In 2012, MO-based MSP Computer St. Louis took the plunge and opened up its first datacenter in its home city.
It's regarded an unusual move at a time when several channel partners have shuttered datacenter facilities in the wake of increasing customer adoption of public and hybrid cloud.
But, for owner and CEO Seth Russell, a DIY approach to cloud has been a huge success. So much so, in 2016 the firm went on to open a second datacenter in Chicago in 2016 following high demand for its St. Louis site.
The decision is based on some bad experiences working with private cloud vendors, explained Russell, including what he described as a "total misalignment" between a client and a vendor on what was included at what price, the terms of the contract and issues regarding a restoration timeline for backup supplied through another vendor.
"We try not to rely on other vendors' clouds, and we don't even like to have the conversation with clients. We like to control everything ourselves, for a lot of reasons," he explains.
"We've had a couple of bad experiences with other people's clouds, so we like to control the client experience and be able to set expectations fully internally. And when there's an issue, we come up with the solution versus having to rely on someone else to get it right. So it's done well from a client experience standpoint, and from an internal capability standpoint."
Importantly, Russell noted that the conversation needs to happen early in the process with clients so that they know they will be dealing with the MSP's private cloud and not a vendor's public or hybrid offering. This conversation is never a difficult one, he said, and existing clients have been the main customers for this shift.
"The vast majority of our sales to our cloud have been through existing clients who've got aging infrastructure. Wherever it is, whether it's on premise or at a previous cloud provider that we inherited - and its life cycle is up and we need to get it upgraded to the latest version. We move it into our cloud, and there's no pushback at all."
Computer St. Louis' private cloud growth comes amid various studies showing significant growth in public cloud, along with a drop in datacenter spend. Forrester in late 2017 reported in its research that AWS, Google and Microsoft would account for 76 percent of all cloud platform spend in 2018, rising to 80 percent in 2020. Meanwhile, Gartner in January released its Gartner Market Databook, Q418 Update, which predicts datacenter spend to drop from 11.3 percent growth in 2018 to 4.2 percent growth in 2019 and -3.9 percent in 2020.
However, Russell said the MSP expects to see 25 to 30 percent growth in its private cloud practice this year, making it its second biggest revenue maker in terms of actual dollar amounts after the firm's longer-established IT managed services practice.
Other areas of the firm's "unique" make-up are a hosted voice platform and managed print services, all of which are set to see growth in 2019, Russell said.
"We're growing fairly well across the board. We're growing our IT managed services at a slower pace from a percentage standpoint, just because it's the biggest part of our business, so that's growing at about 15 percent year over year on average for us, but all our other areas are growing at higher, double-digit rates, probably in the 25 to 30 percent neighborhood."
The firm's IT managed services practice is set to bring in the most in terms of actual revenue, despite expecting only 15 percent growth, Russell said, but the private cloud gets the most attention and is "definitely the next biggest chunk".
An area that is set to be slightly more of a challenge in 2019 for Computer St. Louis is recruitment, with Russell noting that finding talent at the moment is difficult. He said the firm used to do almost all of its recruiting internally or through alumni, but now finds itself having to work with recruitment agencies to find new talent.
"I would say, 75 to 80 percent of our hires are coming from recruiting agencies, which obviously have a cost associated with them. It's not that we can't find talent when we need it, we can definitely find it, but it's much more expensive than it used to be," he said.
Computer St. Louis isn't alone in this challenge, Russell noted. He said that when speaking with peers on the subject, "everybody who's growing and actually trying to add staff and not either stagnate or go in the opposite direction is seeing the same problem".
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