training Kit For more information go to the Cloud Solutions section on the Microsoft Partner Network Portal
1 2 3 4 5
IDC (March 2010) Gartner ID:G00171813. Market Trends: Software as a Service, Worldwide, 2008-2013 Update. November 2009. IPED: Can You See Through The Clouds? The Evolution of Technology Delivery, March 2010 Sizing The Cloud, Forrester Research, Inc., April 21, 2011. IDC (originally cited in Dynamics CRM Online Partner Profitability Guide)
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