'When we do something, we go all in'

As part of our Rising Stars report highlighting the most disruptive, most profitable and fastest-growing firms in the channel ANS CEO Paul Shannon talks to CRN about the VAR's reinvention as a cloud services provider

Cisco and NetApp partner ANS has spent the last 18 months reinventing itself as a public cloud migration specialist, working with AWS and Azure, and was highlighted as one of seven firms pushing the boundary in CRN's Rising Stars report.

ANS CEO Paul Shannon admitted it had been a painful transition but claimed that ANS' gross margins have ultimately been boosted by the move.

Partner: ANS

VAR 300 ranking: 60th

Pushing the boundary in: Public cloud reinvention

Most people will know you as a Cisco Gold partner, but you're now doing a lot of work with AWS and Azure. What prompted the change?

We first started looking in a fairly serious way at public cloud about five years ago. We're a mid-market MSP, so we're working with companies with 500 to 10,000 staff. We don't work with the huge blue chips that were going public cloud four years ago, and we don't work with small SMEs, some of which were also doing that. It was too early four years ago for the mid-market, but two years ago we could see Microsoft building some presence in the mid-market, and so was AWS, so we thought that this was what we wanted to do and what we want to be known for.

We go all in. We don't just say we're going to be a cloud company and then see what happens. When we said we're going to focus on cloud for X number of years, we went all in. So we spent a lot of money on training our existing staff to make sure they're cloud capable, and a lot of the staff wanted to go with us. They understood that having a hardware-only business wasn't going to be sustainable going forward, so we managed to take them on that journey.

How much retraining have you had to undergo?

We've got about 150 technical staff. Of those I would guess 100 of them have either done, have started or have a personal development plan related to public cloud. It's a huge portion. We have 275 staff and 100 of them have started retraining, and that doesn't include sales guys or our marketing team who've had to retrain in a completely new area of the market. If you add it all up, almost half of our business has had to be retrained in one way or another.

How much pain has that transition inflicted on ANS?

It's been really, really tough. When people ask me how it's been, I've been really candid with them. It's really tough to see something you've been making money out of - and you've been doing really well from for a long, long time - have its margins diminish because the market is changing. Then realising you've got to go all in on something completely new, not just for AWS, it's not like we've picked up on unified comms that people have been doing for years; public cloud is new for everyone.

Apart from people, the main challenge has been that, in the past when we sold what we've always sold, we've always been able to rely on anywhere between 60 and 70 per cent of our profitability in any particular financial year from existing customers. But this year and last year, a lot of that has come from new customer wins. Winning new customers is a lot harder than working with existing customers.

We've also had to retrain our contracts team, our finance team, and interact with our suppliers in a different way. We've had to change what we do on a day-to-day basis.

How does AWS measure up as a vendor partner?

They're easy to do business with. They're nowhere near as mature in the channel as some vendors, but that's understandable given that the channel model is essentially a company that has come from a direct-to-consumer retailer. They're recruiting people who have been working in the channel at established vendors for decades, so it won't take them very long to get that level of maturity.

Any of the most advanced programmes, or highest levels of accreditation with those partners, we'll be seeking to achieve them this coming financial year, if not earlier. So we definitely want to get on the Expert MSP for Azure programme, and we're in the midst of prepping for that.

How do you expect your public cloud assault to affect your financials?

Last financial year's focus was on winning new customers in public cloud and training our staff and get everyone to become a public cloud expert in their field. This year it's to push our relationship with those key partners further.

We're not announcing our numbers, but anecdotally we expect FY19 revenue to be broadly flat. We've seen the bottom of the revenue drop. Give or take a couple of million, I wouldn't expect it to be a significant drop in this coming financial year.

A link to the full Rising Stars report can be found here.

All the data from the Rising Stars report was drawn from VAR 300, which is available exclusively to CRN Essential subscribers.