Threatening Skies: The Managed Service Provider

John Humphreys

The Managed Service Provider

Business is not easy. Just when you think you have the market figured out, and your business is growing nicely, another new threat comes onto the horizon.

Many VARs and MSPs who built successful businesses implementing or hosting computing infrastructure are dealing with that threat today: the rapid growth of cloud computing. A recent Gartner analysis estimated that global spending on public cloud services will almost double in size from 2012 to 2016, reaching $210B in 2016 – with Infrastructure as a Service (IaaS) projected to grow the fastest at over 40% CAGR.

To add even more fuel to the fire, much of that growth is coming from small and medium enterprises (SMEs), companies that most VARS and MSPs consider their most significant customers. Recent remarks from a McKinsey & Company analyst at UBM’s Cloud Connect conference were a dire warning to SMB focused service providers: accelerate your transition to the cloud or your business will die.

So, is the cloud something VARs and MSPs can’t weather?

Managed service providers, VARs and distributors around the globe are starting to get the message. Most small to midsized service providers realize they won’t be able to beat the big public cloud guys on price (due to the economies of scale advantage that large providers have). As a result, they are focusing on reliability, ease of use, service levels, support services and customer responsiveness to differentiate themselves.

While strong relationships and the trust of their customers are necessary assets, it is critical not to depend on them alone for continued success. If your customer can reduce their costs by more than 50% by moving to a new technology from a new provider – they will. That is what is happening in the cloud – and your only option is to get into the game with your own differentiated offering.

To build a managed cloud service that meets the needs of SME customers starts with choosing the right cloud provisioning and management software. There are more options every day, but here are some of the key points to consider as you evaluate the different cloud management software products:

Security for multi-tenancy – Security will always be the top concern for customers. Because of these providers can differentiate on the protection their cloud services are able to offer. This includes not only secures isolation of services but also how they are able to protect customer data and applications. With public cloud services using shared infrastructure to support multiple clients, companies should always inquire about the security of the software’s partitions and resources.

Ease of use – A high priority consideration for any user moving to the cloud is time-to-deployment of computing resources and any service chosen should come with the flexibility for users to adapt to their specific needs. MSPs will need to take into consideration the need for intuitiveness, and ensuring users can create, easily design, deploy, manage and pay for a customized solution as they are built and consumed.

Support for all their applications – Not all applications are easily virtualized, especially the more mission critical or performance-intensive applications like databases. Providers will want to consider a cloud management software that provides a mix of virtual and physical servers or support a cloud with a mix of hypervisors.

High availability and business continuity – MSPs can differentiate on reliability as users want a cloud that provides high availability and disaster recovery services. As such, MSPs should look for a cloud management software that can provide automated n+1 continuity services. This is particularly critical if the MSP wants to make money in the cloud. Without n+1 and automation, continuity features are expensive as they double the infrastructure needed or add a lot of manual processes to the burden of cloud operators.

Cost reduction – Let’s be honest, a major driver for moving to the cloud is the reduction in CapEx and OpEx. This is table stakes. As such, to keep the costs down, any cloud management software must optimize existing hardware and consolidate as many physical components. The way to do that is with a converged infrastructure. Converged infrastructure and cloud management software can speed your transition to the cloud, all while keeping your costs in line and you competitive.

The advent of cloud computing is similar to other market transitions that have occurred over the decades, and in every case there are those that adapt and those that get left behind. The winners and losers are distinguished by how quickly they can evolve their business models and strategy to implement services that provide more value to their customers than alternatives. If you haven’t already started down the path toward offering cloud services, today is the day. Hopefully the guidelines above will help you succeed and grow while those firms who don’t adapt to the reality of the cloud will certainly suffer as a consequence.

By John Humphreys

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