Jenaly Technology Group, a managed services provider (MSP) based in Portsmouth, NH, was featured in Business Solutions magazine earlier this year in a cover feature story titled, "Why Now Is The Right Time To Sell Cloud Computing." In the article, Jenaly President MJ Shoer shared his growth strategy for 2012 and beyond, which included starting a cloud services company called TOGL. This joint venture, which comprises Jenaly and 16 other IT solution providers, opened for business on January of this year. I caught up with Shoer recently to find out how his business plans were turning out as we approach the end of 2012.
How are your growth projections turning out this year?
Shoer: We're going to finish the year strong -- up about 20% over last year -- but where that growth is coming from is different from what I would have predicted at the beginning of this year. None of our customers or prospects are moving 100% to the cloud. When we do side-by-side proposals, comparing upgrading their on-premise servers with moving everything to the cloud, companies still prefer to keep their servers and most of their applications on-site.
What's the primary reason for company's resistance to the cloud?
Shoer: I think there's a few reasons:
1. The ROI isn't there. When we do our side-by-side proposals, there really isn't any cost savings for customers to move to the cloud. Even though the cloud hype coming from companies like Google, which promises a complete cloud offering for less than $10 per month, that's not reality.
The fact is that when you look at the 3-year cost for a cloud solution and compare it to an on-premise solution, the cost differences are minimal.
2. Internet connectivity is a concern. We have a lot of customers located in rural areas that don't have super high-speed connectivity. Not only that, but their Internet connectivity isn't 100% reliable, which makes them nervous about considering the cloud.
3. The New England states tend to be more conservative. I'm not 100% sure how much this reason is contributing to our customers' cloud resistance, but I suspect it does play a part. For example, some of our peer group partners, which are based in other parts of the country, have brought more than 100 of their customers to the TOGL cloud, and overall TOGL is experiencing significant growth this year.
If the cloud isn't the primary reason driving your growth this year, what is?
Shoer: We've been getting a ton of project work -- server and workstation upgrades. Several businesses held off these kinds of upgrades three years ago, and they're now making those investments once again.
We're seeing some cloud business, but it's mainly migrating customers from traditional Exchange servers to hosted Exchange. I still think the cloud is the way of the future, and it will eventually be a reality for our customers; it's just going to take a little longer than I would have originally predicted.
Any changes you've made to your business since we last talked that you'd like to share?
Shoer: We've made two big changes this year:
1. We brought on a business development person this year who's helping us find more sales opportunities and focus on our growth. We already had a good foundation with our services business, and this was exactly what we've needed help with.
2. We've standardized our backup and disaster recovery offering on Intronis. We had always used them for cloud backup previously, but they recently added VMware virtualization support, which enables us to more efficiently remotely manage backups for our clients with virtual and blended environments. This process used to require us to integrate multiple solutions when selling BDR (backup and disaster recovery), but it's much better now that we can standardize on one vendor and have one portal to manage our customers' backups.