MSP-Internal IT Relationship: How It's Changing

By Michael Vizard
MSP relationships

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."

As a result of these changes, even IT vendors that created a business model predicated on selling direct to end users are now reaching out to the channel. Bedrock Data, a provider of data integration tools for end users delivered via the cloud, announced a partnership with Trujay Group, a consulting firm that specialized in systems integration.

"Trujay has a lot of best practices expertise in the area of master data management," said Bedrock CEO John Marcus. "We'll be evaluating future partnerships on a case-by-case basis."

MSPs to Deliver More IT Services

As macrotrends—including the cloud, hyperconvergence, shadow IT spending, software-defined infrastructure—start to converge, IT organizations will be forced to embrace MSPs because line-of-business executives continue to become more comfortable with contracting IT services on their own, said Diane Krakora, CEO of PartnerPath, a channel consulting firm. This will have an impact on IT's role.

"The IT department has to find a way to stay involved," Krakora said. "Otherwise, the business unit is going to go straight to the MSP to solve their problem."

In fact, it may not be long before more IT services are delivered by external MSPs than the internal IT department. A recent report from CompTIA found that more than half the 200,000 new technology jobs created in 2015 came from the IT services sector. Much of that future growth won't just involve MSPs managing IT services; entire processes will increasingly be outsourced to the MSP.

As such, the real challenge going forward is finding a way to make sure that the traditional tensions that have always existed between MSPs and internal IT organizations get reduced in a way that winds up delivering something that is much greater than the sum of the parts.

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.


This article was originally published on 2016-03-24