The Future of MSPs Lies in Adding Value to Cloud Services


Managed Service Providers (MSPs) spent the last decade or so making a major transformation ― moving from a focus on break/fix to true managed services ― and at the same expanding their list of offerings to become more complete providers.

Now they are going through an arguably even more significant change ― becoming cloud leaders to the SMB market.  To do this effectively, MSPs also need to work with clients on a higher level by acting as a trusted advisor and even offering Virtual CIO (vCIO) services, including partnering with clients to conduct in-depth IT consulting, budgeting, and planning projects.

Some of these changes, such as becoming a trusted advisor and offering CIO-level consulting, are being led by MSPs directly. The cloud, however, is more often  thrust upon MSPs by the SMB market and client demands. The wisest providers see the writing on the wall and have decided to lead the cloud charge rather than be run over by it.

The Cloud and SMBs

Many SMBs have – on their own – moved some computing to the cloud, adopting SaaS in particular. The thought is that these apps more or less run themselves, saving money and reducing the IT burden. While some cloud services are just about this easy, SaaS is still at its core software, and many of these applications require more management than the SMBs thought they signed up for.

In addition, new SaaS deployments often need migration services and integration with existing infrastructure and applications. Since few SMBs shift computing 100% to the cloud, their environments can quickly become complex.

Making matters worse, many SMBs have multiple SaaS tools, and  can’t keep track of all the data scattered across these services, never mind provide secure access, manage end users, and handle configuration, backups and storage.

The Cloud Opportunity for MSPs

In contrast, MSPs can create a holistic, aggregate view of these cloud services the way they have a single pane view of on-premises infrastructure – it just takes a bit more work.  Even more than the work involved, it takes planning.  As I said above, MSPs that don’t take the lead in cloud offerings risk being run over by market forces.

In a way, the cloud forces MSPs to go back to earlier channel approaches. While cloud services do need the kind of management SMBs struggle to do themselves, it is really a matter of degree. The fact is that cloud providers do much of this work and are an actual source of MSP competition. As an MSP you can add value to this new cloud infrastructure and offer superior management capabilities.

The future will see MSPs taking more and more charge of cloud services for SMBs – and more and more leading clients with a cloud first strategy. In effect, MSPs will be operating as cloud brokers, helping clients choose and buy services.  Afterward the MSP can add management and security solutions tailored to each service.

CompTIA Issues Cloud Challenge

The channel advocacy group CompTIA this year released its CompTIA’s Fifth Annual Trends in Managed Services report, which is available to premium members.

CompTIA found that MSPs are still largely focused on on-premises work, such as security, firewall and server management. But the needs of SMBs go far beyond that. “Today, end user organizations of all sizes, from SMBs to enterprises, want MSPs that can deliver advanced services, such as cloud infrastructure management, application management, and even business process outsourcing. This will require technical skills that many of today’s MSPs do not yet have, which means training and/or recruitment of new employees,” CompTIA found.

The Time is Now: First Steps to Make Money from the Cloud

MSPs should first look at a two main ways to make money from the cloud – paid consulting and services that add value to cloud applications.

We mentioned MSPs serving as cloud brokers.  Part of that is helping SMBs choose the right solutions in key areas such as storage, CRM, ERP, database and productivity tools. Of course, this is just a start.  Different customers may require more customized evaluations.

Once a solution is picked, an MSP can provide service to  set up the application, train users, handle cross service and on-premises integration, and, of course, security. Now the MSP has made themselves  a true strategic partner and trusted advisor.

MSPs can also advise on building the customer’s network so it can handle the load placed by cloud apps.

This is actually great news – there is less admin-style grunt work for the MSP and far more strategy and creative  solution-building that offer SMBs efficiency and competitive value. And it’s harder for SMBs to part ways with a strategic partner than to switch IT management providers.

Here’s what one MSP said on Reddit. “Everything is going towards the cloud. For example ― I have a client on a Rackspace server, Vonage Business (VOIP), Office 365, and QB (QuickBooks) is hosted. The only service I’m not making MRC (monthly recurring cost) is on is the QB Hosting,” the MSP said. “I believe the future of MSPs is also selling telecom and implementing cloud solutions for their clients.”

Another MSP responded with the same sentiment. “Agreed… I’m starting to see my business transform into a technology broker and integrator more than anything else. Seeing the big picture now and down the road is becoming the differentiator.”

But Wait. There’s More Ways to Make Money from the Cloud.

Consulting and cloud app migration and management are very natural first steps for MSPs to consider when looking to beef up their cloud service offerings.  However, they are just first steps. MSPs also are offering many more cloud services – including offering their privately managed cloud infrastructure.

Even MSPs who are not offering their own privately managed cloud infrastructure need to consider two essential service offerings – complex network and systems monitoring, and identity management as a service

1. Provide Network and Systems Monitoring Solutions for Large and Complex Networks

Larger SMBs are outsourcing (or considering outsourcing) discrete internal facing IT functions. Network and Systems monitoring is a leading candidate to be outsourced as it is an internal-facing function that requires significant technical expertise that can be readily sourced from a MSP. Approximately 40% of SMBs surveyed indicated that they anticipate outsourcing their Network and Systems Management by 2020. Management of network infrastructure is often outsourced as part of an infrastructure upgrade project and provides MSPs with a recurring revenue stream to complement their project based revenues.

Meanwhile, the criticality of private/public cloud-based applications makes monitoring these applications and the shared infrastructure that they run on a priority for clients.

The ability to monitor availability and rapidly assess and address the root cause of performance problems and outages provides a strong value proposition for MSPs to offer to their clients.

MSPs interested is this growing area of business have been turning to Kaseya Traverse, which can help you manage the cloud and perform Root Cause Analysis in Complex Networks.

2. Proffer Identity Management as a Service (IDaaS)

Security is the single largest area of concern and confusion today for SMBs. Many SMBs struggle with password management and the security implications surrounding all their end points and connection points.  As SMBs become both more security conscious and reliant on a mix of on-premises and cloud applications, the need for Single Sign-On (SSO) and MFA becomes apparent.

They often just don’t have the internal knowledge to address this and, so, will look to outsource solutions in this area.

Charles Weaver, CEO of the MSPAlliance sees identity and access management as a major MSP opportunity.  “We’re seeing a lot of MSPs get into things like identity and access management, a service line that would have been really rare 10 to 15 years ago. But today with cloud that’s a very hot growth sector,” Weaver told Redmond Channel Partner Magazine. “If you have one of these born-in-the-cloud service providers, the majority of their offerings are resold public cloud applications. What’s one of the best ways these companies can provide high-value services? They can manage the rights on customers accessing these public clouds ― password management, user management, access management, and blending in BYOD and device management.”

Posted by Doug Barney
Doug Barney was the founding editor of Redmond Magazine, Redmond Channel Partner, Redmond Developer News and Virtualization Review. Doug also served as Executive Editor of Network World, Editor in Chief of AmigaWorld, and Editor in Chief of Network Computing.
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