As a VMware VSPP where do you make your most money

[KapsZ28]

Just wondering how other VMware Service Providers find their success? Although our company is the Enterprise Level VSPP, most of our income comes from the ISP portion of the business. We are not huge on vCloud Director, but have a decent amount of IaaS. We have been trying to figure out what is a good direction to go in. I guess, where is Cloud really going, especially for SMBs? Are more companies looking for self-service such as vCloud Director, or are they looking simply for a private cloud that may be managed by someone else, or they manage through vSphere buy purchasing Resource Pools? How about managed colo vs self-service colo?

Any insight would be great. We are still a small business trying to find our niche and too many people with too many different ideas.

 

[4saken]

I will probably get flamed for this, but many companies, including large companies are winding down self hosted infrastructure on the massive scale and moving towards a more Hybrid/Public cloud solution. Honestly, Docker, Chef, Chef-Metal, Heroku, etc DevOps are beginning to completely script their infrastructures w/o needing to care about what is hosting or where its being hosted. Environment agnostic. VMWorld was interesting this year, they had all kinds of vendors relating to this and Vmware seemed to be embracing it, but had no direct answer of their own. Their wild success is eventually going to be their demise faster than they can blink if they dont innovate.

Not saying there isnt still a place for VCD, etc, but I work at a company with a very massive IT budget and we have taken a 180 just from last year when we refreshed our infrastructure top to bottom to already planning on phasing out 50% of our physical infrastructure for virtualization to go Hybrid. Means smaller SAN/NAS/Vmware license footprint next go around. The curve is dropping quickly if you follow any Industry Magic Quadrant reports.

 

[KapsZ28]

What kind of platform would those types of companies use to host their hybrid/public infrastructure? For a VSPP not using vCD and just using vSphere there lacks a lot of ability for the customer to easily migrate their infrastructure. Are VSPP's developing their own user interface kind of like OnApp, purchasing a third party UI, or just working with the customer to P2V their on-premise physical servers into the cloud?

 

[Thuleman]

I work at a company with a very massive IT budget

Define massive, if you don't mind.

I can see SMB moving to 3rd party hosted infrastructure, but I see all kinds of policy, legal, and liability issues for large enterprise or anyone else with sensitive data to host on 3rd party infrastructure.

 

[KapsZ28]

I can see SMB moving to 3rd party hosted infrastructure, but I see all kinds of policy, legal, and liability issues for large enterprise or anyone else with sensitive data to host on 3rd party infrastructure.

Agreed. Most my experience is in Fortune 100 enterprises. The last one I was at was in the financial sector and I specifically sat in many Security meetings brainstorming security concerns from Disaster Recover to BYOD. Based on those meetings I see lots of holes in SMB infrastructures because they don't look at security at such a detailed level. I am hoping NSX can answer some of those security concerns but I have yet to get very involved in it yet and because of pricing our company may just avoid it all together.

 

[Child of Wonder]

Define massive, if you don't mind.

I can see SMB moving to 3rd party hosted infrastructure, but I see all kinds of policy, legal, and liability issues for large enterprise or anyone else with sensitive data to host on 3rd party infrastructure.

Agreed. The company I work for offers a public cloud but customers can buy their own storage array, place it in our datacenter, and we'll plug it into our cloud infrastructure. They lease compute from us but own their own storage which helps mitigate those privacy and security concerns of placing sensitive data in the cloud.

 

[KapsZ28]

Agreed. The company I work for offers a public cloud but customers can buy their own storage array, place it in our datacenter, and we'll plug it into our cloud infrastructure. They lease compute from us but own their own storage which helps mitigate those privacy and security concerns of placing sensitive data in the cloud.

We do that too or even sell completely private storage that is not shared with anyone else.

But besides providing resources so these companies don't have to own and operate their own DC, what else are VSPP's offering to be successful? There are so many large Cloud companies out there it makes it difficult to compete.

Exchange SAL pricing is pretty good, but add in the costs for the Office Suite and there is no way to compete against Office 365's price. VMware is basically a competitor of DaaS now. Or if you want to be a part of their DaaS, it is a $25k buy in.

 

[Thuleman]

Office 365's usability is terrible in comparison to the thick client Office Suite, I personally don't even see the two being actual competitors at all that's how bad 365 is. Microsoft provides fairly attractive volume licensing for the Office Suite so unless a company is really having a tough time making money Office 365 shouldn't even be considered. Whatever money is saved in licensing costs is lost many times over due to lost productivity.

As far as difficulty to compete with other cloud companies goes; It comes down to why someone should pay more for your service than the service another company provides even though both companies, at face value, provide the same infrastructure.

The answer to that question what Kevin Roberts (Saatchi & Saatchi CEO) calls Lovemarks. He actually came up with that term. The book and the web page for it are kind of meh, but the concept is great.

It's about customer loyalty beyond reason. Apple users are a good example for that. Most non-Apple users know that the technology is overpriced, the ecosystem is limiting, yadda yadda yadda, but the fanbois defend Apple. That's loyalty beyond reason, and for a company that's where you want to be.

Apple has flashy stuff and they sell to people's egos, what does a service provider do? Actually provide service! But, you say, we do provide service just like our competitors do, so what are we supposed to do?

Provide better service!
Bother to bother. Don't do stuff because you are paid to do it. Do it because you care, even if you are at times not paid to do it. Many of your customers will undoubtedly be local/regional and that's where your growth will have to come from. Some guy in Poland isn't going to pay you for services, but the people in your area will if they know that you are there and that you care about them.

It's leaving the transactional model (i.e. X amount of memory for X dollars) and embracing the relationship model. How exactly to get there depends on your situation, but some things you can do are to offer a review of their implementation for a fairly low flat fee. Maybe they over provisioned, or maybe there's a glaring design flaw. Monitor their usage, if they only use a fraction of the resources they pay for after a few months then offer to downgrade their service to save them money.

Have a live person answer the phone! OMG that's a big one! (That's also why I personally still host with Liquidweb in addition to Digital Ocean. At Liquidweb I get to speak to an actual engineer who is based in Lansing, MI, even if I call at 3 am in the morning, and I won't be on hold for longer than a few seconds.) I did some consulting for another campus and they had a really odd help desk web page. It said that the live chat function is only for students, that the help desk should only be called in emergencies, and then where was phone system with a two levels deep selection. Why?

At a university it doesn't matter whether you are staff, faculty, or a student. If there's help desk chat then everyone should be able to use it. We changed that around, deployed a better chat system so that there is an audit trail and log retention. Their rationale for having people submit an online ticket rather than calling the help desk was that online tickets are more accurate because the help desk has to transcribe tickets. That's generally true, but online it gave the wrong impression. We changed it around so that it was explained that complex issues are better submitted online, but please, if you are in doubt then call.

Student employees cost like $10/hour when it's all said and done. We hired a few students who have technical aptitude and put them on the phones in 2 shifts. No more, "If you are calling with printer issues press 72, if you are calling with copier issues, press 73, if you are calling with a projector issue, but not a projector outage, press 74" etc etc.

The result was that a lot of simple issues were immediately resolved by the $10/hour staff. Being able to talk to an actual person and not the madness the phone system was resulted in significantly higher approval levels for the campus IT organization.

How does this story help you?
Well, for one you could potentially hire students to assist with your help desk. Interships, Federal Work Study, both are very low cost (there's still admin overhead). You could potentially get qualified staff from your intership pool down the road.

Just some ideas anyway.

 

[KapsZ28]

Definitely some good ideas there. The student thing, probably not so much. Only because we don't do helpdesk which I personally feel is a shortcoming of our business. We are willing to host infrastructure and call ourselves a MSP, but don't want to be involved with end user support. So our typical customer will need to be someone that still has internal IT to support all their users, or in some other cases, we partner with another MSP that handles onsite and remote support while we just do the infrastructure. Is this the best idea? Not really sure, but they have been adamant about staying out of end user support.

We have a 24/7 NOC that is always available, but that is mainly for our ISP and monitoring managed clients. So they do need to have a decent amount of networking skills.

 

[markwo]

Perhaps too far offtopic, but with the general move away from internal infrastructure to cloud-based, how are you guys positioning yourselves to stay relevant in the field?

With the efficiencies generated by the cloud coupled with the reduced need for internal support, it seems like a reduced need for engineers naturally follows.

 

[Database]

Office 365's usability is terrible in comparison to the thick client Office Suite, I personally don't even see the two being actual competitors at all that's how bad 365 is. Microsoft provides fairly attractive volume licensing for the Office Suite so unless a company is really having a tough time making money Office 365 shouldn't even be considered. Whatever money is saved in licensing costs is lost many times over due to lost productivity.

I'm thinking you don't really know what the Office 365 offering is. Most plans come with full Office license for up to 5 devices per user. The value of the full Office 365 plan is actually pretty amazing. Exchange, Office, Lync, Sharepoint, 1 TB of Onedrive, etc.

 

[Schro]

I'm trying to understand exactly the types of business that you want to target with your services. You mention SMBs as being a target, which is fine, but to clarify, it makes me think of a business with a dozen or two employees. Most businesses of those size won't have a full time IT person - it'll be a part-timer or contractor, or perhaps someone that works there will wear IT as one of the hats. Most of the time, they just want everything to work like it should and not have to worry about it. They want the complete package from someone that understands their needs and can keep the shop running. I don't see them caring about whether their systems are in the cloud or in the closet down the hall (actually, many will prefer them to be down the hall because they can go physical poke them if something isn't acting right). That being said, I think SMBs need a consistent interface with a company that can handle all of their IT needs, from desktop support up to cloud services.

Of course, if you're talking the higher end of SMBs (that are barely SMBs), then your approach may be more workable as they're more likely to have the IT resources in place to get the job done.

Either way, I see the path to making more money is to provide a higher quality of service that can command premium pricing that puts the onus of execution on you to do well in order to earn that premium. You won't be able to compete on price with the large cloud service providers, so you'll need to solve their business problems to keep them as customers.

Slightly off topic, are you doing any third party assessments to evidence that you're doing things in a controlled manner to your customers? I.e. SSAE 16/ SOC2/ etc?

 

[Thuleman]

I'm thinking you don't really know what the Office 365 offering is. Most plans come with full Office license for up to 5 devices per user. The value of the full Office 365 plan is actually pretty amazing. Exchange, Office, Lync, Sharepoint, 1 TB of Onedrive, etc.

Unless things have significantly changed since I looked into this in April O365 is, over a period of 24 months, more expensive than Enterprise Desktop CALs. If you only change your Office Suite every three years (or space it even further), the cost savings are even more staggering.

When I said that O365 sucks what I was referring to was the UX of the online product. What's worse, at least in April, it would stream the components every time you load O365. It wouldn't cache them. So you need a fat pipe and all that data will clog up your connection and potentially increase the cost of your network service.

On a more philosophical side I strongly object to renting mission-critical productivity software. I think that exposes businesses to a terrible risk if they fall on hard times and can't pay up. O365 locks your files to view-only with no way to get the files out of the cloud as soon as you don't pay up.

 

[KapsZ28]

I'm trying to understand exactly the types of business that you want to target with your services. You mention SMBs as being a target, which is fine, but to clarify, it makes me think of a business with a dozen or two employees. Most businesses of those size won't have a full time IT person - it'll be a part-timer or contractor, or perhaps someone that works there will wear IT as one of the hats. Most of the time, they just want everything to work like it should and not have to worry about it. They want the complete package from someone that understands their needs and can keep the shop running. I don't see them caring about whether their systems are in the cloud or in the closet down the hall (actually, many will prefer them to be down the hall because they can go physical poke them if something isn't acting right). That being said, I think SMBs need a consistent interface with a company that can handle all of their IT needs, from desktop support up to cloud services.

Of course, if you're talking the higher end of SMBs (that are barely SMBs), then your approach may be more workable as they're more likely to have the IT resources in place to get the job done.

Either way, I see the path to making more money is to provide a higher quality of service that can command premium pricing that puts the onus of execution on you to do well in order to earn that premium. You won't be able to compete on price with the large cloud service providers, so you'll need to solve their business problems to keep them as customers.

Slightly off topic, are you doing any third party assessments to evidence that you're doing things in a controlled manner to your customers? I.e. SSAE 16/ SOC2/ etc?

I am not really sure what kind of businesses our sales team is targeting. Seems like they are more interested in selling ISP then IaaS. Seems to be an easier sell for them. We also don't really have any specific vertical.

High quality really isn't an issue, it is getting additional customers. Most customers have remained loyal. Some unfortunately have literally went out of business which in many cases is bad for us because of the initial investment that was made for those companies. When they file chapter 11, we are pretty much screwed.

We have the following compliances.

SAS 70, SSAE 16, SOC 1 & 2, HIPAA, PCI DSS, SOX

 

[Schro]

I am not really sure what kind of businesses our sales team is targeting. Seems like they are more interested in selling ISP then IaaS. Seems to be an easier sell for them. We also don't really have any specific vertical.

High quality really isn't an issue, it is getting additional customers. Most customers have remained loyal. Some unfortunately have literally went out of business which in many cases is bad for us because of the initial investment that was made for those companies. When they file chapter 11, we are pretty much screwed.

We have the following compliances.

SAS 70, SSAE 16, SOC 1 & 2, HIPAA, PCI DSS, SOX

Sales weasels tend to be more interested in selling things that will make them more money. If you want them to develop a particular line of business, then their compensation should be adjusted to make it more appealing to them to sell based upon the business's intended direction (i.e. IaaS instead of ISP).

Sounds like you guys have some serious compliance spend (though, the SAS 70 was replaced by the SSAE 16 and can't be issued anymore ;-) ). That's probably good for being able to target more lucrative opportunities as most will require some form of compliance assurance...

 

[KapsZ28]

Sales weasels tend to be more interested in selling things that will make them more money. If you want them to develop a particular line of business, then their compensation should be adjusted to make it more appealing to them to sell based upon the business's intended direction (i.e. IaaS instead of ISP).

Sounds like you guys have some serious compliance spend (though, the SAS 70 was replaced by the SSAE 16 and can't be issued anymore ;-) ). That's probably good for being able to target more lucrative opportunities as most will require some form of compliance assurance...

Good point on the sales, but I think it is also that they don't know how to sell IaaS that well. Most of their background is ISP. Supposedly we are going to hire a SE, but who knows when.