With the cloud market booming in billions, every service provider that looks at the prospect of cloud must also focus on cloud monetisation. For traditional managed service providers, the cloud presents opportunities to ‘sell more’ – both horizontally as well as vertically. Think of a data center operator also selling Office 365 subscriptions because, well, that’s what their customers use. Or think of a legacy software developer transforming from heavily priced licensing models to lightweight subscription models aimed at expanding customer lifetimes.
Here are 4 reasons why service providers should prioritise cloud monetisation and extract most benefit from the opportunities that the cloud provides.
Your customer may be buying a set range of services from you – e.g., an accounting software. At the same time, he is also using a host of other services to manage processes that are out of your core domain – an employee engagement software.
Enterprises have a bias towards single windows, and managing separate vendors is often a compromise. So what if you were to sell your accounting software and also partner with an employee engagement software vendor? In other words, sell together from the same shop front.
By setting up the right pieces on the cloud, service providers can leverage unique business partnerships and use the cloud as a sales avenue to capture a larger piece of the enterprise lifecycle pie.
Selling on/from the cloud lets you explore innovative business models. Looking at the evolution of software in the last 15 years, the business paradigm shifted from single installable licenses to ‘pay-as-you-grow’ subscriptions.
These business models also give you clearer visibility on actual sales, and also traceability in terms of customer segments. Additionally, these give you tighter control on managing your costs, thereby, bringing predictability in both costs and revenues.
Arguably, the cloud gave birth to the subscription economy. Customers no longer need to ‘buy’ software licenses, as they can just subscribe to a ‘service’ being provided. This ‘as-a-service’ model also allows customers to stop using the service(s) if it doesn’t fulfil their needs anymore. All this, without the headaches of (re)negotiating contracts and service agreements.
What this provides to cloud service providers, is a unique way of modelling how they package and sell their services. A one-time USD 100,000 license for a year can be potentially remodelled to a USD 150 ‘per-seat’ monthly subscription. This recurring revenue, again, keeps the predictability high while ensuring fewer empty months on cash flow statements.
The API Opportunity
If the cloud brought about a new paradigm, the next seismic shift came with open-source, which is a direct descendant of the cloud itself. Developing service offerings (software, platforms, infrastructure) is no longer confined to a silo, and tech communities are being built collaboratively.
In terms of business, this collaborative approach has given rise to the API economy. What this essentially means, is that anyone can ‘pick up where you left’. A developer-ready API is one of the new benchmarks of technology development.
In other words, complementing businesses can co-build a more holistic offering by integrating each others’ services using APIs. In the process, service providers can create more revenue channels through developer pricing, partnership pricing and the likes.
We are one of Asia’s fastest growing cloud start-ups working with service providers globally and enabling them with cloud monetisation tools and services. Our product, apiculus, is built with keeping the business needs of telcos, managed and cloud service providers in mind. Hit us up for more details and a demo.