Can MSPs Beat The Cloud?

Earlier this year, Sonian commissioned a study which found that 79% of managed service providers believed their greatest threat comes from other cloud providers. Compare this with 2011 when only 50% of MSPs viewed other cloud providers as threats and you can see where we are headed.

Is this fear warranted, though? Let’s take a closer look.

Evolution of MSPs

Looking back over 25 years you can chart a distinct evolutionary path successful MSPs have taken. I say successful because those who failed to evolve are no longer in business. The path starts from basic monitoring and management, and adds new service capabilities such as backup, security solutions, patching, voice, virtualization, etc.

MSPs who survived over throughout these years did so by adapting their service capabilities. Often, these changes would occur on an annual basis, requiring almost constant engineering and business planning on the part of the MSP, all in an attempt to remain relevant.

The age of cloud has brought another evolutionary inflection point for MSPs and it is time again to either change or wither away.

MSP Options in the Cloud

As the above mentioned study suggests, MSPs are already fearful of the cloud as a source of competition. Assuming this fear is real, what can be done about it?

MSPs really have two options when it comes to cloud: either embrace cloud or go around it.

Embrace the Cloud

MSPs who meet the cloud head on and look at it like any other disruptive technology do not fear cloud computing but instead embrace it for what it is and realize what it is not, which is a fancy way of saying acknowledge the limitations of cloud computing.

MSPs embracing the cloud can resell, which is not very innovative nor is it a long term strategy. MSPs can still develop very lucrative businesses around cloud consulting, application monitoring and management, and even the traditional managed service offerings applied to cloud objects. For these MSPs, cloud is nothing new, it’s just someone else’s computer and monitoring/management objects residing in remote places is what MSPs have been doing since the beginning.

Go Around The Cloud

When I say go around the cloud I mean take the path less traveled and develop a service offering which is not completely reliant on cloud providers. What do I mean?

Some of the really thriving MSPs today are those with developed private or hybrid cloud offerings. These MSPs acknowledge cloud, but also that it has serious flaws. These flaws must be addressed or else the MSP and their client will be at the mercy of the cloud providers.

Private and hybrid cloud offerings can include nearly everything a legacy MSP would provide, just in a slightly different way. For example, instead of building a backup solution which is 100% cloud based, maybe you add in a few localized backup options for customers. You charge more for more options and arguably better performance. The same can be true for hosting applications, servers, firewalls, etc.

There are many ways MSPs can come to grips with the cloud, besides putting our collective heads in the sand. Cloud represents disruptive change. The question is will MSPs adapt or be disrupted?

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4 Responses to Can MSPs Beat The Cloud?

  1. Joanie says:

    It isn’t unreasonable for MSPs to fear the cloud a little bit. The market is compressing and the channels are converging, so differentiation isn’t as easily created as it once was. Guys who sell phone systems are in the same business as the MSPs these days, offering “cloud” solutions along with telco and voice. Cloud could mean co-location, hosted PBX, hosted email services… cloud is the universal “value add” because it can encompass so many things. Datacenters want to be where the action is, carriers want to provide the access, channel agents want to resell all that stuff, and the MSP is often the guy at the end of the food chain supporting it all. Ultimately, it is quite difficult to tell who has the greater influence with the customer. For MSPs, embracing cloud technologies and services in some manner should be viewed as a business imperative, else they’ll lose out to the phone vendors and SaaS solution providers the customer is almost certainly also engaged with.

  2. medhahosting says:

    Cloud was there in market before MSP, Cloud we called them as hosting. So cloud is not new thing .The only things changed now is billing part ,earlier we had monthly billings now per second billing.That’s all the difference when we can co exists from last 25 to 30 years we will travel along with cloud .
    This is my personal opinion.

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