- July 13, 2016
- Catagory IT Service
MSPs and the Changing Face of Managed Cloud Services
Cloud computing services are changing business model fundamentals and Managed Services Providers need to adapt to keep up.
The biggest impact of the cloud on MSPs has been the shift in focus service providers have had to make from hardware supply, management and maintenance to services that give companies the same (and better) business performance and functionality, without depending on the same volume of physical infrastructure associated with the ‘old days’.
Services went the thinking, represented profit margin and survival; an MSP that relied solely on hardware sales and their slender profit margins would go the way of the dinosaur. In the first phase of cloud services adoption, client or customer sites retained a portion of infrastructure at their physical location with remote management. Today, the big push comes from fully-managed off-site cloud-based infrastructure, located in centralized in data centres.
And this is where the challenge for many MSPs lies. Data centre infrastructure doesn’t come cheap. Many MSPs have traditionally not been large enough to make the necessary investments in cloud infrastructure required to shift their own business model in to that of a competitive, service-centric provider. For the time being, the most price-competitive and comprehensive – and therefore attractive – MSPs have been those large enough, and with the financial standing, so own their own cloud infrastructure. The rest have few options but to repackage and resell cloud services with reduced profit margins to their larger competitors. It’s a tough task.
Brian Gernon, VP Sales at Supra ITS, a Canadian Managed Services Provider based in Mississauga, Ontario, believes one future threat may come in the form of technology and platform creators themselves. ‘It may be a way down the road, but I wouldn’t be surprised to be competing for business with the likes of Google, Apple, Microsoft and whoever turns out to be the next big thing,’ says Gernon.
‘These giant entities will have data–driven insights into the needs of businesses and other networked organisations, plus the resources and ability to develop the solutions which can then be folded into an overall offering. Going head to head with their managed cloud services might be a tough time for conventional MSPs, but we’ll also be adapting as the future unfolds, so there’s every reason to look at it positively,’ Gernon adds.
Gernon also points to a definitive difference between the two potential competitors. ‘It’s not ‘MPs’ - it’s MSPs, and the S stands for Service. The Microsofts and Googles of the world are always going to struggle with the real-time, real-people, business-to-business service levels and support that a dedicated company and team like ours can deliver.’
If there’s one thing that appears certain on the horizon for business technology and the managed services providers who work the land in between, it is that those who fail to recognise the evolving demands of businesses and opportunities ahead, may be consigned to little more than a place in history.