The growing popularity for MSPs

I am doing some research for a story for the New York Times on managed service providers and while I haven’t finished am finding out some interesting trends that I thought I would share with you. The idea behind MSPs isn’t new — we have been talking about it in the trades for at least a decade. But I think this year we will see a confluence of factors that will drive many VARs towards expanding their managed offerings. The reasons have to do with the following trends:

– More bandwidth for less money means servers can be on the other side of the world and users can connect without noticeable delays or network latency issues. This means that proximity to your customer’s data center is irrelevant.

– Increasingly better and more capable remote management tools mean that VARs can deliver higher reliability and quality of service, making MSP offerings more cost-effective.

– Corporate data center managers want better disaster recovery options especially since 9/11.

– Sharing inbound customer Internet access to corporate servers with outbound employee’s Web surfing can clog the ISP pipes, so corporations are moving these servers to MSPs to offload their connectivity.

– Increasing numbers of consultants who have better expertise in managing off site data centers and understand the issues. Having lots of IT layoffs over the past decade has increased this talent pool.

– The traditional access-only ISP market has dried up and has evolved into selling more sophisticated and profitable services and applications hosting.

– Tighter integration of the Internet with overall IT applications, requiring more sophisticated configuration and management.

– More security-aware applications that require more expertise to manage them.

– Lower hardware margins have driven VARs to look for recurring revenue streams that monthly MSP service contracts can provide.

– More complex compliance regulations that require offsite storage of critical records.

And with fewer internal IT staff to do all of the above means that corporate IT shops have to find someone that can help deliver all of these services, driving demand for MSPs up.