MSPs are clearly on the move. Seeing the value of outsourcing, SMBs and larger shops alike are moving in droves towards managed services. At the same time though, too many organizations do the things the old way, having understaffed IT teams struggling to keep things running – and not availing themselves of state-of-the-art managed services.
There are two problems IT needs to overcome, both of which are solved by managed services. First, it’s hard for small overstressed teams to secure the network, ensure performance, and fix all the problems that constantly arise. The bigger issue is this struggling IT team has virtually no time to think strategically. That leaves them both vulnerable and at a huge competitive disadvantage in their industry.
On the micro level, using an MSP can transform an SMB in terms of efficiency and business possibilities.
That means SMBs can focus on innovation and differentiation – a huge business booster. At the same time, they can be far more efficient since their IT systems are optimized and have excellent uptime – not to mention the benefit of flawless backup.
Managed services change the IT economic model as well. Even if a client isn’t fully in the cloud, managed services reduce IT staff spending. And CAPEX can go down since they have far less on-premises gear to buy and manage. They can also save on networking gear and software licensing since things such as monitoring and management, and antivirus/anti-malware are handled by the MSP. If the client is ‘all in’ the cloud, CAPEX is almost entirely replaced by OPEX.
On a macro level, the more MSPs take over SMB IT, the better that huge portion of the economy operates. SMBs are the major driver for jobs in most places, and if they achieve greater efficiency, save on IT, and increase their ability to innovate — that can be transformative for the whole economy.
An Early Believer in the Power of MSPs
One thinker who explores the role of MSPs in driving change is Jon Tonti, writing for NearShoreAmericas.com, a Latin American web site that offers business advice. Tonti believes in the transformative powers of MSPs. He knows it would be a better world if MSPs took over a greater swath of IT. At the same time, MSPs could spearhead the move to the cloud, offering a whole other benefit.
And the combination of cloud and managed services is a positive double whammy for clients. Add in the fact that MSPs are becoming more strategic in their advice and solutions, and you see the seeds of real change being fully sown.
Tonti looked at two elements of change. If companies move to the cloud, their economics move from CAPEX to OPEX.
That is only half the battle. Under this scenario, IT still has to manage cloud apps, virtual infrastructure, and whatever remains of their physical infrastructure. They are still mired in a great deal of non-strategic grunt work.
By taking the next step to managed services, this grunt work is shifted to the service provider, freeing IT up even further to focus on competitive advantage.
MSPs, especially the new generation of service providers that are embracing MSP 2.0 concepts, are fully equipped to drive this transition. “In the relatively recent past, we have crossed the threshold where it is now “technically and economically feasible” for any organization to transfer all their technology needs to managed service providers (MSPs),” Tonti said.
A Second Great Thinker Weighs In
Tonti doesn’t pretend these ideas are his alone. He gives great credit to Jon Parkinson of Parkwood Advisors, a consultant and writer who follows MSP issues. Parkinson is already seeing the MSP impact on organizations that use them.
“I did a consulting project for one of the big global tech firms looking at what the macro-economic impact on the industry would be if the majority of what are currently on-premises IT were provided as managed services. How many people does it take to run global IT if it is provided the same way as a phone service or electricity – a managed service – by some number of peer service providers and you don’t have all the people in-house you have today? What does the industry look like, how big does it have to be, and what skills do you have to have to make that work? The headline is that you only need about 40 percent as many people,” Parkinson told Tonti in an interview.
As an example, Parkinson explored what is would take to support 100 users. “Today it might take 30 because the 100 users are in 10 different companies, tomorrow it will take 10 because it doesn’t matter where they are…basically you create a user-cloud, and yes, you have to build in privacy, security, and some multi-tenant type handling capabilities, but if you presume you can solve those problems, which we can or are close too, then you are a much more efficient user of human capital in technology, which is good because there isn’t enough of it,” he explained.
Existing companies are or should be making this transition. Startups are more often than not taking this approach from the get-go. In many cases it is a mandate from the investors. “The PE guys won’t give money to these companies to buy technology anymore; they just don’t want money tied up in technical assets,” said Parkinson.
The View from the Mainstream
The mainstream IT press is likewise getting onboard the MSP train. CIO recently ran a piece by consultant Eric Brow extolling the virtues of MSPs.
“The role of the MSP is an important one in the small and medium business (SMB) space. An MSP provides the ability for a small or medium business to offload those pieces of their business that aren’t driving value or competitive advantage. For example, a non-profit that focuses on delivering meals to the elderly should – in most cases – hire a managed services provider to manage the IT for the organization. IT isn’t a key driver of value of this organization and should be outsourced to an MSP,” Brown wrote.
To stay relevant MSPs have to keep moving forward. “In order to continue to drive value as a trusted business partner, MSP’s have needed to stay on the forefront of technologies. Over the last few years, the MSP’s that have thrived have been those that have adopted the cloud as a way to deliver more value to their clients. The next generation MSP understands the cloud, social and mobile to help clients run and grow their business,” Brown argued. “Those MSP’s that have been most successful have moved away from solely focusing on delivering “IT” to their clients and have begun helping drive business solutions. This is, in fact, the same thing that the good internal IT groups have done over the years – they’ve stopped focusing on delivering “technology” and started delivering solutions that the business needs.”
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