MSP Business
Best Practices to Develop a Cloud-First Approach and Increase Margins
The IT industry has shifted toward a cloud-centric model over the past decade. But many MSPs have not. To a degree, that makes sense. Many of the managed services that MSPs deliver aren’t obvious candidates for disruption by cloud computing. An MSP who sets up and manages workstations or local services may not seem to have much to gain from cloud computing, for example.
But the fact is that the cloud can benefit MSPs in many ways that are not always obvious. Indeed, the cloud offers so many opportunities for MSPs that, if you aren’t already using cloud solutions to help deliver managed services, now is the time to start.
Keep reading for an overview of the cloud-first approach benefits and why to go “cloud-first” for your MSP business.
What is a cloud-first managed services strategy?
A cloud-first strategy for MSPs is one in which you shift services to the cloud wherever possible. If you have a choice between running a given type of solution -- such as a backup tool or managed software application -- in the cloud or on-premises, you choose the cloud.
For many MSPs, there will be situations where some solutions can’t run in the cloud. That’s fine; you can leverage the cloud to streamline your MSP business while still making use of on-premises solutions where needed. This is why we call this a cloud-first strategy, and not a cloud-only strategy.
For more examples of managed services that you can offer using the cloud, check out this article.
Benefits of a cloud-first strategy
MSPs can unlock many benefits of a cloud-first strategy by moving some of its operations and tools to the cloud:
- Flexibility: When your tools run in the cloud, they tend to be more flexible. You don’t have to rebuild your systems if you switch from one physical office to another, for example. You can also easily duplicate or expand the scale of cloud-based tool deployments in order to reuse them for new customers, without having to set up new physical infrastructure to support the expansion.
- Cost reduction: Although the cloud may not always be cheaper, in many instances it offers a lower total cost of ownership. You can store data in the cloud for pennies per gigabyte per month, for instance. Running servers and workstations in the cloud may also be less costly than hosting physical alternatives.
- Fixed, predictable costs: Another cost-benefit of a cloud-first strategy is that you typically pay a fixed rate each month to use them. This makes your costs more predictable and consistent than they are if you acquire and deploy solutions on-premises, which usually entails a large upfront cost followed by varying costs for ongoing maintenance.
- Faster setup: Many types of cloud-based tools can be deployed immediately, with no need to set up an environment or hosting infrastructure first.
- Universal access: Cloud-based solutions can be accessed from anywhere with an Internet connection. You don’t need to worry about being physically present in your office or data center to use them.
- Reliability: Although clouds can and do occasionally go down, they are generally more reliable than anything that you can build yourself.
- Automated updates: Most cloud-based solutions are updated automatically, which saves time on management and maintenance.
In all of these ways, a cloud-first approach to managed services helps MSPs to operate more flexibly and cost-efficiently.
Further reading How MSPs Offer Cloud Implementation to Customers
This guide offers tips on how to talk about BaaS with customers in a way that makes its value clear, but without getting so technical that clients become lost
Limitations of cloud-first
While cloud-first approach benefits are obvious for MSPs, there are some limitations to be wary of:
- Network bandwidth limitations: Because cloud-based services rely on the public Internet for connectivity, it can take longer to move data into and out of the cloud than it would take to move data within the same local network. This may be a challenge if you are delivering managed services that involve large volumes of data, such as videoconferencing or massive data backups. (These types of services can be effectively delivered using a cloud-based approach, but you should be aware of potential network bottlenecks.)
- Internet dependency: The fact that the cloud depends centrally on the Internet also means that a connectivity outage may severely disrupt your operations. Internet failures are rare these days, but this is still a challenge to be aware of. You can mitigate it by setting up backup connections; for example, you could deploy a wireless router that connects to the cellular network to provide connectivity in case your normal ISP-based connection goes down.
- Regulatory requirements: In certain cases, your clients may be subject to regulatory requirements that prevent their data from existing in the cloud, or require it to be managed in certain ways within the cloud. For example, it may need to be retained within certain geographic regions. This can be done, but you need to plan ahead for these requirements.
- Censorship and data inaccessibility: Certain governments impose restrictions on which Internet locations are accessible from within their borders, meaning that data stored in certain clouds may not be accessible to all MSP clients. This is likely not an issue for most MSPs, but it could impact you if you work with overseas clients.
- The cloud is not always cheaper: In many cases, the cloud is more cost-effective. But this is not universally true. It’s important to do the math and determine whether the cloud will truly save you money before going cloud-first.
Understanding cloud-first cost savings
On the last-mentioned point, here’s an example of cost comparisons between the cloud and on-premises infrastructure for a typical MSP use case: running a server.
The cost of setting up and managing an on-premises server varies widely depending on which type of server you choose, what you do with it, and so on. But according to one estimate, the typical server for an SMB costs nearly $1,500 per month, when you factor in all expenses: hardware cost, HVAC costs (to keep the server cool), the salary of the staff who maintain the server, and the cost of the physical space required to host it.
According to the same estimate, the total monthly cost of an equivalent cloud-based server is a mere $314. That’s a saving of 79 percent.
Again, your mileage may vary, and it’s important to run the figures for your particular use cases in order to determine where you can save money using the cloud and where you are better off sticking with on-premises tools and infrastructure. In many situations, however, the cloud can dramatically lower your total cost of ownership.
Conclusion
If you haven’t yet explored the ways you can use the cloud-first approach benefits and streamline your MSP operations, now is the time. Although the cloud hasn’t always seemed like an obvious resource for many MSPs, it has more benefits to offer to managed service providers than you may think.
In subsequent articles, we’ll dive deeper into specific ways that MSPs can leverage the cloud to deliver more cost-efficient and reliable managed services.
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