Why cloud has birthed a new breed of managed service provider

Has cloud spelled the end of managed services or created an opportunity worth exploring?

Johannesburg, 14 Oct 2019
Read time 3min 30sec

Ian Moyse, sales director Natterbox, Board Member Cloud Industry Forum, says according to a ‘Markets and Markets’ industry report, the managed services market is expected to reach $282 billion by 2023. And this is a space that’s been growing continually since its inception, years after it replaced the fledgling ASP (application services provider) era in the early 90s.

This is fuelled by the realisation that the core business focus and expertise of enterprises is no longer enough to keep the IT lights on and that third-parties are now tasked with ensuring the availability of IT services and that infrastructure provides far greater commercial and operational efficiency and productivity.

So has the cloud spelled the end of managed services?

Moyse says far from it. "Cloud-provisioned offerings have been one of the latest models to disrupt markets, business processes and channels. Cloud and hybrid-cloud delivery models are marginalising or removing the need for hardware infrastructure through a combination of SaaS, PaaS and IaaS packages."

As cloud providers grow in numbers, one would think the demand for MSPs (managed services providers) would have dwindled, as this part of the process is effectively being outsourced. However, widespread adoption of cloud multiple solutions is a double-edged sword. While it has the potential to solve many problems for organisations, it can also introduce a plethora of new issues and concerns.

Moyse adds that for example, moving to IaaS or PaaS with AWS, Azure or Google offers great flexibility and commercial advantage, but it requires platform-specific expertise and experience in order to ensure effective and secure usage. Due to the intense growth of these offerings, skilled experts who are well-versed in their use are in short supply, and hence demand a high price.

But MSPs have the ability to resource these skills, aggregating them across clients as demand requires to ensure clients get the best out of these new offerings in the most appropriate manner suited to their needs.

‘The subscription economy has finally infiltrated the IT world’

As businesses become increasingly familiar with the cloud as a delivery form model, they’re beginning to seek new ways to digest their technology costs. Almost gone are the days where a large CAPex up-front investment was followed by low annual maintenance fees and ad hoc consultancy engagement. Businesses are being drawn to consumption-based models and are looking for partners who can aggregate and move CAPex charges into an OPex spread ongoing cost. The subscription economy has finally infiltrated the IT world and, increasingly, IT leadership is being moved under the finance operation.

Cloud providers can individually move their technology areas into this form, with MSPs offering an additional layer of transformation for operational and skills needs.

Fortunately, heightened security measures have forced MSPs to toughen up. Another reason for the meteoric rise of MSPs is the business world’s need to achieve a higher diligence and mitigation on security than ever before. With the advent of GDPR (General Data Protection Regulation) and heightened customer awareness, security providers have come under extreme scrutiny and held to even higher accountability.

Moyse says that getting it wrong in 2019 spells a level of financial and reputational impact so high that C-suite leaders are going through great pains to avoid falling victim. Threats are growing, risks are greater, and damages are having a long-lasting impact – organisations now possess a much more pressing need to meet regulatory and legal compliances.

These shifts are thankfully leading to a refreshed outlook on MSP requirements, with customers demanding an offering beyond simply ‘keeping the lights on’ operational help. They’re now seeking partners who can help digitise, transform, innovate and protect as part of the MSP process.

The modern managed services provider needs the breadth and scale to accommodate this new mindset, bringing a new business-level transformational partnership to its clients.

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