Here’s why I think this is an opportunity you should consider: According to research conducted by Homeland Security Research, global intelligent video surveillance (IVS) and video analytics (VA) industry revenues totaled $13.5 billion in 2012 and are estimated to reach $39 billion in 2020. The study goes on to attribute the increased use of video surveillance and the migration from analog to digital cameras as two top drivers behind this trend.

According to the same study, in 2011 more than 165 million video surveillance cameras were installed worldwide and captured 1.4 trillion video hours. By 2020, it’s projected that the number of captured video hours will grow by more than 135% to 3.3 trillion! Even though we sometimes become desensitized to numbers of this size thanks to our national debt, it’s important to take a minute to consider the magnitude of this growth: All the video footage captured throughout the world in 2011 is going to more than double within the next seven years, resulting in more than $25 billion in revenue opportunities.

Another related and interesting trend happening in this market is that there is a shift occurring with regard to the type of companies selling and installing video surveillance solutions. Traditional CCTV and analog video dealers are either transitioning to — or being replaced by — systems integrators. The reason for this shift is due largely to the fact that analog video systems are being replaced by IP video solutions, which requires the kind of IT knowledge VARs, systems integrators, and MSPs already possess.

If you’re currently selling and configuring computers, servers, routers, switches, mobile devices, printers, fax machines, phone systems, and other IT assets that run on your customers’ IP networks, how much of a learning curve would it be to start selling IP video surveillance solutions? Even if your research concluded that expanding into this arena would be too much of an undertaking right now, you should still be thinking about ways to partner with IP video surveillance solution providers and becoming their trusted advisor for handling the cloud storage portion of their implementations. This move alone could become a very big deal for your business.

I had an opportunity to talk with Paul Smith, a partner at Datasmith Networks. One of the things that took me by surprise during our interview was the fact that this MSP has only eight employees! How can a company with so few employees take on customers like PlanetShoes.com? What’s even more interesting is that a big part of Datasmith Networks’ growth strategy involves keeping its business lean and partnering with companies like NetEnrich for NOC and RIM (remote infrastructure management) support.

When I asked Smith about this business strategy, he had this to share:

As a small business owner, it’s easy to get caught up in the false notion that the only way to properly take care of your customers is to do everything yourself. When you operate under that belief, you create a lot of unnecessary pressure. You end up settling for subpar profit margins and may compromise your customer service by having to address multiple IT emergencies at the same time.

Consider, for example, what it would cost to hire a Web expert, a virtualization expert, and a database expert — easily $300,000, right?  And, let’s say you actually do succeed in finding that talent; you’d be lucky to achieve a 70% utilization rate on their time.

I wonder how many VARs and MSPs could learn a valuable lesson from Datasmith Networks and stop believing that to be successful they have to troubleshoot every customer IT problem themselves? Not only can teaming up with a good business partner remove a lot of your stress, it can also allow you to start going after and landing larger deals that you’d otherwise have to walk away from.

Check out Smith’s article here for more details about why partnering is the smart way to grow your cloud services practice.

Next week, I’ll be sharing the details about a specific project LIBANGA won with a medical practices customer recently, but I wanted to first share one thing this IT services provider is doing that’s getting customers excited about cloud services.

There is usually one or two IT services that serve as gateways to the cloud for your customers. In other words, it’s highly unlikely a customer is going to take an all-or-nothing approach to the cloud. What’s more likely to happen is that a customer will try one IT service now — such as migrating their email to the cloud — and if that proves to be a good experience and offers some tangible business benefits, then they’ll consider moving other IT solutions to the cloud as well.

For LIBANGA, hosted Exchange is often the first cloud service customers try, and once they do, they’re highly likely to add other services such as security, backups, and virtual desktop services after that. One challenge LIBANGA was running into was getting customers to take that first step to the cloud – especially if their on-premise servers were still working.

Guerendo and his team overcame this obstacle by developing a server buyback program, which entails paying customers the fair market resale value for their Exchange Servers and applying that value to the monthly cost of their hosted Exchange Server service in the form of a credit. Typically the credit caps at $100 per month and can run for three to six months, depending on the value of the server.

So, what does LIBANGA do with the customer’s legacy server(s). Depending on the condition of the server, the MSP might reformat it and resell it, or in some situations if the server is too old to resell, the solution provider decommissions it and recycles it. In the success story I’m going to be sharing from LIBANGA next week, you’ll see that one of the MSP’s customers had two servers, only one of which was able to be repurposed. Even though the solution provider lost $300 from the server that couldn’t be repurposed, the profit margin from the overall sale was healthy enough that it became a no-brainer decision, shortening the sales cycle by several months and has already led to several upsell opportunities. Sometimes it’s the little, outside-the-box ideas you come up with that make doing business with your company a little easier and help overcome your customers’ objections. And, those small changes can turn into big cloud revenue over time.

In my role as CloudTalk blogger, I have the privilege of talking with some of the most successful channel companies around and learning about their business strategies. Even though these companies may emphasize one technology over another or one vertical market over another, I’ve noticed they all share this one thing in common: they take a very consultative sales approach with their customers. I know that you’re probably thinking that that phrase is used so often it’s merely a cliché.  But, make no mistake; it’s absolutely necessary that your cloud sales pitch is preceded by a consultation with your client.

So, the real question becomes how do you enter into a consultative discussion with a client? Unless a client has an immediate IT need or problem, the business owner or office manager won’t likely be too receptive to giving you four hours to pummel him/her with questions. So, here’s how you avoid that pitfall: Before you get into a consultative discussion with any new client, conduct a network assessment.

A network assessment typically entails loading software onto a prospect’s network and allowing the software to run — sometimes for up to a week — to gather data on every IT asset that’s connected to the prospect’s network. The end result of this is a report that gives you and your prospect the key talking points for your consultative discussion.

Not only does a network assessment get you and your clients out of the world of reactive IT (e.g.: “My server is full and I haven’t been able to back up my data for the past three days. Can you help me RIGHT AWAY?”), and it will also make it clearer to you where the cloud can help alleviate some of your client’s burdens. For example, maybe you discover that a client’s backups aren’t working properly. Instead of focusing the discussion only on fixing their local backup problem, take a couple of steps back and start the discussion about the value of the client’s data and the cost of downtime. It’s in this kind of environment where clients begin to understand that your company is more than just a company that fixes computers and IT equipment, but you’re a true business partner that has a real stake in helping protect their business.

• 80% of respondents are already using some sort of cloud storage. Of those who are currently using cloud, 37% are using the public cloud, 35% are using a private cloud, and 7% are using a hybrid of both public and private clouds.
• The study also revealed that within the next five years, 45% of respondents plan to use the public cloud for their businesses, 29% plan to use the private cloud, and 22% will implement hybrid cloud options.

I know that’s a lot of numbers to digest, but I don’t want you to miss a very significant statistic for the IT channel, which is that hybrid cloud adoption is going to triple over the next five years.

There are a couple of reasons this uptick in hybrid cloud adoption is so important. First, it speaks to your customers’ security fears when considering public-cloud-only options combined with the fact that private-only cloud options can sometimes be cost prohibitive. And second, deploying a hybrid cloud strategy is more complicated than a public-only or private-only strategy. Where there is more complexity, the channel becomes more relevant.

This is a great opportunity for managed services providers to consult with customers and help them create a plan to determine which applications and data can be housed in a public cloud and which assets need to be moved into a private cloud. Equally important and valuable to your customer is how well you can present them with a single user interface, so they don’t feel like they’re accessing their applications and files from multiple silos.

Knowing that hybrid cloud adoption is going to realize explosive growth over the next five years, start preparing your salespeople and technicians now, so they can start engaging with your customers about this topic right away.  By honing your hybrid cloud consulting skills now, you’ll be in a better position to prevent customers and prospects from cutting you out of their cloud IT plans and/or deploying cloud strategies that might compromise their data security and/or compliance with industry regulations. You’ll also put your company in a better position to grow by fulfilling the role of a trusted business advisor, which is what your customers need most.

For example, one of the MSPs shared that the reason her company purchased an on-premise PSA was for security reasons and that by keeping her customers’ data behind her company’s firewall it was much safer. Really, I wondered? You think your data is safer on your servers than it would be in a SAS 70- and/or SSAE 16-certified cloud data center?

Even one of the other MSPs that was using a SaaS-based PSA admitted that he didn’t put his customers’ most sensitive data in this system, but kept it instead in his on-premise SharePoint system.

If these MSPs have reservations about cloud security, you can bet that many of your customers have even greater cloud fears. I recall how one IT solutions provider overcame a customers’ cloud security concerns. It was a smart and practical move that I think more MSPs should consider. He drove his client to the co-location center where the client’s data would be stored. The client was impressed by the physical security measures the co-location facility had in place. After the MSP accompanied the client inside, the client was even more impressed by the size and quality of the servers the data center was using in addition to how clean and cool the environment was. The MSP shared with me that by the time the tour was over, the client said to him, “I’ve had this whole thing backwards. My data would be way safer here than it would ever be in my facility.”

If you’ve run into similar situations, perhaps a meeting with your client and co-location provider is in order. Or, maybe, like the MSPs I talked to recently, the security concerns aren’t coming from customers; rather, they’re your own fears. In that case, it’s imperative that you schedule a road trip to a private cloud data center ASAP and put those fears to rest.

Did you do it? No cheating. Once you’ve jotted down a few sentences, answer the following question: “Does my brand reflect what I’m saying?”

Ok, time to submit your homework and check the answers to see how you did. Let’s take a look at some of the main ways your brand is defined and conveyed:

1. Your website. How does the message on your homepage align with the cloud message you just wrote down? Would it be obvious to someone visiting your site that your company knows about the cloud and sells cloud solutions and services?

2. Your newsletter. If you send a physical newsletter and/or email newsletter, check out the last three and hone in on the cloud message you’re sending to customers and prospects.  Are you including customer success stories that highlight your cloud offering? How about thought leadership articles educating your audience about the cloud?

3. Your Social Media. Does your company have a Facebook page? LinkedIn? Twitter? A blog? How strong is your cloud messaging on these pages?

4. Your Salespeople. If you’re able to, it would be very valuable to hear a sampling of your salespeople’s interactions with customers and prospects to get a sense of how similar their cloud message is to what you just wrote down.

Hopefully, you can see from the examples above that if your brand isn’t getting your cloud message to your customers and prospects, it’s going to make selling cloud that much more difficult. After all, let’s face it, many of your customers are curious about the cloud, but they also have a lot of reservations. If they get the sense that you’re not a cloud expert, but just another IT company trying to sell them something they probably don’t need, they’re not going to want to engage with you on this discussion.

If, on the other hand, they start to associate your company as a cloud expert — because your brand consistently proves to them that you are — then (and only then) can you earn their trust, which is the first step in addressing their cloud questions and concerns with your cloud solutions.

I know an MSP who invested tens of thousands of dollars to start a private cloud company with several MSP peers. His thinking was that he wasn’t able to sell cloud solutions because he couldn’t overcome customers’ insecurities about the cloud unless he actually owned the cloud data center himself. I caught up with him a year later to ask him how things were going, and he confessed to me that he’s still not selling very many cloud solutions or services.

There are several factors behind why MSPs run into this problem, but here’s one key reason I’d like to suggest could be happening to you: Your salespeople don’t see the incentive to sell it.

Consider this example that Jason Bystrak, Ingram Micro’s director of sales shared with me recently, using the comparison of selling a 100-seat on-site Exchange server to a 100-seat hosted Exchange server . “When most salespeople contrast the lump-sum commission they could earn from an on-premise Exchange server sale, which in this example would be about $200, with a $40-per-monthly recurring commission they would earn selling Exchange in the cloud, they’re going to select the immediate payoff every time.”

You can invest time trying to convince salespeople that after five months their commissions will actually start to surpass what they would have earned on the old model, but that usually won’t move the motivation needle very much. What Bystrak suggests you need to do — and I can’t disagree with — is change your sales compensation model.

Here’s where you the business owner need to be focused on the long-term benefits of recurring revenue. If you’re really committed to capturing recurring revenue in the cloud, here’s what you do: When your salesperson sells a subscription-based cloud solution, pay your salesperson 12 months’ worth of monthly recurring revenue commissions upfront, but don’t pay them on the annuity. They’ll earn more than twice the commission than they would have earned selling an on-premise solution, and you’ll earn more than six times as much profit over a three year period.  Now, that’s a reward you and your salespeople should feel very motivated to strive for.

Gartner analyst Tiffani Bova really hit home this point last week at the Ingram Micro Cloud Summit event, where she shared some surprising statistics from Gartner’s latest research. As more and more businesses shift their focus from the enterprise systems of the back office (e.g. servers, routers, and switches) to front-office IT applications and services, the decision making process is moving out of IT’s hands to LOB (line of business) managers and business executives.

Don’t misunderstand: IT is still very involved with the process, but their role is becoming more about implementing and managing IT and less about making the decision as to which IT solutions and services their company should purchase. Exactly how much of the IT budget is moving outside the IT department you may ask? According to a Gartner study of more than 500 IT marketing managers based in the United States and Europe, 41% of spending on technology now comes from outside the IT department.

And, it’s important to realize that it isn’t just the decision makers (DMs) who are changing, the buying motivations of these new DMs is very different, too. According to Gartner’s Bova, these DMs’ biggest motivator is to acquire technology that can improve decision-making processes (e.g. business intelligence, analytics, and performance management applications). What that means for you and your sales team is that you’ll want to focus less on the specific features and functions of the latest hardware appliances and instead speak to the way your bundled IT offering can help transform their business processes. The goal you’re shooting for is to show them how you can help them do more with less — and operate their businesses even better than they did before.

The upside to this change in the IT buying decision making process is that if you don’t have it all figured out right now, it’s okay. IT still owns nearly 60% of the budget. That said, I think you’ll agree that it’s a no-brainer that if you want to have a shot at winning the other 40%, you’ll need to educate your sales team about this new reality and train and equip them to help keep your company relevant in the ever-changing world of IT.

The second message I have for you is this: The growing acceptance and adoption of cloud computing does not mean the channel is going way. It just means that for channel companies to continue to thrive, they’re going to have to adapt to change. For IT solutions providers that have already gone down the path of becoming managed services providers, this won’t be too big of a stretch for you — you’re already getting accustomed to change as the new norm.

To help you make that change, here are three common areas many of your SMB customers are struggling with that you should keep in mind as you engage them on the topic of the cloud and continue down the path toward making peace with this new way of doing business:

1. Your customers don’t understand the differences between public and private cloud. According to Citrix’ research, 80% of Fortune 500 companies are using unmanaged cloud storage for their corporate data. For your SMB customers, you can only imagine how much higher that percentage is. Not only does this create the threat of customers losing their valuable intellectual property, it could also put them at risk of not complying with industry mandates/regulations.
2. Cloud backup and cloud recovery are worlds apart. As you’re well aware, having data stored securely off-site is only half the equation. If it takes several days to perform a data restore from the cloud because of inadequate bandwidth and time spent building new servers, the cost of downtime could translate to hundreds of thousands of dollars in lost revenue for your customer. Discussing RTO (recovery time objective) is another area small businesses overlook when they move to the cloud without the help of a VAR/MSP.
3. Software problems are inevitable. This can occur even if the customer’s applications are running in a top-notch cloud data center. Sometimes an operating system update can cause problems with certain business applications, which is outside the cloud provider’s area of responsibility. SMBs that use VARs/MSPs to remotely monitor and manage their apps can often have their application problems fixed before they even realize there is a problem.

If you have fears about the cloud eating into your profit margins, hopefully this gives you some new ideas to help convince your clients about the importance of partnering with your company — whether they’re considering the cloud or not. By helping clients realize the potential pitfalls they could run into without your help, the cloud + you should make perfect mathematical (and business) sense.