This $9 million MSP’s projected 17% revenue growth is coming from its foray into selling virtualization solutions and services to the SMB market.
Although virtualization may not get as much press as the cloud when it comes to talking about “IT opportunities for the channel,” the fact is that virtualization solutions and services are in high demand. Consider this: The procurement and deployment of virtualized servers has more than doubled in the last three years. VMware’s research revealed that the percent of virtualized servers vs. physical servers grew from 29 percent in 2009 to 66 percent in 2012, and it continues to grow at nearly twice the rate of historical physical server procurements and deployments. The study goes on to say that the top five drivers for this shift from physical to virtual servers include reduced hardware costs, server provisioning time reduction, disaster recovery improvements, reduced maintenance/ upgrade expenses, and shorter application rollouts.
Unlike the early days of virtualization, where the benefits were reserved for large enterprises that had dozens of servers residing in large data centers, virtualization is now a viable option for SMBs. E-Safe Technologies (E-Safe) is an example of an MSP (managed services provider)/ IT solutions provider that not only recognized this trend a couple of years ago, but acted on that knowledge by implementing a four-step strategic process to market, sell, and support virtualized solutions and IT services to SMBs.
1 — Invest In Virtualization Expertise
Although many of the skills required for managing and supporting a physical IT environment are easily transferable to a virtual environment, there are still enough significant differences that warrant outside training before one can become successful selling virtualized solutions and services. In E-Safe’s case, it went a step beyond sending technicians and salespeople to training classes and opted to hire a virtualization practice manager to train its staff and oversee its virtualization sales plans. “Our certified VMware vExpert has been a chairman for the western PA chapter of VMUG [VMware User Group] for seven years, and he has more than 13 years’ experience working with VMware and Citrix,” says Bruce Thompson, vice president of E-Safe Technologies. “Within the first few months of joining our company, he helped us redefine our offerings, which now include a desktop virtualization solution based on the VMware Horizon View desktop virtualization product as well as virtual backup and disaster recovery services.”
2 — Establish And Conduct A Virtualization Health Check
Just as a VAR or MSP wouldn’t sell a new hardware appliance without first conducting a network assessment to fully understand its customer’s business needs, E-Safe couldn’t expect to sell a virtualization solution without a similar assessment. The goal of E-Safe’s virtualization health check is to ensure each customer has an optimized and secure IT environment that’s suitable for virtualization and will provide the cost savings customers want without compromises in computing performance.
Beginning with a presales consultation, the virtualization practice manager works with the E-Safe salesperson to set up an introductory alignment call with the client to discuss the client’s business needs, technology environment, compliance/mandate issues, and short- and long-term requirements. Next, the E-Safe rep schedules a follow-up meeting to review the proposed assessment plan and to discuss the scope of work, which includes providing a clear understanding of services to be performed and the requirements for all parties involved. “Our virtualization health check includes a 25-point check, covering areas such as network infrastructure, storage, software licensing [e.g. VMware and Citrix], and business applications,” says Thompson. “The assessment includes 4 hours on-site, plus a couple of hours developing the follow-up report and recommendation. We charge $3,000 for the assessment, and since launching this practice last year, we’ve been averaging one per month. We’ve found the sweet spot for virtualization among SMBs is with companies that have between 60 and 300 users.”
3 — Develop Bundled Virtualized Solutions
After creating its virtualization health check, E-Safe worked with its virtualization practice manager to select the appropriate virtualization vendor partners to support its new offerings. “We started by assessing our current vendor partners by looking at the quality of their customer support and customer feedback, and we took into consideration how each vendor responded to our feedback/inquiries as well as how their product fit into our solution stack,” says Thompson. “Following the vendor assessment period, we brought in new storage appliance vendors [e.g. ExaGrid, NetApp, and Nimble], wireless networking vendors [e.g. Aruba Networks and Cisco], and cloud backup and disaster recovery vendors who specialize in virtualized solutions [e.g. Intronis and Veeam Software]. We’ve learned over the years that signing up with a new vendor without thoroughly vetting their product first can be very costly. And, when you take into consideration that many of our customers operate in highly regulated industries, protecting their data from server failures, viruses, and disasters — and ensuring IT availability under any circumstances — is of utmost importance.” (See sidebar about E-Safe’s frustrations with its previous backup vendor and the reasons it switched to Intronis, page 22.)
4 — Educate Customers And Prospects About Virtualization
Although E-Safe has been seeing a large uptick in interest among SMB clients wanting to virtualize their IT environments, the MSP still finds another large segment expressing skepticism about adopting something new and different. “The biggest obstacle just about every IT solutions provider runs up against is the ‘This is how we’ve always done things’ mindset,” says Thompson. “This is particularly true with regard to virtualization because even though the term might be familiar, there’s a good chance the client doesn’t understand what it is, and more importantly, how it can help reduce their IT costs and future-proof their IT investments.”
To combat skepticism and convince more prospects to move forward with a virtualization health check, E-Safe developed two virtualization educational programs, which Thompson says are like 101- and 201- level college courses. “The 101 course is a very basic introduction to VMware and virtualization, and it’s designed for business owners and IT owners with no virtualization experience,” he says. “The 201 course is geared toward network/server administrators who already know the basics of virtualization, but need a little more training before they can implement it themselves.”
Bruce Thompson, VP, E-Safe Technologies
Both courses run from 8 a.m. to 5 p.m. at E-Safe’s facility, and the MSP charges $595 per person to take the course. Thompson also shared that E-Safe does not offer discounts for those who complete the educational course and go on to sign up for a virtual health check assessment. “We like to keep the educational sessions and assessments separate, which we believe gives us more credibility as trusted business advisors, rather than taking the risk of morphing the program into a glorified sales pitch,” he says. But some may worry that E-Safe’s 200-level course, which empowers end users to handle many aspects of a virtualization deployments without the MSP’s help, could be harmful to its business. “We believe that offering this class is what’s in the customer’s best interest, and up to this point, we’ve only seen positive results,” Thompson says. “The fact is that there are simpler steps involved in virtualization [e.g. moving a volume from one virtual server to another, adding new users] and much more complex steps [e.g. balancing volumes as part of a major upgrade]. It’s the latter scenarios that require our expertise and allow us to build stronger customer relationships and earn higher profit margins.”
Despite the fact that E-Safe started out as a data center company that was focused on selling IBM products and services, Thompson says it now sees itself as a virtualization/managed services company. “Currently, only about 30 percent of our business comes from recurring revenue,” he says. “But, as our virtualization services continue to grow, I see that number reaching the 40 percent to 45 percent category in less than five years.”
One thing about virtualization is that it helps prepare E-Safe’s customers for the next IT milestone that often accompanies virtualization: the cloud. “Right now, customers are OK with off-site backups, but the vast majority still want their core business apps onsite,” says Thompson. “There’s just something about seeing a blinking light on a hard drive that provides more peace of mind than accessing resources over the Internet. In time, however, and with the right strategy, we believe the virtualized services we’re now providing on-premises will migrate to the cloud, which will offer additional earning opportunities for our company and additional business benefits for our customers.”