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At a time when many organizations have higher expectations than ever regarding their IT investments, the divide between internal IT organizations and managed service providers is finally coming to a head.

Historically, internal IT organizations often as a last resort begrudgingly agreed to outsource to an MSP areas beyond their ken—including IT security or lower-level IT services, such as backup and recovery. If the MSP wanted to deliver anything more complex, it often had to go around IT by selling directly to a line-of-business executive.

However, in an age when internal IT organizations are under pressure to drive digital business transformation using cloud services, the relationship between internal IT organizations and MSPs is evolving rapidly. Instead of viewing MSPs as a threat to their existence, more internal IT organizations are counting on MSP expertise to help them orchestrate all these services. This IT service integration is becoming a key part of the MSP’s role.

In fact, a recent survey of 397 IT professionals in the United States and the United Kingdom conducted by market research firm Vanson Bourne on behalf of IT service provider Sungard Availability Services finds that nearly three-fourths of the respondents report bringing in additional external support to implement cloud solutions.

At the same time, many IT organizations are investing in private clouds that are not only finally becoming easier to build, but they also make use of software-defined infrastructure that makes data centers more accessible for the MSP to manage remotely.

Arguably, MSPs have been orchestrating a mix of IT services they developed alongside additional services they resell for years. In the age of the cloud, that mix of services is changing noticeably. With more services available in the cloud than ever, many MSPs don’t have to invest nearly as much in data centers to deliver managed services. Instead, they invoke an API that most cloud service providers (CSPs) routinely expose.

MSP Services Mix: How It’s Evolving

In fact, a new survey of 101 channel partners in the United States released by Nintex, a provider of workflow automation software, finds that 72 percent of them not only expect their managed services business to increase, 38 percent are estimating half or more of their services will be delivered via the cloud. The challenge that MSPs face in realizing that potential is building practice areas to support new technologies (48 percent) and then hiring the right talent (45 percent) to support it. More than half (53 percent) also report they are also seeing an increase in their IP/custom app development business.

Josh Waldo, vice president of partner strategy and programs at Nintex, said many MSPs are clearly re-engineering their business models to stay relevant. “A lot of these MSPs are either born of the cloud or rebuilding their business models,” Waldo said. “At the same time, the IT department is trying to figure out its place.”

In fact, Mike Crane, executive vice president for Five9, a provider of a contact management center that is delivered as a cloud service, said his services organization now routinely sees IT organizations working more hand-in-glove with his company’s partners.

“It removes a lot of the overhead for the internal IT organization,” Crane said. “They can focus now more on the overall architecture.”