The managed services profession has always been about evolution. Effective MSPs have always taken services which are no longer relevant (or less so than they were) and replaced them with services and solutions which are more effective, more relevant, and higher margin. This cycle of service delivery evolution is constant; it always takes place.
IaaS, like many managed services and technologies in the past, is fast becoming a commodity. One key indicator of this commoditization is that Amazon continues to drop its prices on its AWS platform with increasing regularity. So, why are there so many Infrastructure as a Service (IaaS) providers trying to aim their sights in the channel? Granted, IaaS is the foundation upon which many lucrative managed services offerings are built. Security, storage, business applications, are just a few examples of managed services that can be delivered using IaaS. But, what is the explanation of so many IaaS channel companies, and what does the future look like for these organizations and the MSPs they are targeting?
IaaS Outlook
IaaS is a critical solution, don't get me wrong. It's very important for MSPs who are not ready to do "cloud" themselves. For these MSPs, going to an Amazon, SoftLayer (IBM), or similar type of company, makes a lot of sense. Low cost of entry, no capital expense, and the infrastructure is generally managed on behalf of the MSP. It's a necessary component to get started in cloud computing.
As crucial as IaaS is to MSPs, it is undeniably getting commoditized. Case in point, Rackspace. When Rackspace decided it was no longer going to be competing in the IaaS space, it should signal a big red flag for smaller IaaS providers about the long term benefits of this business model. You could argue that Rackspace simply did not want to compete against Amazon and SoftLayer, and you would probably be right. But, it still should serve as an important case study for all other IaaS companies, particularly those who are channel focused.
IaaS as a Channel Offering
If Rackspace leaving the IaaS business isn't proof enough, then let's turn our attention to the overall business strategy of channel focused IaaS. Similar to how the "master MSPs" reached the height of their prominence during the mid 200s, only to become virtually extinct today, IaaS is also trending down the same path. What made Master MSPs so popular is the same as what caused IaaS to become popular. MSPs need a service, the cost of entry (both monetary and other resources) was too great, so they decided to partner instead of build.
For the Iaas or Master MSP, the problem with this business model is that the channel MSP organization that needs the service is on the upswing of their maturity. Put differently, MSPs most likely to respond to a IaaS offering will be those MSPs who have not yet built their cloud solution completely. The problem with this model becomes apparent when the MSP matures and decides (as they all do if they are really maturing) that they can deliver the service (IaaS, or whatever it may be) more cost effectively, with higher assurance, more flexibility, etc., than the Master MSP. Eventually, the pupil becomes the Master and leaves.
