Ah, Microsoft Office. The ultimate bait and switch of the IT channel. When the software that launched a thousand VARs in the 1990s evolved to the cloud offering Office 365 in 2010, it began devouring the very profit margins it had created in its on-premises days.
These days, O365 is somewhat of a necessary evil to most channel partners. There are more than 155 million Office 365 users worldwide, with more than 3 million users added every month. It’s become a ubiquitous mainstay of business applications, and that presents an irritating conundrum for resellers and managed service providers (MSPs). You can’t not offer it, but at a profit margin hovering around 15 percent, it’s hard to make money reselling it.
Lately, there’s been a lot of energy around ways to change that. There are O365-specific backup and disaster recovery solutions, for example, and many partners concoct a magic combination of Office 365, CRM, email protection and other basic services into a tidy bundle that’s higher margin with relatively low effort. But at the end of the day, it really boils down to two ways to monetize Office 365: Resell on volume or make money on tangential services.
So says Ned Bellavance, director of cloud solutions at tech consultancy and reseller Anexinet. The issue with the resale tactic is that in order to really make profit, you’ve got to move a crazy amount of licenses. It’s a volume play, and only larger MSPs can afford to chase the thin margins that come with being a volume cloud service provider (CSP). But if you’ve got the resources, it can be a nice little moneymaker, especially when you roll the Office 365 licensing into an existing MSP practice.
Read the full article at ChannelFutures.com