Author: Alistair Mackenzie

Key takeaways

1. Pricing and billing are critically important to consistently win profitable service contracts
2. Back-office processes will be tested by the demands from scaling your MSP business
3. An increased focus on cash-flow is required, particularly for channel players early in their transition
4. There is a need to balance customer choice with the need to keep operations simple and efficient
5. Good business systems are required to drive operational processes at scale

Trends driving the importance of your pricing strategy

1. Purchasing and finance departments are increasing their influence over IT investment decisions
2. The commoditisation of IT infrastructure makes it harder to differentiate with technical features alone
3. Disruption to business models and economic uncertainty creates an aversion to capital expenditure. Technology-as-a-service becomes more attractive
4. Economic moats are getting smaller, putting pressure on cash flow and long-term capital investment. Flexibility is king.

You must have a competitive solution in place or your competitors will. We all know once someone else is running the infrastructure of your client, you have lost control.

When I first started out in the channel we operated a standard VAR model and as a result the pricing strategy was straightforward.  Building loyalty with clients enabled us to maximise gross margins by ensuring revenues exceeded the costs of goods. Maximising net profits was done in the most efficient manner by paying close attention to overheads.

Our accounts team had a simple job to collect monies as quickly as possible and pay suppliers. Consequently revenues could be recognised almost immediately. On the balance sheet we had little if any, deferred income liability. Therefore, a small back office team with off-the-shelf finance tools could handle the workload.

Building competitive solutions in data protection

The pricing strategy we needed to compete as a service provider had a much greater impact on our business. As a result, it consumed a growing amount of management time as our business model evolved.

As a pure-play data protection and backup service provider here are some of the things we considered when building our pricing model:

Pricing Metric

for backup and recovery-as-a-service we considered the following:

• Capacity stored
• Server or client count
• Data transferred
• Volume of backup schedules
• Restore requests

Invoicing frequency

• Monthly billing in arrears
• Annual in advance, with or without periodic true-ups
• Fixed or variable

Portfolio choice

We found that a service catalogue made our offering more attractive in the market by introducing several service level tiers. Operationally this meant different levels of customer response time depending on workload type or different hours of cover. Later, we brought in the use of higher performing storage classes for critical systems. This all had to be linked to the pricing model thereby increasing the complexity of our portfolio pricing.

Contract terms and pricing

We found pricing was significantly impacted by contract terms. For example, the length of the contracted period or the cancellation terms could trigger a complete re-think of our model.

If you plan to sell one or two contracts you can survive without investment in management systems. The challenge comes if you want to scale across tens, or hundreds, of clients.

Executing a well-designed pricing strategy should have a positive impact in the following areas:

1. Ensuring timely and accurate customer invoicing
2. Minimising time spent self-auditing for technology partners or suppliers
3. Calculating margins and paying commissions to sales staff or reseller partners
4. Easier filing of accounts, cash flow management and revenue recognition
5. Managing contract renewals

Whether you plan to offer a full-opex service or a basic managed model, allocating sufficient time to your pricing strategy will help you stay competitive and profitable.

Charlie joins Predatar having spent 2 years developing her knowledge of the IT Channel, working for a telemarketing company in Oxford, U.K.

Charlie’s first brush with technology was when she was chosen to be the model dancer for a video game called “Get Up and Dance”, developed for the Playstation 3 and Wii consoles in 2011. Our advice is don’t ever challenge Charlie to a dance-off!

Her new work passion is customer service and this makes her a great fit for Predatar. Like us, she believes great experiences come from the personal connections made, not just from technology speeds and feeds. Charlie will work closely with our partners to develop their customer service capability by getting the most out of the Predatar platform of automation, service management and artificial intelligence.

We thought we would ask Charlie a few questions by way of an introduction.

Q. Do you have a favourite sport?

A. Yes, because of my background as a dancer I’ve always enjoyed watching gymnastics.

Q. Do you have a favourite gymnast?

A. I’ve always admired Beth Tweddle as the first British female gymnast to win European, World and Olympic medals. I also like watching Simone Biles of the USA.

Q. What do you like doing in your spare time?

A. Taking my German Shepherd dog for long walks. Very long walks!

Q. Do you like to travel?

A. I haven’t done much travelling but I’m hoping to get out and meet some of our global partners which will be great

Commenting on Charlie’s appointment, Alistair Mackenzie, CEO at Predatar, highlighted the focus on customer service:

We preach the importance of customer service in the channel’s evolution from VAR to Service Provider, so it is important we put our money where our mouth is. Charlie will be a great resource for partners to get the most from their investment in the Predatar platform.

Please welcome Charlie to the team.

Channel Forces

The established relationships IT channel organisations hold with vendors and customers are being disrupted. For their survival VARs have had to evolve their businesses. A common reaction has been to increase the portfolio of technology and vendor offerings to try to capture every possible customer opportunity. Sounds like a reasonable strategy but it hasn’t solved the systemic problems of weak new business development and falling margins.

There has never been so much vendor choice for on-premise IT infrastructure. This at a time when established suppliers are scrambling to maintain their relevance as more workload migrates to public cloud.

What is Predatar?

Our proposition to the channel is not about selling more technology. It is a business model transformation to help it stay relevant, regardless of the adoption mix of hosted datacentre, private or public cloud.

We don’t expect that every channel organisation will embrace this evolution but we want to work with those that do. The Predatar team engages with channel executives who are excited, if slightly daunted by the opportunities and challenges the new channel ecosystem will present. We know from much experience the evolution is not easy but that’s the point, good margins don’t come easy.

The Predatar proposition helps make the transition as quick and painless as possible. This graphic I hope explains our position in the market.

If you are heading to Las Vegas for IBM Think 2018 and you would like to meet with one of our representatives, please book early to reserve a time.

Andy joins Predatar having spent the previous six years at a storage software company, developing its channel across Europe and Asia.

We thought we would ask Andy a few questions to find out what makes him tick

Q. Andy, why did you decide to join the team at Predatar?
A. The opportunity to build a global network of interconnected IT channel players is unique. It’s not something I’ve seen before despite my extensive experience in the channel

Q. What interests you most about the opportunity?
A. The IT channel is at a critical tipping point, margins are being squeezed and new business models are required to delight customers and maintain relevance. Predatar provides both the platform and the processes to quickly build a global channel ecosystem

That’s great Andy but can you tell the readers a bit about yourself?

Q. Who’s your favourite sports team?
A. Gloucester Rugby Club

Q. You’ve just been handed a sausage sandwich. Do you add red sauce or brown sauce?
A. Mustard!

Q. English, French or American?
A. Stupid question. English, of course

Q. What’s the coolest thing you have ever done?
A. As a co-driver, saloon car racing with Damon Hill in 1992, the year before he got his Formula One drive. Damon went on to win the F1 title in 1995

Q. What’s your favourite joke (keep it clean please)?
A. “I needed a password eight characters long, so I picked Snow White and the Seven Dwarves.”

Commenting on Andy’s appointment Alistair Mackenzie, CEO at Predatar, highlighted the focus on channel transformation:

“With Andy’s industry knowledge and channel engagement experience, Predatar is better positioned to really help its partners evolve and build profitable, recurring business models. We are delighted to welcome him to the team”.

Would you like to say “hello”?

Andy will be with the team when it visits Las Vegas later this month for the IBM Think 2018 conference. Please come say hello at booth #793 and if you’re nice to him he might give you a free Predatar t-shirt!

Enterprise Challenge

Today’s complex IT infrastructures are demanding new ways to manage and protect data.

The burden of owning and operating complex data protection systems is driving many  companies to investigate alternative ownership models.

Service Provider Opportunity

In recent years, consumption-based delivery models for IT services have exploded in popularity.

As increasing numbers of businesses look for ways to spend less time, effort and resources on IT, your long-term success depends on capturing a share of the emerging managed services market.

Data protection is a hot but crowded market. How will you differentiate your BaaS portfolio?

The Problem

It’s one thing to start a Managed Services practice, it’s another thing entirely to scale it and make money. 

The challenge is keeping service levels high and operating costs low. The barriers to attaining MSP status, including cost, headcount, and infrastructure requirements, have prevented many businesses from achieving this transformation. 

Customer churn and a high cost of service delivery can kill the profitability of a Managed Services business. 

Enter Predatar

If you’ve dreamt of building and growing a profitable, sustainable data protection services business, then Predatar can help make it a reality.

We offer value-added resellers the opportunity to establish new revenue streams with their own-branded data protection offerings; converting transactional buyers into loyal, engaged customers.

How do we do this?

Technology

The Predatar platform is a complete systems management solution used by service providers to manage enterprise data protection offerings built with the IBM Storage Protect Suite

Business Process

Becoming an MSP means rethinking everything; not just technology but processes too.

The Predatar Evolution Framework encompasses everything you need for a smooth and profitable transition.

Commercial models

Predatar enables service providers to offer customers more innovative and flexible pricing aligned with their actual consumption

Meet with the Predatar team while at IBM Think and we’ll give you a free Predatar t-shirt.

Drop a note to info@predatar.com to book your slot