Managed Services Becoming Commodity?

Recent moves by heavyweights Dell and Intel in the managed services market raise some questions about the market’s direction but, more importantly, add validity to a business model dismissed as hype not long ago.

Intel on April 8 launched its “white label” managed services offering, which includes hosted Exchange and Sharepoint components. A week earlier, Dell launched a pilot program to deliver managed services directly to customers, a move that is causing some anxiety in the channel about the vendor’s intentions despite its efforts in the past year to roll out an official channel program.

But Dell never denied it planned to have a direct managed services program, even as it prepared its channel strategy. In addition, the vendor is readying a MSP (managed services provider) certification initiative, the details of which Greg Davis, the vendor’s channel chief, said he will reveal before month’s end.

The Dell and Intel developments are significant because they indicate that these major vendors view the managed services model as a viable approach to the delivery of IT services. If these vendors put their marketing muscle behind raising awareness of the model among end users, they will make it easier for channel companies to promote it to their customers.

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The vendors’ validation of the model also is likely to provide an impetus for those solution providers that have stayed out of managed services to change their minds.

As a result of some stumbling blocks and misconceptions when managed services started gaining popularity a few years ago, many in the channel dismissed the model as hype. But despite the holdouts, the perception has slowly changed as more and more VARs and integrators adopt the model or in, some cases, embark on complete transformations to become MSPs.

Some of the VARs and integrators looking to add managed services to their offerings are doing so in reaction to requests from their customers. As word gets out that it’s possible to monitor and manage systems remotely around the clock, and that tasks such as backup and recovery can be handled remotely as well, end users start asking their solution providers about the topic.

Clinton Gatewood, vice president of corporate development at Zenith Infotech, a managed services platform vendor in Warrendale, Pa., said that has become a common reason for solution providers to sign up as partners with Zenith.

Gatewood and I did a Webcast on Sept. 9 about managed services myths versus reality, an archive file of which will be available shortly at the company’s Web site.

In preparing for the Webcast, Gatewood and I had a wide-ranging discussion about the evolution of managed services. When I brought up the concern among some in the managed services channel about Dell and other major vendors potentially commoditizing the remote monitoring component of the model, Gatewood argued that piece already is a commodity.

If he is right, that means providers that continue to hold out will find it harder and harder to adopt the model in a profitable way. And those already delivering the services will feel more pressure to differentiate themselves. They’ll have to be ever more intimate with their customers’ business needs and make sure they are addressing those needs and helping the customer use IT strategically.

So regardless the direction in which Dell, Intel and other big-name vendors take the managed services space, priority for the managed services provider will be to tailor services to the customer’s needs and deliver them efficiently and effectively. Telling customers that a provider can remotely monitor and manage their IT environments won’t be enough.

Pedro Pereira is editor of eWEEK Strategic Partner and a contributing editor for The Channel Insider. He can be reached at pedro.pereira@ziffdavisenterprise.com.