MSPs: Will the Cloud Change Everything?

Cloud computing is, according to many sources, the Borg of the IT industry; resistance is futile and we will all be assimilated whether we like it or not. With technology giants such as Microsoft, Google, Amazon and Apple making big investments in the cloud, the truth of those predictions seems self-evident. While there has been some push-back in both the business and consumer markets (with the former still concerned and security and the latter concerned about control and cost), it’s safe to say that cloud computing will, at the very least, make big inroads in the coming decade.

There has been a great deal of discussion surrounding what that means to Managed Service Providers. Last spring, a senior software engineer at one MSP made a splash in the news when he said that, because of the cloud, MSPs will be obsolete within five to ten years.  Does that mean the cloud is going to put you out of business?  Maybe, maybe not.

Certainly the ability to put IT services into the public cloud and pay as you go is attractive to the SMB companies that currently make up the customer base for many MSPs. If this companies think they can save money by replacing their traditional managed services contract with a public cloud offering, some will make that switch.

Traditional hosting services have served MSPs well, but forward-thinking companies are looking at how they can supplement, rather than replace, those services with cloud-based services. Many businesses want to explore cloud options without giving up the control they have with dedicated environments. The hybrid cloud is a popular option for cautious customers, and that’s an area where MSPs can expand their offerings and keep their customer base even as those customers make the slow migration toward the cloud. The MSP can help customers integrate their on-site data centers with virtualized off-site data centers that are managed by the MSP.

MSPs are understandably cautious, themselves, about entering the cloud market. It’s a big change, but you don’t have to do it alone. There are companies that have already seen the need and are building businesses based on the premise of helping MSPs make that transformation.

One factor that may be inhibiting MSPs in regard to offering cloud services is the thought that they will be competing with the “big boys” – Amazon, Microsoft, Google – and the fear that there is no way they can provide the levels of service and prices those tech behemoths can. What you need to remember is that small operations can always offer something that giant corporations can’t: individual, personalized service where customers are treated as valued members of the family rather than one of a million or more “accounts.”

Is it working? According to MSPMentor’s “talking Cloud” survey this past summer, top MSPs had increased their cloud-related revenues by 50 percent in the previous year, with an average of $6 million in cloud-related revenues. And some MSPs have taken a different route, building their own services on top of the big cloud providers’ infrastructures. Last year, Datapipe launched a new product line based on Amazon Web Services’ infrastructure.

If there is one indisputable truism about any IT-related business, it’s that the landscape is constantly changing.  Those who fail to adapt to those changes generally don’t survive. MSPs that hang onto their old model of service and provide only traditional services may find themselves losing out. But those who see the cloud as an opportunity instead of a threat, and embrace the cloud model, are likely to find that the cloud does indeed have a silver lining.

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