This is part eight of my presentation “Making money from the cloud”. You can find the full slides at:
and the previous parts are at:
In a world of common cloud services like Office 365 and Azure, that anyone can buy at any time from the web, how do you make your IT reseller business stand out from the crowd? Simple. Add value.
As with many things, the answer is simple but executing on that is challenging. This is because the traditional model for IT resellers was basically, buy from distributor, add some margin and resell. That worked until the products became commodities where margins were driven to zero. Strike one.
The next ‘solution’ that resellers adapted was managed services. Basically, for a flat monthly free, a reseller agreed to fix any broken IT issues. Exactly the same thing then happened. Managed services became something that everyone was offering. Thus, with no point of real differentiation it became a commodity and once again margins were driven to zero. Strike two.
For small providers in the cloud world both the traditional reseller and managed service provider model are fading into oblivion. If you keep pursuing them you are going to go down swinging. The reason is that few providers can, or are, differentiating themselves from their competitors. Many providers are still locked into these old world models and trying to apply them to products like Office 365, Azure, etc and unsurprisingly they are failing to make them profitable. In short, they are striking out.
The reason for this is they are failing to add value in what they do. If you migrate emails from on premises to the cloud, what real value have you provided the customer? To their mind, nothing. What point of differentiation can you create with email migrations? Generally not much thanks to automated tools like Migrationwiz and Skykick. The only way to be profitable going forward is to focus on providing value.
Specifically, it must be value to the customer, not the IT reseller. Simply moving emails to the cloud doesn’t provide much value in the customers mind as I have highlighted. However, showing customers how to create rules to filter emails, enable enhanced security like encryption and data loss prevention certainly do. Again, value in the customers mind, not your own.
This means IT resellers needs to focus on what matters to the business. The hardest technical challenge may indeed need to be solved but it may not provide much perceived value to the business. Conversely, the simplest thing technically can provide enormous business benefit and value to a business. In short, you need to look using the customers eyes and understand what they see as valuable.
For most customers, value is added by making things simpler. Less steps, less choices, less options and so on. Less also means that there is less than can break and go wrong. Many technical people believe that being simple is somehow being inadequate. In fact, it is quite the opposite. Simplifying something is far more challenging than adding unwanted overhead. Complicating things just because you can doesn’t add value, in many cases it destroys value in the customers mind.
Apart from simplification, customers are looking for end to end solutions. This, to me, is one of the standard out features that Office 365 brings to the table that sets it apart from its competition. For example, there is one Azure AD user login for Office 365, Azure, Intune, CRM, Project Online, etc, etc. One end to end user identity to access everything. When you also combine that with Windows 10 on the desktop, where you can again login to machines using the same identity, life becomes a whole lot simpler for the customer. Value added.
I continually harp on the fact that Office 365 is more than just hosted email, yet the vast majority of installations I see are email only enabled even though they have paid for the full Office 365 suite. That isn’t the customers fault, it’s the reseller who has implemented something they don’t know enough about!
If all you are doing is simply lifting and shifting emails and or files then:
1. You aren’t really adding any value from the way things currently are and
2. You are potentially allowing someone else to easily add value and push you out of the equation.
Not a smart or sustainable strategy at all.
As the above slide indicates, there is just so much more that can be done with Office 365 email alone, not to mention SharePoint, Yammer, Skype, Teams and so on. Yet all I see, time after time, is resellers focused on simple email migrations. Lift and shifting while adding no value. Doing so adds zero value to the customer OR to the reseller’s own business. Why? Because just about anyone can do an email migration to Office 365 these days. Where’s the point of differentiation there? And of course, no differentiation means its a commodity and being a commodity means the only way you make money is in large volumes. And that is something a small reseller can’t do. They can never scale to a size that it becomes economically viable. So why limit your options to those that won’t help you win? Strangely, many resellers do.
You need to turn the whole model around and put value at the forefront of everything you do. My aim with this blog post is to provide value to readers in lifting their knowledge. My aim when doing a demo of Office 365 is to show customers how Office 365 services could help their business get things done better and more profitably. When I follow up with someone about Office 365 I send them a list of links with further information about the product. Value, value, value. In short, what can I do that adds value at every transaction point?
Value is your unique differentiation point. You need to understand and develop what you can bring to the table for the customer. Not just at installation time, but at every point through the engagement process. The act of adding value is a process that is never complete. There is always more value you can add. Importantly, no matter how small you are, you can still add value.
You know that you are getting your value offerings right when customers seek you out. The point at which people start asking you to provide your offerings without you even telling them is a clear indication that what you have is unique and is something they want. Perfect.
To have a successful value proposition you need to move beyond the technology. As an IT reseller you have to help the customer transform their business with technology. You have to help them do things better, faster and cheaper using the technology. Technology needs to be the centre piece of the way they run their business and at that centre is you guiding them and adding value every step of the way. You need to understand their business rather than merely selling ‘stuff’ to it as the old model dictated.
Take a look at what existing processes a customer may have that can have technology applied to it in order to improve it. Where are in inefficiencies? Where are the opportunities to help your customer reach more customers and serve their customers better? With tools like Office 365 and Azure there are virtually an unlimited number of opportunities to do just that for customers.
Changing your business model from that of a traditional IT reseller and managed services provider into a business that is focused on adding value through technology won’t happen overnight. It takes discipline and dedication as well as constant focus but the rewards are tremendous. Once you commence down the value path you’ll find that the world starts beating a path to your door step. Why? Because customers buy on value not on price, and you have the products that are most valuable to them.