Will SDI’s Rise Enhance MSP Profits?

On one hand, the rise of software-defined infrastructure (SDI) takes away from the channel. Instead of being able to count on revenue generated by integrating servers, storage and networking, a greater percentage of IT infrastructure is now pre-integrated. On the other side of that equation, the combination of SDI and hyperconverged infrastructure makes it much less expensive to provide higher-margin managed services.

Armughan Ahmad, vice president of global solutions and alliances for Dell, said that’s the guiding principle behind the company’s effort to deliver Dell Blueprints, a set of reference architectures optimized for specific classes of application workloads that channel partners can easily deploy. The goal, Ahmad said, is to reduce the operational costs associated with delivering managed IT services.

James Pilgrim, director of consultancy services for CGI, a Dell channel partner, said CGI is already seeing the benefits of this approach. While there was a time when CGI worked on a lot of technology integration projects for a given customer, turning a profit on those projects was always a challenge. Most customers are price-sensitive, Pilgrim explained. While they may demand a level of integration, they are not always willing to pay for it. Platforms such as the Dell Hybrid Cloud System take those integration costs out of the overall solution equation while reducing the total cost of IT labor associated with delivering a managed service because fewer IT specialists are required.

In terms of SDI and hyperconverged platform adoption, it’s still early. However, interest in SDI is running high. The question now isn’t so much whether IT will become more software-defined but to what degree it will. In fact, it may turn out that MSPs have a vested interest in leading that adoption in order to more profitability deliver a larger number of IT services at scale.

Meanwhile, channel partners would be well-advised to take a hard look at how profitable any given service they deliver actually is. While a particular service may generate a lot of up-front revenue, it may turn out that the cost of delivering that service makes it more trouble than it’s worth.

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.