Every Managed Service Provider is familiar with Microsoft Azure – after all, they’re a giant in the cloud computing space whose reputation is widespread! However, a critical point often overlooked is how ‘Microsoft Azure Is Killing Your MSP Profits’.
As a leading platform in cloud computing, Azure’s vast array of services and capabilities initially appeared as an opportunity for us to expand our offerings when we were an MSP. Its diverse range of solutions promised a new horizon of possibilities for our clients.
Yet, this venture into Azure was not as straightforward as anticipated. Our journey with Azure was filled with challenges, testing our resilience and adaptability in the cloud services market. Read on for several specific difficulties we faced with Azure, and how we eventually solved them.
- Pricing Challenges: The Initial Hurdle
Our first major hurdle, which highlighted the concern that ‘Microsoft Azure Is Killing Your MSP Profits,’ was Azure’s pricing. This revision incorporates the keyword phrase while maintaining the original message about the challenges posed by Azure’s pricing. Known for its high costs, Azure presented a significant barrier for many of our clients. The cost was simply too high, causing hesitation and resistance towards adopting our cloud.
These high price points were difficult to work with: the initial cost projections we made were often surpassed by what we quoted the customer. This discrepancy made it difficult for us to provide competitive quotes to our clients, leading to frustration on both sides.
In an attempt to make Azure’s pricing more appealing, we adjusted our margins down. However, this wasn’t a great solution either. Reducing our margins did lead to more competitive prices, but it also lowered our profits to the point where we didn’t make any money, so it didn’t make sense for us to offer it to our clients.
- Navigating Azure’s Complexity: Worth the Effort?
Azure’s complexity when trying to create a cloud environment for our customers was a significant obstacle that became quickly apparent when working with them. When trying to create an environment the options were cryptic and really didn’t make sense. Here are some examples to illustrate some of options Azure required you to understand and answer when trying to set up an environment:
- Choosing the right category (Compute optimized, general purpose, GPU, etc.) is necessary and was the first of many confusing steps, with each category having its own implications and cost structures with no clear explanation of what each one was.
- Selecting an instance type (A, B, F series, etc.) was equally confusing, as each type came with its specifications and pricing, again with no explanation. This added another layer of difficulty and complexity to the environment.
- Azure charges by the hour which is great for a company that needs that capability, but in the MSP space, most, if not all of our customers need to have access to their systems 24 hours a day, 7 days a week. This just added a layer of complexity to the billing process that was just not needed for our MSP.
- Choosing the right hard disk type and size is a must and you would think simple, but since Azure doesn’t size in GBs but rather GiBs, it added another layer of complexity to the environment and our billing.
- Azure also wanted you to estimate the number of transactional units and outbound data transfer types which is impossible to know even if your customer has been with you for many years. Again, another layer of complexity that should not be needed in our industry.
To drive this all home even further, all these difficulties led to the creation of companies like Nerdio, which exist solely to simplify Azure’s pricing and selection process – a testament to the system’s intricacy. We learned quickly that when needing cloud solutions, complexity is a sure-fire way to halt momentum.
- Unpredictable Billing: The Financial Rollercoaster
Dealing with Azure’s billing was like navigating through a storm. The costs were unpredictable, often fluctuating significantly because of how they bill for their services by charging for things like ingress and egress of data which changes with your customer daily, uptime, bandwidth and so on. We found that our customers did not like to receive different invoice amounts every month, so we tried to absorb these fluctuations by setting our prices very high, but that didn’t close many deals because the sell prices were just too high for our clients.
Our approach was reactive; we waited for the Azure bill, marked up our costs, and then billed the customer. This gave our customers a different invoice amounts every month which was difficult to explain to our customers and frustrating for them. It also strained our cash flow and operations because we had to pay Azure long before collecting monies from our customer. The billing became so complex that we had to hire additional staff, just to handle the billing.
- The Microsoft Factor: Support and Client Relations Challenges
Another point of contention was dealing with Microsoft. We’ve all had to deal with them and are aware of their support issues. Trying to communicate with non-US based support centers and trying to get to a technician that can help is frustrating. They also do not have an understanding of the MSP industry which added to our frustration. Every time we had to work on an issue, an explanation of exactly what we were doing and how things were set up was needed before even getting to the issue that initiated the support call. This resulted in long support calls for our technicians and resolution times that were just not acceptable to our clients.
Furthermore, Microsoft’s practice of reaching out directly to our customers created confusion and mistrust. This direct approach occasionally bypassed the MSP-client relationship, leading to scenarios where our clients received mixed messages or conflicting information. In some cases, they received advice or offers directly from Microsoft that were at odds with our strategies and solutions.
- The Diminishing Returns of Training
Developing in-house expertise in Azure’s systems was necessary because of the complexities of their environment. Azure’s environment is complex and management options constantly changed without notice. This led to frustration with our technicians when trying to perform a simple task that no longer had the same options as the previous day and caused us to constantly train and relearn their environment. It was not helpful when we had to scramble when trying to fix a simple problem in a timely manner just because we had to figure out what changed in the Azure environment before we could work on what the customer needed. This was frustrating for the technicians as well as the customers.
Conclusion: Embracing the Challenges with Azure
As you can tell, our journey with Microsoft Azure was anything but smooth sailing. The phrase ‘Microsoft Azure Is Killing Your MSP Profits’ resonates deeply with our experience. The shortcomings listed above led us to look elsewhere for our cloud services… or rather, led us to take control of our own cloud services! By distancing from Azure and addressing specific pain points we felt as an MSP, we adapted to provide the cloud services we wished we had instead of troubleshooting with Microsoft Azure.
If you’re still looking for the right cloud provider, reach out and I’ll be happy to consult with your MSP!
Additionally, check out our Cloud Academy for complementary resources and guidance tailored for MSPs looking to boost their MRR by offering the cloud.