As I speak with partners around the world, I receive a lot of questions about what key changes businesses need to make to become more profitable selling cloud solutions. One consideration I always talk about is around evolving the delivery model, based on partners I have had the opportunity to speak with who have been there and done that. There will be plenty of opportunities to learn more about this in depth at WPC, but the basics are that the cloud offers an opportunity to move from a pure project-based delivery model to a mix of project-based and managed services. This allows our partners to successfully execute a project up front while mixing and optimizing resources for the long-term customer relationship
By 2009, Microsoft was advising its partners to get ready for cloud services but, like many of those partners, RoseBud regarded the cloud as a threat, not an opportunity. It had built its business on Small Business Server and the cloud would take this away. Microsoft, not RoseBud, would service the infrastructure. Where would RoseBud make its money? RoseBud’s business model hasn’t changed much as a result of the cloud—but its delivery model certainly has. And making some of those changes have hurt, according to Greg Treanor.
"We cannibalized our customer base to shift to the cloud,” he says. “We went to our customers and told them that as a result of moving them to the cloud, we wouldn’t be on their premises as much. We’d support them at least as well as we did before, but we’d do it remotely, and more efficiently, so they shouldn’t be paying us as much. We introduced a reduced fee schedule. That was a tough nut for us to swallow.”
And it led to the hardest part of implementing the cloud strategy. Engineers who formerly visited two or three customers per day could now service six or seven customers daily through the cloud. But that meant that RoseBud needed fewer engineers. It also meant that RoseBud could only afford fewer engineers, since it was passing the productivity savings to its customers. It reduced its 25-person staff by about 40 percent.
RoseBud faced an obvious challenge in managing this change. In addition to reducing the personnel count, the company had to change the skill sets of those who remained. “The typical network admin with end-user support skills was no longer needed,” says Greg Treanor. “Those who made it with us through the transition were those who were willing to acquire new skills, in SharePoint, for example. We put some pretty compelling opportunities in front of our staff to encourage them to educate themselves.”