Magazine Article | September 15, 2015

Want Recurring Cloud Revenue? Develop A Killer App

By The Business Solutions Network

This small MSP-turned-ISV is projecting more than $1 million in revenue growth this year with even bigger growth potential the following year.

Prior to developing an app, Jerod Powell, founder and CEO of InfinIT Consulting, identified a common pain point among his customers, which he further validated was a widespread concern after researching social media forums.

Photo By Peter Samuels

Jerod Powell understands managed services. He knows, for example, that it is not about selling SharePoint subscriptions or disaster recovery as a service (DRaaS) — it is about selling a business transformation service. While that mindset is enough to put Powell’s company, InfinIT Consulting, in the minority of managed services providers (MSPs), there is something else equally important this founder and CEO has learned. If you want to differentiate your business from other channel companies reselling IT solutions and services, you need to develop and sell customized, cloud-based software.

The Decision To Become An ISV
If someone had suggested to Powell four years ago that he should become an ISV, he would not have given it much credence. However, circumstances over the past few years led him to that very conclusion. “We’ve always been consultative with our clients, trying to learn about their business challenges before recommending a solution, and that’s where we first started seeing a trend,” he says. “Organizations with 1,000+ Microsoft Office 365 users were having a difficult time managing shared contacts. The regular tool offered by Microsoft to solve the problem required IT admins to manually navigate screen to screen and write Windows PowerShell commands.”

Powell found further verification of his hunch online. “It was through researching LinkedIn Office 365 forums that we realized our customers’ business challenges were representative of a much larger group of companies. After digging into the problem further, we discovered that even though many partners had the skills to manually fix the problem by writing PowerShell commands, no one took the initiative.”

InfinIT Consulting’s blog brought further confirmation that the MSP was onto something. “Long before we identified this trend, we had written a blog titled, ‘How to Create Shared Contacts Lists in Office 365,’” he says. “Every month for three years it generated more clicks than any other article on our site. We originally thought the readers were consumers or small business owners who did not know how to set up shared contacts. But after we started getting calls from larger companies and schools, we realized it was a pain point for big businesses too, and that’s when we started seriously considering getting into the ISV business.”

The Risks And Rewards Of Becoming An ISV
A look at the 1 million+ applications available at the Android and Apple app stores is proof that lots of app developers want a piece of this lucrative and highly competitive market. “Early on, I had to contend with the recurring thought, ‘What happens if I invest all this time and money developing the perfect program and no one wants to buy it?’” says Powell. Another fear was what if he came out with a great app that businesses did want but one of his competitors stole his idea by copying the back-end code. “Aside from the GUI, it’s difficult to protect against someone copying the code,” he says.

Powell had enough data points to realize that the first fear was just the normal feeling that comes with taking risks and trying something new. To protect his company from piracy, however, he met with multiple intellectual property and patent attorneys and adopted a nondisclosure agreement [NDA], which provides at least some protection.

Once the above-mentioned fears were handled, there was just one more issue that needed to be addressed, which was where he was going to find the right application developers to build his first killer app — and hopefully more apps after that. “The market moves quickly, especially when the cloud is involved, and I knew I had to move quickly, or someone else was going to develop the same app before me,” says Powell.

“I knew I had to move quickly, or someone else was going to develop the same app before me.”

Jerod Powell, founder and CEO, InfinIT Consulting


After discovering that hiring an application developer in the San Francisco Bay area wasn’t going to work (thanks to the myriad of other tech companies in Silicon Valley), Powell knew he needed to find outsourced talent. “I knew I wanted developers with .NET and C-sharp programming skills, preferably with extensive REST (representational state transfer) API (application program interface) experience and ideally some expertise with Cortana Advanced Analytics, Microsoft’s machine learning language, which is designed for big data and IoT [Internet of Things] apps,” he says.

Through his network of peers and his own online research, Powell formed a list of 100 potential app developer candidates, and over the course of six months, he narrowed the list down to five. “After getting the final five, I assigned each company a different phase of the project, and I let them each know that they were participatingSubscribe to Business Solutions magazine in a competition with four other companies,” he says. “Looking back, I’m really glad I took that approach, as it enabled me to know which one was fastest, which one was most strategic, and which types of challenges each could handle. In the end, I kept all five of the finalists, and to this day, I work with each one depending on the specific programming need.”

One of the biggest lessons Powell learned from this experiment, too, was that the most expensive app developers are not always the best ones, and it definitely pays to shop around. Powell also learned to recognize cultural differences when working with programmers outside of the United States. “I recall one offshore firm that said ‘Yes’ to everything I asked them for, and when I finally needed them to get started on a project, they were forced to admit they couldn’t do what I needed them to do. They wasted six weeks of my time and forced me to have to start my search all over,” he says. “I quickly learned that that particular culture doesn’t like to say ‘No.’ I also learned that I had to validate each request to make sure the programmers could do what I was asking and that they were not just trying to be nice.”

A Killer App Needs A Killer Sales Strategy
In addition to developing his first app, Powell needed to figure out how to price and sell it. “Microsoft provides IP worksheets that helped us determine our costs, the margins we wanted to make, and ultimately the price we needed to charge,” he says. “It also made me realize that this was going to be a long-term commitment; once you’re in IP, you’re in it forever. Microsoft’s apps will change, and as a result, we will have to continually keep our applications updated to support our end customers.”

“We’re predicting 500 sign-ups per month and averaging $200 per person, which would add $100,000 every month in additional recurring revenue.”

Jerod Powell, founder and CEO, InfinIT Consulting

The MSP also received guidance from Microsoft about how to sell its new app. “We’re now part of a Microsoft ecosystem that includes 50 partners that evaluate and give feedback on our apps [all under NDA, of course],” says Powell. “And, if they like it, they can resell it, too.”

Ultimately, Powell wants to build a channel. “Really successful companies have a channel. Sky- Kick is a good example of the kind of company we want to emulate. They offer a service that solves a Microsoft-related business challenge, which in their case entails helping companies migrate their on-premises Microsoft Office products and data to the cloud. Their commitment to the channel has created a loyal following of IT solutions providers. In fact, we’ve looked at other companies that offered similar services as good as or better than SkyKick’s, but the fact that the others did not understand the channel made them far less appealing than SkyKick."

Powell is planning to make his company’s cloud management software available in a multitenant version for channel partners. Additionally, InfinIT Consulting is developing modules that will roll in other Microsoft products such as SharePoint, Skype for Business, and Azure Active Directory (AD).

Before the MSP-turned-ISV makes the next big transition and figures out the details of managing a channel while avoiding conflict with its direct sales, Powell says his biggest challenge is going to be managing what he calls “the whirlwind.” “We’ve been winning lots of business in the education market,” he says. “I started a conversation with one school administrator, and I had only gotten out two sentences about our InfinIT Cloud Manager for Office 365 product, and she said, ‘I’ll take it.’ We closed nine deals this week alone, and I’ve barely gotten any sleep — it’s been crazy.” In full disclosure, Powell shared that he has lost a couple of salespeople along the way because selling cloud solutions is not a fit for every salesperson. “Even though we’ve always prided ourselves on being consultative, some of our people had gotten in the habit of treating Office 365 sales like a product sale. I sat down with our team and told them, ‘We’re either moving forward, or we’re moving backwards — we’re not staying the same.’”

Following the talk, Powell discovered that over the previous year, 300 customers had purchased Office 365 through his company, but they were not being managed. “Since then we’ve gone back and discovered there were a lot of new business opportunities with those customers. We even hired a customer retention manager to ensure we’re not compromising customer satisfaction as we continue to transition and grow.”

InfinIT Consulting is currently developing additional apps, including an InfinIT Shared Contacts Mobility Sync app and a global signature manager app, which it expects to bring to market in the coming months. “Things have really taken off this year, and we’re predicting 500 sign-ups per month and averaging $200 per person, which would add $100,000 every month in additional recurring revenue,” says Powell. “As long as we continue focusing on the simple mission of improving customers’ lives through technology, I believe we’ll continue to grow. That is what led us to become an MSP five years ago, and it is what led us to become an ISV and cloud services provider focused on providing business transformation services.”