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Managed Services Thrive in the Cloud Era

By Michael Vizard Conventional wisdom held that cloud computing would lead to a centralization of IT resources in a way that would ultimately lead to the demise of managed services. Instead, we’ve seen an explosion in complexity that is about to create more demand for managed services than ever before. The major issue customers are […]

Written By: Michael Vizard

Jul 18, 2013

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By Michael Vizard

Conventional wisdom held that cloud computing would lead to a centralization of IT resources in a way that would ultimately lead to the demise of managed services. Instead, we’ve seen an explosion in complexity that is about to create more demand for managed services than ever before.

The major issue customers are grappling with today is that the cloud introduces another tier of computing that needs to be managed alongside on-premise servers and desktops. BYOD and the incursion of mobile computing devices into the enterprise have added even more complexity to the IT environment.

“We’re adding a whole new layer of complexity to the existing IT environment,” said Jeff Kaplan, president of ThinkStrategies, an IT consulting firm focused on the cloud and software-as-a-service (SaaS) applications.

Of course, some customers are looking to move all those tiers of computing into the cloud. But even in those situations, not all classes of application workloads run equally well in the same cloud, resulting in multiple cloud services that need to holistically managed.

To make things even more challenging, customers are realizing that being overly dependent on a single cloud provider can present significant disaster recovery issues should that provider experience an outage.

What’s not yet clear is what type of managed services provider is best positioned to take advantage of this opportunity. For example, there are well-established solution providers such as SoftServe that can expand the scope of their business by extending their MSP portfolio.

“Cloud computing is an opportunity for MSPs to triple the size of their business,” said Russ Hertzberg, vice president of technology solutions for SoftServe.

In addition, cloud computing has resulted in new classes of solution providers. For example, 2^nd Watch was specifically founded to help organizations manage Amazon Web Services (AWS). According to Jeff Aden, 2^nd Watch’s president, customers are hiring the company to develop tools to manage AWS deployments and to administer those deployments.

Aden said there’s a need for service providers that grew out of the cloud because managing clouds effectively requires a significantly different approach than traditional IT. “Best practices in the cloud require a different tool set,” he added.

The demand for managed services is expected to increase rapidly in the age of the cloud, so it’s likely that both kinds of MSPs will succeed. Cloud services providers are going to be increasingly dependent on channel partners to bring their services to market because the partners own the relationships with the customers.

“It’s the channel partner that usually has the knowledge of a specific industry or region that the cloud service provider needs,” said Kaplan of ThinkStrategies. “Most of the cloud service providers can’t afford to develop that kind of expertise.”

The challenge, of course, is that a lot of channel partners are already running out of time to make the shift to the cloud. In fact, many of them are addicted to business models that depend on selling on-premise equipment that generates more immediate revenue than a three-year cloud services contract does. Ultimately, however, that traditional model is not as profitable.

“Unlike previous transitions, the move to the cloud is going to be a lot shorter and more violent,” said Andy Banks, vice president of the data center practice for the global distributor Westcon Group.

What remains to be seen is how many channel partners will survive that transition and how many will be usurped by a new generation of service providers that are unencumbered by business models from what is looking like a bygone era.

Michael Vizard

Michael Vizard is a seasoned IT journalist, with nearly 30 years of experience writing and editing about enterprise IT issues. He is a writer for publications including Programmableweb, IT Business Edge, CIOinsight, Channel Insider and UBM Tech. He formerly was editorial director for Ziff-Davis Enterprise, where he launched the company’s custom content division, and has also served as editor in chief for CRN and InfoWorld. He also has held editorial positions at PC Week, Computerworld and Digital Review.

Managed Services Thrive in the Cloud Era

Michael Vizard

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