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Is the Managed Service Provider (MSP) Business Outdated? By @IanKhanLive | @CloudExpo #Cloud

MSPs today are at the crossroads of on premise vs cloud

Over the last few weeks I was fortunate to meet a large number of Managed Service Providers (MSPs) at two separate industry events in Toronto. At both these events, focused on MSPs, and through all my conversations, one thing that resonated throughout was the dire state in which Managed Service Providers are currently conducting business. I am sharing my thoughts to help make sense of what the industry is going through and how the inability to adapt can lead to the slow death of an otherwise highly successful industry.

Every year it costs North American businesses over $26 billion in downtime. Given the state of the economy and unstable economic times, over 46% firms have cut IT expenses last year. Moreover, reducing costs seems to be the priority of over 56% of business in North America in the coming year. With statistics like these it becomes imperative to look at options that will drive results for businesses and what role the Managed Service providers play.

MSPs Today
Managed Service Providers have traditionally driven a majority of their revenues from services. Yes, reselling solutions and products and upgrades has been key in making that happen, but had it not been for the hardware and software deployments, MSPs would not have had as much success as they had. According to MSP Alliance, an MSP-focused industry alliance, the estimated managed services revenue generated by cloud and MSPs in North America during 2014 was over $154 billion while an average MSP generated above $3.9 million per year. This number however does not reflect every MSP.

The Fight Between Legacy and Cloud
MSPs today are at the crossroads of on premise vs cloud. Until now, the MSP business model had worked great and many MSPs have grown tremendously. For the majority, however, it is a matter of staying on top of the game and to be able to continue to provide an exemplary service to the customers so that they can continue to reap rewards from that relationship.

At a completely different perspective, cloud is becoming the new norm for IT. According to IDC, public IT cloud services spending will be more than $107 billion in 2017. Cloud, although new, is the choice that hundreds of businesses are making today. Not just large enterprises, but also small businesses are moving to the cloud as newer technologies and platforms unleash a wave of productivity-related solutions in the market. Managed Service Providers who now have a cloud play are at least battling a different problem. The challenge with MSPs with investments in infrastructure is to fill that infrastructure with their customer infrastructure and to offer more value than the company next door. MSPs are now also challenged with the problem of being able to provide automation on services that they provide to their customers, granularity in billing, and of course, agility, better customer response time and so on.

Provisioning Automation and Billing Granularity In The Cloud
A typical Managed Service Provider today is certified on various platforms, such as Microsoft Azure or Amazon Web Services. Let's take the example of Azure-driven MSPs. As a Microsoft-driven MSP customers are being driven to join the Azure revolution, add on Office 365 and a bunch of other complimentary solutions that add productivity, collaboration and other benefits. A severe challenge for all MSPs offering Azure and AWS to customers is the ability to break the charge statement down and help customer get granularity in their billing process. Converting the single charge statement from cloud providers into separate charge statements for individual customers is a challenge. Another challenge is for MSPs to be able to offer automation around provisioning. Presently almost all MSPs have a manual work process of being able to spin a new VM or configure new infrastructure for a customer. Automating this process would be revolutionary, and many options to do this are available in the market today. These are some of the biggest hurdles in helping customers get on the cloud.

What Should MSPs Do?
The Managed Service Business is not a new model; however, technologies that MSPs need to work with to get best results are new. Cloud is transforming the way end users are using IT and MSPs are working on being able to help unlock more value for end users with the cloud. Definitely the adoption of new technologies is key to being able to unlock this value. Managed Service Providers today need to place the highest priority into learning about automating their business in order to place the highest value into value-generating activities and initiatives. Embracing the new is the only path for MSPs that will lead to a business stronger than before.

Check out the Solgenia Powua solution that offers an incredible opportunity for MSPs to automate the process of deploying and managing the Cloud for your customers. Enable recurring revenue, reduce costs through automation and grow your MSP business through the Cloud.

More Stories By Ian Khan

Ian Khan leads Innovation & Marketing initiatives at Solgenia, a global Cloud services provider with more than 3500 enterprise customers globally that includes Top Fortune 100 and Fortune 500 companies. An advocate of Cloud computing and a thought leader driving change within the industry, Ian is a catalyst for collaboration and Cloud solutions.

He has written for multiple industry publications, presented at various industry events worldwide, and brings more than 15 years of in depth technology experience across various industries.

Ian is a PMP Certified Project Manager, MCSE, and an Instrumentation Technology engineer.

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