The Future of IT Services

Historically providing IT services has always been a business where the cost of labor was fairly high. But as IT continues to evolve it’s apparent that as the devices become more instrumented the easier it’s becoming to automate the IT services process.

The latest case in point is Nexsan, a provider of storage systems that has rolled out a new Nexsan Concierge managed service through which Nexsan proactively services its storage equipment. Where once a solution provider dispatch a technician a couple of times a year to optimize the performance of a Nexsan storage system that function can now be handled remotely by Nexsan over the Web.

According to Nexsan COO Rik Mussman, Nexsan is charging customers a premium for a Concierge service that is sold through its channel partners. In that context, Mussman says the existence of the Nexsan Concierge service should allow solution providers to invest less in expensive field technicians, which in turn would mean that the Nexsan Concierge service is going to be a more profitable approach to IT services.

There’s no doubt that reducing the cost of labor associated with delivering IT services is a good thing for the channel in the short term. But it’s not at all clear that customers are going to want to pay extra for automated services that are delivered via the Web. It won’t take long for many of them to figure out that total cost of ownership associated with IT is about to drop substantially. Once they do become aware of that they are going to start asking some tough questions about why savings on IT services are not being passed along to them.

Of course, the cost of the Nexsan Concierge service, for example, is probably less than the cost of sending a technician on site, so at least initially solution providers will have some wiggle room on IT services pricing. But over the longer term the laws of diminishing returns are likely to apply to IT services as much as they do to the product, especially when vendors decide that bundling the automated IT services is now a standard part of the cost of getting the business in the first place.

Longer term, Mussman says it’s not clear in the age of the cloud how IT services will be ultimately delivered. Nexsan, for example, is working on standardizing the instrumentation across all it products in order to make them easier to manage via the cloud. But whether that’s going to a capability delivered by Nexsan, a third-party cloud provider or some vendor invoking the remote management capabilities provided via a Nexsan application programming interface remains to be seen. Chances are that some variation of all three models is likely to be in vogue at any given time.

The automation of IT services is going to have a profound impact across the channel, ranging from the amount of profit and revenue a solution provider generates to who is actually delivering the service. As is often the case with any major IT disruption, the higher up the application stack solution providers go the safer the ground will become.