Another hurdle MSPs and channel players face is competition from large public cloud service providers such as Amazon. These providers are highly focused on pricing as a means of remaining competitive and have the ability to keep their costs so low that if a reseller were to try to stay at the same price-point with their own cloud service, there would be no margin for profit.

As a result of the drawbacks associated with the creation of their own clouds, channel resellers are now realizing that maintaining their own clouds is not financially feasible. A recent survey of nearly 300

With this realization taking hold, we can expect to see big changes in the cloud over the next 12 to 18 months – that is, many of these small clouds that have been created by MSPs and the like are going to slowly shut down and morph. 

Cloud 2.0 And The IT Value Chain overall strategy.

For MSPs, rather than focusing on technology to build a cloud, the next chapter in the evolution of the cloud – cloud 2.0 – should focus on this value chain and creating clearer roles for all of the participants in the chain on their unique value proposition.

Think of it as similar to the traditional manufacturer-distributor-reseller value chain, but selling services rather than moving product through these channels. 

Within this model, one of the key ways cloud distributors will differentiate is by providing services in many local markets so resellers can meet their customer performance, latency and data residency requirements – and do so at a wholesale price point.

This will allow not only the reseller make the margins it needs, it also allows them to focus on their value added services, which will vary depending on the partner and skill sets. 

These services may be the consultative approach the partner employs when helping the customer plan their cloud migration, they may be the migration and transformation services provided to end users, or it may be things like the ongoing support, monitoring and compliance services the partners provide.

By embracing this wholesale model, MSPs are able to quickly enter the cloud services market with no up-front costs and with the ability to add service offerings that complement their particular skills and added value.

Two key points MSPs should keep in mind are to look for white-label offerings that give them the ability to put their brand front and center, and to partner with wholesalers whose management capabilities are required to provide strong levels of customer support.

This is the best road to profitability and growth for MSPs in the coming years. They’ve already done the groundwork developing and fostering their relationships with their customers, and now they can take the next step to developing a strong and profitable line of business for the future by embracing the wholesale cloud.