Consultants and cloud computing: The bottom line is it’s tough on the bottom line

Everybody in the tech world talks about disruption as if it’s always a good thing. Of course, it feels a bit different if yours is the business being disrupted. One group of individuals who have experienced a significant amount of disruption in recent years are those who work in small business IT consulting and system integration. The source, of course, for most of the disruption they’ve been experienced is the push toward cloud computing.

I personally know of at least three small business IT consultants who have hung up their spurs and moved on to other careers, and the reasons they give for doing this seem to be twofold. First, while IT has always been a rapidly changing field, change seems to have picked up speed considerably with the move toward cloud computing. With change of course comes additional stress — the stress of learning new skills and the stress of retooling your business — and for some consultants (particularly those with 15-plus years of experience) the motivation to learn and the amount of work involved in retooling just seems too high a bar to try to leap over just to keep running their business.

The second consideration that I’ve heard from them that has led them to leave the small business IT consulting area is that the margins for earning are too small with cloud computing for them to continue to make a decent living. Only one small business IT consultant I know personally is making a good living helping small businesses move to the cloud, and he’s a young aggressive guy who has only been in the IT field for a couple of years. All of my more experienced small business IT consultant colleagues who are still working in the field are finding it increasingly difficult to make good money selling, configuring, and maintaining cloud services for their customers. Some are even trying to scare customers off from the cloud by trumpeting the security/privacy risks of migrating their on-premises infrastructures entirely to the cloud. I actually think they’re right about this and that a hybrid approach (on-premises plus cloud) is perhaps the best approach for most smaller businesses, but that’s another matter.

Finally, while few small businesses would consider purchasing their own server system and then configuring and maintaining it on-premises without the help of an IT expert (either on staff or as a consultant), it seems that more and more small business owners are beginning to view IT as a commodity they can rent and utilize with little or no expert help, and it’s the cloud (or at least the hype surrounding the cloud) that seems to be giving them this impression. Whether it’s a true impression or a misleading one is beside the point however because the impression of “no setup required” and “turnkey cloud services” is be becoming increasingly widespread in the world of IT solutions marketing.

On the other hand…

cloud computing

On the other hand, I’ve talked with several consultants who work primarily with small and midsized businesses who are making a pretty good living off of the cloud. One of these colleagues who I often keep in touch as he keeps his finger on the pulse of the consulting world is Andrew S. Baker, the president and founder of BrainWave Consulting Co., which provides cybersecurity and technology consulting services for small and medium-sized businesses. When I asked Andrew some time back for his opinions on how cloud computing has been affecting his own business and career, he thoughtfully replied as follows:

“My personal take on cloud computing is that it is viable for a considerable number of businesses and that embracing it is beneficial to technologists — particularly consultants. I cater to the SMB market, primarily, and I’ve found that it is easier to get customers to make use of a cloud service that provides a function they need vs. getting them to make a similar investment in an on-premises solution. It is also easier for them to size cloud infrastructure than it is for them to accept the sizing of on-premises solutions (in many cases).

Yes, there is a small loss of maintenance revenue that can come with managing physical, local infrastructure, but this is offset for me by more frequent implementation and migration revenue, and by having a buffer between myself and the delivery of services. At this point, however, I’d much rather manage the cloud vendor relationship — even if only during support issues — than have to manage all of the moving parts of a given infrastructure. The bigger margin doesn’t equate to the much bigger headache. The appropriate use of cloud computing also helps to minimize some of the concerns about a technologist having to maintain in-depth knowledge of every single piece of hardware or software they might touch.

Not going away

Not everything belongs in the cloud today, and not everyone is going to like the new model, but it’s nothing more than the ongoing maturation of mainframe terminals — > client/server — > web computing. It’s not going away anytime soon. It’s not for everyone, but it could work for many if they gave it some consideration. It has allowed me to focus on more strategy and long-term technology direction, rather than get too invested in each specific technology decision.”

I think Andrew hit it on the head when he weighed the loss of maintenance revenue against the added migration revenue and the buffer that cloud computing places between himself and the customer. In the end, it’s really about reallocating your time and energy as a consultant to match the changes in your potential revenue streams. And I don’t know about you, but business challenges like that excite me and energize me instead of draining me. Finding new and better ways to earn money as a consultant or other independent IT pro is a creative endeavor that can be highly satisfying — as long as you can still pay the bills.

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