With SoftLayer and three years of hard work, SMB managed service providers can drive as much as $2.1 million in new profits annually based on winning as few as 10 customers, according to a Forrester study released Thursday.

Forrester's projections assume the MSP is already generating between $5 million to $30 million in revenue. The study also assumes the MSP acquires six SoftLayer customers in the first year and two new customers in years two and three.

The Forrester report, which was commissioned by IBM, was created by modeling six existing SoftLayer MSPs. It makes big assumptions. For example, the MSPs must migrate their existing datacenters to SoftLayer and hire new sales and engineering staff.  

"The biggest piece of this is not SoftLayer hosting revenue, it's the recurring yearly revenue these companies will make on managed services such as provisioning servers and storage space, maintaining server capacity, and performance monitoring," said Reggie Lau, senior consultant total economic impact at Forrester.

Waukesha, W.I.-based MSP AIR Technology Services owner and Vice President Jack Taugher, who was not part of the Forrester survey, said the numbers seemed high. "I think it depends on the market you are in. In the Milwaukee area we don't see the type of demand for cloud services that you might find in other parts of the country."

Taugher said when he informally runs the numbers and adds revenues associated with onboarding new customers and factoring in labor, setting-up systems, and training, he still can't get to $2.1 million. AIR Technology is not SoftLayer partner.

"SoftLayer is a very compelling offering and I think in a best case scenario in some regions of the country, if you targeted specific industries you could come close," Taugher said.

Forrester's math is based on 40 percent margin for each new customer setup, managed service revenue, and 20 percent for hosting revenue. 

Forrester estimates that the total three-year transition costs for a small to medium-sized MSP is about $425,000, which includes initial setup costs, transitioning their business, and hiring news staff.

"SoftLayer gives MSPs a scalable, easily deployable, global platform. It allows them to focus their time and attention on delivering managed services instead of worrying about infrastructure," said Brig Serman,  sales director with IBM Global Midmarket and Managed Service Providers.

"SoftLayer allows MSPs to invest ahead of demand. SoftLayer is on demand. It offers compute capacity on an as-needed basis. As an MSP determines where to invest capital, SoftLayer allows them to focus on what they do best – managing services – and not building out infrastructure," Serman said.

IBM’s cloud business, while still a tiny fraction of IBM’s overall business, is part of IBM CEO Ginni Rometty’s “strategic imperatives.” Earlier this month, during its second quarter earnings release, IBM reported its cloud revenue was up more than 50 percent year-to-date, and that cloud-delivered-as-a-service is up 100 percent to $2.8 billion compared to a year ago.