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For the most part, IT service providers are not so different from the average IT organization. Over time, a large number of IT silos that are optimized for specific classes of application workloads have sprung up for one reason or another.

The problem is that each of these silos requires the service provider to dedicate individuals with specific levels of expertise to manage them. The end result is a total cost of computing that creates both capital and operating expenses that would otherwise go directly to the bottom line of the IT service provider.

IT service providers of all sizes would do well to take note of what Saudi Telecom Company (STC) is up to with the OpenStack cloud management framework. Rather than committing to using OpenStack to manage “cloud native” applications and next-generation network-functions virtualization (NFV) software, STC plans to transform its IT operations using a common OpenStack framework based on a commercial distribution of the technology from Mirantis.

Boris Renski, chief marketing officer for Mirantis, said that means that in time everything from backend billing services to the platforms used to deliver the managed services themselves will be based on OpenStack. In effect, rather than continuing to make additions to their IT house, STC is drawing a line in the proverbial sand where it plans to construct an entirely new IT house that is less expensive to manage.

That same issue is now about to confront just about every other managed service provider. MSPs today operate on razor-thin margins. Given the level of competition in the managed service provider market, MSPs can’t afford to be inefficient from an IT perspective.

It’s clear they need to put strategic plans in place that will enable them to remain profitable on the assumption that any ability they will have to influence pricing will be negligible. In fact, now that competition in the managed service provider space is increasingly global, MSPs need to start streamlining operations today if they ever hope to be around tomorrow.

OpenStack may not be the right choice for every IT service provider, but given the level of technical expertise most MSPs have at their disposal, the cost of open-source software at the very least creates an attractive place from which to get started.

Michael Vizard has been covering IT issues in the enterprise for more than 25 years as an editor and columnist for publications such as InfoWorld, eWEEK, Baseline, CRN, ComputerWorld and Digital Review.