Multi-Cloud Opportunity for Providers
VMware Cloud partners seek to deliver unique value through regional data centers, compliance with local regulations, language and currency support, as well as value-add managed services. In a multi-cloud world, however, customers require more. They want global availability and additional services and scale that is typically found in hyperscale public cloud portfolios. The VMware Multi-Cloud strategy provides our partners with a large opportunity to address these customer needs.
In our new white paper, we focus on these multi-cloud use-cases, subscription business models and solutions. All this can be enabled through the VMware Partner Connect Cloud Provider and Managed Service Provider models. The approach we describe is intended as a guide for partners to offer new services. And on a proven platform that is innovative and competitively priced. The paper looks at financial metrics for subscription businesses, incremental growth and value delivered through multi-cloud offerings in cooperation with hyperscale public clouds like Amazon Web Services, Microsoft Azure and Google Cloud Platform. It puts emphasis on financials and economics of an operational expenditure (OpEx) and Software-as-a-Service (SaaS) strategy, versus a capital investment (CapEx), asset-heavy strategy with rental software models.
The Subscription Business Model
As a SaaS consumer in the VMware MSP model, VMware Cloud Providers building on a partially asset-light model can enjoy similar benefits as their subscription customers. In an asset-heavy sales business, key metrics are usually ROI and EBITDA, both describing the financial performance of assets and investments. These metrics are negatively impacted by high customer churn leading to lower customer lifetime value. Moving to an asset-light SaaS model on the supply side can mitigate the negative impact on performance from churn by reducing potentially sunk upfront investments. This shift also makes traditional financial KPIs like ROI and EBITDA less meaningful. Instead, the Customer Acquisition Costs (CAC) and Time to Recover CAC, among others, shift into focus:
Based on the example calculations used in our new white paper, we show that building an IaaS business on VMware hyperscale services can lead to rapid growth, instant positive cash flow and generate margins of up to 30 percent, even on a globally distributed cloud platform.
We cover the following Multi-Cloud use-cases, that our partners can address:
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This white paper uses a hypothetical VMware Cloud Provider partner, which comes from an infrastructure hosting business limited to one region. They want to significantly increase revenue from 3.3 to above 8.7 million USD annually by pursuing two strategic objectives. First, offer a very competitive platform for commodity and price sensitive workloads, which is already in place. And second, add standardized and scalable cloud migration, global data center expansion and application modernization services.
Do you want to learn more and get started with building a compelling multi-cloud and subscription provider business? Download the new white paper on Partner Connect.
This white paper is part of the “Building a compelling Cloud Provider Business” – White Paper Series: