planning for cloud profitability from day one
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Planning for Cloud Profitability from Day OneNovember 2015
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Introduction ProfitBricks in 2015
Mission Painless Cloud Computing Infrastructure service which enables existing IT teams, to deploy their applications and get all of the benefits of the at an IT budget friendly price.
Details HQs in Berlin, Germany, San Antonio, TX and Boston, MA 135 Employees
Investors Achim Weiss –CEOAndreas Gauger –CMOUnited Internet (UTDI: Market Cap: $8 Billion)
Technology KVM Based – Cloud Computing IaaS service, built on InfiniBand network interconnects with an efficient, performance optimized platform with minute based metering and billing, deployed on premium commodity hardware and housed in top-tier data centers.
Product IaaS – Compute, Networks, Storage with Data Center Design and Management Software
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Other Cloud Providers ProfitBricks:Painless Cloud Infrastructure
Painless Cloud Infrastructure
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Migration without adaptation – ProfitBricks cloud infrastructure behaves like physical hardware with all the advantages of the cloud
No learning curve – ProfitBricks lets existing teams’ knowledge sets and processes be used to achieve rapid success with the cloud
24/7 Phone support – USA based Cloud Architects and SysAdmins always on standby
Price/Performance Guarantee: “We guarantee that any workload deployed on ProfitBricks will cost less than the same workload running at the same performance level on the IaaS platforms of Amazon, Google or Microsoft.”
Painless Cloud Infrastructure
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“We are going through the greatest transformative period in the history of our industry.” - Everyone
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OBVIOUS
Changing Expectations
The future is about outcome-based systems & services, not individual products
Business Models
Costs and BudgetingTechnology & Information Management Consumption
Speed
Work/Life Balance
Automation & Accessibility
NOT OBVIOUS
Unbridled Possibilities
ExpectationsSocial Impact
Risk and Risk
Innovation
Imagination
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• Software as a Service (SaaS)• Platform as a Service (PaaS)• Infrastructure as a Service (IaaS)• Business Process as a Service (BPaaS)• Managed Clouds
Why Clouds?
Enter the Clouds
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Why Customers Want Cloud
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43% reduce IT capital expenses
40% reduce cost of IT operations
23% increase operational productivity
22% increase agility & competitiveness
21% improve performance
15% access new technologies
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Cloud Computing Is a Growing Market Opportunity
42% of businesses say cloud computing is top 5 spending priority
30% Compound growth rate of infrastructure services between 2013 & 2018
11% shift in budget allocations away from traditional IT to cloud services
80% of all enterprises by 2016 will have some investment in infrastructure services
59% of all cloud-based workloads will be software services by 2018
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Cloud Computing Is a Growing Market Opportunity
SaaS$133B
PaaS$12B
IaaS$5B
BPaaS$10B
Source: Forrester Research
Total Cloud Sales: $160 Billion
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Technologies with High Growth Potential
Managed Print ServicesConverged Infrastructure
Software-defined networkingUnified communications and collaboration
Servers/data centerPCs/notebooks/netbooks
Data networking (routing, switching)Business software
Other (please specify)Data storageVirtualization
Application developmentMobile device management/BYOD
Internet of Things/machine-to-machine applicationsPrinting and imagingWireless networking
Mobile devices (smartphones, tablets, handhelds)Business analytics / Big Data
Voice services/bandwidth/connectivity/Internet accessBackup, continuity and disaster recovery
Data securityCloud infrastructure/services
0% 10% 20% 30% 40% 50% 60%
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Marketing
Acquisitions
Other
Developing products independently of vendors and service providers
Developing hosted services
Adopting more vendor hardware/software products for resale
Partnering with application vendors and service providers
Partnering with hosting providers for cloud services
Creating branded products with vendor products as components
Partnering with service providers to deliver cloud/application services to our customers
Creating services with vendor products as components
0% 10% 20% 30% 40% 50% 60%
Channel Growth Investments
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Cloud Computing’s Appeal
• F l e x i b i l i t y • A g i l i t y• S c a l a b i l i t y• U b i q u i t y• A d a p t a b i l i t y • U p d a t a b i l i t y • C o s t s
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Cloud Costs and Revenue
Janu
ary
Februa
ryMarc
hApri
lMay
June
July
Augus
t
Septem
ber
Octobe
r
Novem
ber
Decem
ber
Product
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Cloud Costs and Revenue
Janu
ary
Februa
ryMarc
hApri
lMay
June
July
Augus
t
Septem
ber
Octobe
r
Novem
ber
Decem
ber
Product Cloud
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CapEx vs. OpEx
Rev
enue
Time
CapEx
OpEx
Compounding Recurring Revenue
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R . I . PHardware & SoftwareOn-prem failed over to the cloud
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Cloud as a Replacement
Servers Backup Storage
Software Security Communications
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Average solution provider earns as much as 1/2 to 2/3 of their gross revenue from managed services
Cloud as a Revenue Generator
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Cloud as a Systems Catalyst
Cloud Computing
Devices
Applications
Networks
Analytics
Storage/Backup
Output/Presentation
Transport Sec
urity
Adm
inis
tratio
n &
Ope
ratio
ns
Trai
ning
& S
uppo
rt
Man
aged
Ser
vice
s
Con
sulta
tion
& A
dvis
ory
Cap
Ex
OpEx
(CapEx) + ((OpEx)*(Time))
=Total Accretive Value
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Cloud as a Solutions Component
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Operating Deficit
Cloud Challenge
Rev
enue
/Cos
t
Time
1
Operating Costs
Recurring Revenue
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Cloud Challenge
Rev
enue
/Cos
t
Time/Accounts
12
34
56
78 Operating
Costs
Recurring Revenue
Cash Flow Positive
• Cash flow turns positive when recurring revenue is greater than operating expense
• Cloud service achieves ROI when revenue covers operating expenses and initial investment costs
• Profitability happens when recurring revenue generates more than investment and operating expenses
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Compounding Cloud Revenue
Rev
enue
& O
pera
ting
Exp
ense
s
Time
Revenue
Expenses
Profits
• Continuous addition of new accounts or account expansion that leads to increasing revenue
• Scaling resources faster than services consumption
• Maintaining a low account attrition rate
• Commitment to sales and marketing of services and value
• Focus on customer experience and outcome-based value
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Planning for Profitability
• Pick a Cloud, but Not Any Cloud Keep start-up costs down by leveraging existing
expertise and resources Build cloud practices based on existing technology
and customer experience Create value by incorporating existing resources
with cloud capabilities
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Planning for Profitability
• Identify Customer You can operate globally, but the world is not your
customer Understand and profile customers to establish
sales scenarios and customer interactions Define who is not your customer and why
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Planning for Profitability
• Select a Cloud Model
Advise
Refer
Resell
Build
Support
Manage
Operate
Value
Investment
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Planning for Profitability
• Select a Recurring Revenue Model
On-demand Weekly Monthly Quarterly Annually
Revenue model will determine sales needs and operating
parameters for planning expenses and investments
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Planning for Profitability
• Plan Transition – Don’t Do a Crash ChangeR
even
ue &
Ope
ratin
g E
xpen
ses
Time
Cloud
Legacy Products
Inflection Point
• Do not stop selling legacy products; use legacy revenue streams to pay for future investments
• Plan a steady, progressive transition from legacy revenue to cloud/services revenue
• Set milestones and goals for expanding cloud revenue and measuring performance
• Accept that this process takes time – up to 3 years
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Planning for Profitability
• Make a Plan, Set Goals, Draw a Road Map Create a vision that translates to value Set goals – revenue and development
Know how you’re performing Decide when to expand capacity Maintain and exceed returns on investment
Draft a plan that sets the operational parameters, roles and responsibilities, and performance expectations
Establish what you want to be when you grow up
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Yes78%
No8%
Don’t know15%
Yes58%
No25%
Don’t know16%
Should You Have a Growth Strategy?
Does Your Company Have a Growth Strategy?
SOURCE: 2112 Channel Forecast Report 2015, January 2015
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Planning for Growth
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Planning for Profitability
• Commit to Sales, Not Just Technology You are first and foremost a sales organization Cloud services model is dependent on sales first,
technology second Create a sales culture with management,
governance, planning, expectations, and accountability
Demonstrate sales capabilities to vendors
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Planning for Profitability
• Commit to Marketing Cloud capabilities are worthless if no one knows
who you are, what you’re doing, or what you’re capable of
Communicate value to vendors and customers alike Use all available resources Commit to sustained marketing and
communications; no “one and done” efforts
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Wash, Rinse, Repeat
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Drive to the Next Level• Goal Setting• Business Planning• Focus & Expertise• Investment• Risk Acceptance• Execution,
Governance & Accountability
• Evaluation & Adjustments
• Repeat, Repeat, Repeat
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QUESTIONS
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“The secret of change is to focus all of your energy not on fighting the old, but on building the new.”
- Socrates
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Larry [email protected]
@lmwalsh2112
@the2112group
Websitewww.the2112group.com
2112 Blogwww.the2112group.com/blog
Information contained in this publication has been obtained by sources and methodologies of The 2112 Strategy Group, LLC, and are considered to be reliable but not warrantied. This publication may contain the opinions of The 2112 Strategy Group, which are subject to change from time to time. This publication is copyrighted by The 2112 Strategy Group, LLC. Any violation of the limited terms of reproduction or redistribution of this publication, in whole or in part, whether in hard-copy format, electronically, or otherwise to persons not authorized to receive it, without the express consent of The 2112 Strategy Group, LLC, is in violation of U.S. copyright law and will be subject to an action for civil damages and, if applicable, criminal prosecution. Any questions should be directed to The 2112 Strategy Group at (347) 770-2112 or [email protected].
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Getting Started
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Check out the new ProfitBricks Cloud Computing: Channel Go-To-Market Guide, produced by The 2112 Group