cloud champion - week 3: eye on the opportunity
DESCRIPTION
This is round three of our Cloud Champion course, focusing on Cloud Profitability. We have interviewed hundreds of successful cloud partners from across the globe and have shared their insights in this deck. Cloud Champion is Microsoft Australia's 12-week step-by-step program to help our partners be successful with selling Cloud solutions. For more information on the course, please visit www.aka.ms/CloudChampionBlog.TRANSCRIPT
www.aka.ms/CloudChampionBlog
Eye on the Opportunity
Brent CombestDirector, Cloud SalesSmall and Midsize Business Group
Strong Demand Comparing Vendors
Cloud Momentum by the NumbersTremendous
Potential
Worldwide Cloud Market*
2017
$108B 994k
215k
H1 FY14 Trials
5x The IT Industry growth rate
Asia-Pacific contribution20%
42%Asia-Pacific CAGR
50,000Partners in FY14
Will surpass On-Premise
UnitsSept 2014
FY16 SMB Aspiration for revenue distribution (cloud vs. on-premise)
50%Of the most popular workloads are covered by Office 365 & Azure**
70%24%
15%
12%
11% 8%
Productivity BDR Website App Host Content
*Source: IDC **Source: Spiceworks, 2014
26%
31%
35%
128%APAC
*Base: 348 North American and European software decision-makers at companies with 100 to 999 employees that have implemented SaaS or have plans to do so; Source: Forrsights Software Survey, Q4 2011
Allows us to focus on more important projects
Speed of deployment
Lower overall costs
Lack of IT staff to maintain the solution
Change upfront costs to monthly payments
Improved business agility 74%
64%
62%
59%
49%
48%
Agility!
Primary Customer Drivers
Partner Evolution: Building the Snowball
$143B
2013 2018
Managed Services Market Growth(Markets & Markets, 2013) $256
B
53%29%
9%9%U.S. Office 365
Partner Models*Based a survey done of 9,575 U.S. SMB Office 365 Resellers
SBSC
ISV
VAR MSP
“Leading-partners” are making the move first and gaining the benefits of their vision
Cloud-oriented partners are outperforming their peers
Cloud-oriented partners are winning deals from other partners, selling into white space, and driving hybrid solutions
1.6XGross profit
Gross profit %Cloud partner = 52.3%Others = 31.8%
2.4XHigher new customer mix*
% new customers in last 12 months
Cloud partner = 57.7%
Others = 23.6%
2.4XFaster growth*
Growth
Cloud partner = 26.9%
Others = 11.1%
Cloud Partners Outperform Peers
*Source: Forrester: Market Overview, Managed Service Providers, Part 2 May 2013
1.5 to 3XCurrent State
5 to 8XStrategic State
Valuation Multiples*(X of EBITDA)
What attracts a premium price*
Cloud Services
Geographic Reach
Vertical Expertise
Specialization
Variable Before
Revenue $5M
EBITDA 8%
Operating Income $400k
Valuation Multiple 2.25
Price $900k
After
$8.45M
12%
$1.01M
6
$6.59M
The Reward is on the Horizon
The Five Keys of Successful Partners
Build Own AnnuityMulti-Workload
Volume Sales
Web Centric Marketing High Services Margins
Building The Annuity
Year 1 Gross Revenue
On-Premise
$18,450Office Standard
$7,475Migrate & Deploy
$25,925
$9,000Office 365 Midsize Business
$5,000Migrate & Deploy
$29,180Partner Managed Services
Cloud
$43,180
5 Year Total: $195,900
Infrastructure Monitoring Exchange Configuration SharePoint Set-Up Lync Set-Up Front Line Support User Training
Software Asset Management Remote Monitoring Managed Security Patch Management Policy Management Desktop Management Diagnostic Reports
$38kAnnual Annuity
Paid
44%Of an IT
Resource
Office Standard vs. Office 365 - Midsize Business: 50 Seats
Multiple Workloads
$5 Service Monitoring Exchange Configuration SharePoint Set-Up Lync Set-Up Front Line Support User Training SharePoint Templates
$52 SAM Remote Monitoring Managed Security Patch Management Policy Management Desktop Management Diagnostic Reports Network Monitoring
$167 Custom Apps Website Management Identity Management Backup & Disaster Recovery Media Hosting Big Data
Small Apps 3rd Party Tool Connectors Vertical IP Business Function
Solutions$55
ProcessCompensation
Volume Sales
A New Type
Incent on Volume
Higher Rate on Your Annuity
MonthlyCommissions
QualifyWeek 1
ProofWeek 2
ProofWeek 3
CloseWeek 4
30 D
ay T
rial P
eri
od
BANT Criteria 5 Pivotal Questions SKU Selection
SKU Review Feature Overview Trial Maximization
IT Review Deployment Planning SOW Development
SOW Sign-Off Onboarding Review Scheduling
Prevent laziness Focus on acquisition Renewal Rep @11 mo’s
A Deal Per Week Accelerated Process Minimum Thresholds
Variable Paid on Year 1
Attach to every deal
Yours = higher margin
CI = 5-7% of Revenue
Treated as Income Raise Comfort
Zone Normalize Revenue
OfSales Rep
Attracting a Web Centric Buyer
Attract
10%
of Gross Revenue
SEO Pay-Per-Click Blogging Back-linking E-mail Campaigns Vendor/Influencer
Educate Short Videos Whitepapers Customer Videos Case Studies Customer Training Assets
Nurture Monthly Nurture Assets Nurture Engine Execution Retention Assets
50%
35%
15%
Project Activity Hours
Sales, Assessment, and SOW 4Hoster/Registrar Discovery 2Mailbox / Alias / DG Discovery 2Email Architecture Planning 6Office 365 Account/User Provisioning 4
Client-side (POP/IMAP) migration / PC
1 per PC
Server-Side Migration, QA 8DNS Changes, QA 1Project Management 3Company/End-User Comms 4Outlook Setup 6Total ~40
52%40%Traditional Time & Materials Automated Utilities (ISV)
Gross Services Margin
Sell MoreNo delay due to resource availability
Increase MarginsAutomation creates efficiency and fixed cost
No SurprisesKeep scope creep out and customers happy
Incremental ValueMore than just an automation tool
High Margin Services
1:1Differentiation Maximizes Profit
Higher Price Point
Influencer Advocacy
Maximum ARPU
Marketing ROI
Sales Efficiency
Service Margin+
Subject matter expertise adds value to services and solution recommendation, justifying high cost.
Domain expertise builds trust and enables additional offerings to be sold.
Proven capabilities can establish stamp of approval from those target customers trust.
Increased focus in audience improves message strength and campaign results.
Repetition in process and pitch improves win rates and requires lower cost resources.
Consistency increases efficiency and reduces the dependency on high cost technical staff.
© 2014 Microsoft Corporation. All rights reserved. Microsoft, Windows and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries.The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.