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Cloud Services Reduce Churn
Another reason CSPs cannot afford to miss the Cloud is that Cloud services fundamentally increase the average lifetime value of a customer. Let’s look at some internal data that shows the impact in churn rates among Small Business who use one service (web hosting) versus two services (web-hosting and email hosting):
In short, Small Businesses that subscribe to web hosting services and use the hosted email services as well remain a customer almost three times longer than if web hosting without email is consumed! Furthermore, this positive impact to churn scales, as additional Cloud services are added and bundled together.
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The key to success is managing a platform that is flexible, extensible, and rapidly enables the roll-out of new services. |
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The key to success for a CSP is managing a Cloud platform that is flexible, extensible, and rapidly enables the roll-out of new Cloud services. Just as automation is critical to profitability for traditional voice and data services, every possible aspect of purchasing, provisioning, billing, and self-service management for Cloud services should be automated. This is critical to keeping “book to bill” days low, support costs down, and being able to rapidly introduce new cloud services. Further automation ensures operational efficiency thereby creating the opportunity for higher margins.
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How to Rapidly Offer Cloud Services to Small Businesses
What is the best way for a CSP to rapidly get to market with Cloud services for Small Business? Developing a Cloud solution from the ground up and integrating into existing OSS/BSS systems is a multi-year project. Building and managing a shared environment for applications (multi-tenancy) along with authentication, security, billing, and payment system integration are all very extensive and expensive projects.
Implementing commercial off the shelf automation software designed for Cloud services that integrate with existing OSS/BSS systems is the fastest way to go to market. Given how rapidly things are evolving, time-to-market is THE critical decision making factor. This approach is also the most flexible, as a CSP will be able to adjust pricing and margins with the market, along with adding new cloud services.
Therefore, CSPs can rapidly and profitably get to market offering cloud services by deploying an open solution built on open multi-tenant standards, security, authentication and license tracking. Such a solution must:
- Offer a catalogue of SaaS applications
- Provide a flexible framework for easily adding new services and applications
- Enable the syndication or sell-through of external third party cloud services (eg, Microsoft BPOS).
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Cloud Services must be easy to consume for Small Businesses
The way Small Businesses consume technology in general, and particularly Cloud services, is very unique. Most of them do not care how it works so long as it works. To be successful, CSPs must make it incredibly simple for small businesses not just to subscribe to Cloud services but also modify and manage their services and applications at any time. Modifications could be to the existing Cloud services being subscribed to such as adding or deleting users or increasing storage capacity or this could mean adding new Cloud services to their subscription bundle.
The last thing a CSP wants to do is introduce existing support costs from small businesses that cause confusion or frustration with their Cloud services. This will destroy margins. The answer is providing an intuitive, self-service portal, or control panel, for small businesses to be able to easily manage the overwhelming majority of their needs.
The Future of Cloud Services for CSPs
Over the past few decades, communications have become ubiquitous. We no longer call a place, we call people. Cloud services take this trend to the next level. Documents, contacts, calendars, applications and other IT services are moving into the Cloud. CSPs that will be able to leverage their network assets, put the right Cloud automation systems in place, and aggressively target small businesses will be positioned for success in the years to come. After all, close to 40% of overall IT spend is coming from small businesses and this spend is moving the Cloud very quickly.
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