CaaB drives momentum in Canada with differentiated business model

CaaB entered the Canadian IaaS market earlier this year, with a white-label offering aimed at smaller MSPs, and a business model that allows them to offer high margins for the industry.

Mor Mordchaev, Global Partnership Director at CaaB

Cloud-as-a-Business [CaaB] entered the Canadian Infrastructure-as-a-Service market late last year, and formally launched this spring, offering a portfolio of managed services that partners typically white label, and focusing on smaller businesses. While the market is already crowded, CaaB believes that they can provide a differentiated value for SMB-focused MSPs. They recently presented at the ASCII IT SMB Success Summit in Toronto and gave ChannelBuzz an update on their progress in this market.

CaaB is new to Canada, but not to the IaaS market. They have been around since 2001, as a part of the large Israeli-based OMC Group.

“The company was originally focused on distributing hardware in the middle east and building software,” said Mor Mordchaev, Global Partnership Director at CaaB. “Building software, we realized that there was an issue hosting, and that’s how we got into the infrastructure business. We started by establishing five data centres in Israel, then we moved into Europe, the U.S., Asia, and most recently, Canada.

CaaB’s new Toronto data centre is their thirteenth globally, and as with the others, CaaB partners with established co-location vendors for the data centre space.

“That’s a pretty common industry practice, because what we do is a very different business from real estate,” Mordchaev noted. “Equinix is our biggest partner, and accounts for 50 per cent of our data centres. We do run our own platforms, on our own software.”

The Canadian IaaS market has no shortage of providers, in Toronto in particular, but Mordchaev believes there is a space where CaaB’s value proposition will resonate.

“The market is crowded, but on the one hand, you have good providers who have limitations because they are regional, and then you have your large cloud providers,” he said. “There is an in-between space where we really fit well, and where we can make it possible for MSPs to make higher margins. Many MSPs who sell enterprise grade solutions are struggling. The pricing is complex, there is not a lot of support for partners, and small providers aren’t able to provide partners with full support or platform automation. We offer personal support, and that’s a differentiator for us. We create a place where we provide the right support, the right price with good margins, and the right performance. Before we onboard a new MSP, we give them access to a test environment where they can see our strong performance against other providers.”

Mordchaev said that multiple factors combine to make it possible for them to offer a more attractive pricing model to MSPs.

“There is a lot of confusion around pricing in the market,” he stated. “In some areas, it is very much a commodity and lower margin, but there are also services which are higher margin, and we can create margin off newer services like around Kubernetes. We are also 100 per cent channel driven, so there are no direct sales costs to support, and we are able to pass savings there to partners so they can create better margins for themselves.”

CaaB sees another major differentiator in their providing a fixed billing model rather than a utility-based one, taking the position that while utility-based pricing is seen a positive by providers who offer it, it’s not appropriate in all cases, and some customers don’t like it at all.

Miguel Ribeiro, one of the owners of Toronto-based VBS IT Services, which has a strong focus on smaller businesses in the adjacent Markham market, said that CaaB’s fixed-billing model is an asset with their customer base.

VBS IT Services’ Miguel Ribeiro

“We are a Microsoft partner, and we tried to sell Azure for years, but our customers didn’t want it,” Ribeiro noted. “There were too many uncertainties about pricing. The utility-based pricing model is based on how much you use it, and these customers had no idea how much they would use it. Many Canadian customers are uneasy about not knowing what their cost would be at the end of the month. CaaB is a fixed billing model, and  people like that because they feel confident they can afford it. It’s an enterprise solution, but is accessible for small business, which is what all small businesses are looking for in order to be competitive.”

Ribeiro also highlighted some particulars of the strong support that CaaB provides.

“With Microsoft and Azure, the support was good, but there was sometimes an issue getting the right person on the line to help us out, both when we were onboarding and then with ongoing support,” he said. “With CaaB, that has not been a challenge, and the support has been excellent.”

CaaB’s cloud-based Terminal server offering has been popular with Ribeiro’s customers.

“Many of our clients are running QuickBooks, and we can host that in a cloud server and use Terminal Server Remote Desktop sessions,” he indicated. CaaB offers a broad selection of services, including well known brands like Veeam.

“We also don’t limit MSPs to the companies that we work with,: Mordchaev said. “MSPs can bring in whatever solution they want, including ones like Datto who we aren’t working with today.

Ribeiro and Mordchaev were friends before the two companies partnered, and Mordchaev said that Ribeiro played an important role in getting CaaB off the ground in Canada.

“Mor reached out to me a couple of years ago, and told me about the company and that they wanted to get into the Canadian market,” Ribeiro explained. “We discussed how we could make that happen. I explained the market landscape here, and who his target market would be – people like myself and some of our competitors. I also recommended where they could raise their exposure, including IT conferences.”

The ASCII Toronto event, where CaaB was a sponsor and Mordchaev gave a keynote address, was the first such conference CaaB has attended in Canada.

“The ASCII event was important to us, particularly as we haven’t done much activity yet to expose us to the market in this way,” Mordchaev noted. “We have been expanding our partner base, but it has been through personal referrals.

CaaB is now up to 35 partners in Canada, and Mordchaev described their momentum as strong.

“When you do something different the market will always give you a chance,” he concluded. “I think there’s a massive gap in data centre services in the SMB community, and we hope to fill that gap.”

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