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Is the Managed Service Provider (MSP) Business Outdated?

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 at 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.

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 have not had as much success as they had. According to MSP Alliance, a 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 has worked great and many MSPs have grown tremendously. For the majority however, it is a matter of staying on top of the game; to be able to continue to provide exemplary service to the customers so that they can continue to reap rewards from that relationship.

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 in its infancy, is the new choice that hundreds of businesses are making today. Not just large enterprises, but small businesses are also 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 battling a different problem. The challenge for MSPs with infrastructure investments is two-fold; filling it with their customers’ infrastructure and being able to offer more value than the company next door. This can range from providing automation of services, granularity in billing, agility, better customer response time, and so on.

Provisioning Automation & Billing Granularity in the Cloud A typical Managed Service Provider today is certified on various platforms, be it Microsoft Azure or Amazon Web Services. As a Microsoft driven MSP, for example, customers are being convinced to join the Azure revolution, add on Office 365 and a bunch of other complementary solutions for productivity, collaboration and other benefits. A severe challenge for these MSPs is the difficulty in breaking down a single charge statement from cloud providers into separate statements for individual customers and getting granularity in their billing process. Another challenge is automating the provisioning process. Presently almost all MSPs have a manual process of being able to say spin a new VM or configuring new infrastructure for a customer. Automating this process would be revolutionary, and many options to do this already exist.

What Should MSPs Do? The Managed Service Business is not a new model, however technologies that MSPs need to work with to get the 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 Cloud. The adoption of new technologies is key in being able to unlock this value. Today’s Managed Service Providers need to place the highest priority into learning about automating their business with a focus on value generating activities and initiatives. Embracing the new is the only path for MSPs that will lead to a stronger business than before.

About Powua Powua is a patented technology by Solgeniakhela that helps revolutionize the MSP industry by providing key features needed to successfully enable a Cloud based recurring revenue model through automation and an easy-to-use Cloud Management Platform. By using a consumption-based model, Powua provides a unique way of provisioning applications and services, monitoring their usage, and enabling a billing system with detailed statements of usage and chargeback functionality, to provide full visibility into the usage of any particular service. The platform offers: Automation of SaaS/PaaS/IaaS Cloud Provisioning, Metering & Monitoring Managed Service Providers can automate the process of moving their customers to the Cloud Self Service Customer Facing Storefront Customers are self-reliant and need less time on the phone with their tech team Monetization at Hardware or Software level Add multiple other SaaS/PaaS/IaaS offerings that can be monetized through Powua.

How it Works (from a user perspective) 1. Users go to the eStore to see which services are available and their respective consumption schedules. 2. User chooses the services needed and purchases a set amount of credits. 3. Powua automatically provisions the services 4. Through the console, the user controls and verifies the amount of credits used by the services selected.

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