There is a new wave of technology that is washing over the SMB IT world. A fundamental shift is taking place from device-based to network-based architectures, facilitated by widely adopted new standards. The MSPs that embrace and manage these more complex IT environments will emerge the winners as managed services moves solidly into this next stage – MSP 2.0.
Virtualization, unified communications, cloud computing, SaaS, networked everything, and ubiquitous wireless devices are just some of the obvious game changers.
Of equal importance to MSPs, though less visible, is the fact that vendors of both traditional as well as the newer technologies described above, are investing heavily to offer deep management of their devices and applications.
Vendors are seeing manageability as a key product differentiator as the SMB channel embraces managed services—not only because manageability allows MSPs to provide best practices management and ensure a positive customer experience of their products, but because it clearly contributes to increased margins for MSPs that use their products, the perfect incentive for increased channel sales.
MSP 2.0 presents a tremendous opportunity for the MSPs who are prepared for this future. The complexity of the interactions of all of these new elements means that SMBs need expert help to make it all work together. They need MSPs who can advise them on the implications of choosing one solution over another; on interoperability; and to identify and repair problems that can extend across multiple on-premise and cloud-based technologies, all interacting in real time over multiple networks.
Now for the Challenges
However, many of the current management platforms were designed over a decade ago when client/server computing was considered the SMB computing standard. SMB networks were assumed to consist of three elements – servers, PCs, and a LAN connecting them. So it is only natural that these older platforms have led to an entire MSP 1.0 business model built around managing this narrowly defined view of the IT environment. MSPs that want to participate in this market shift now need to assess if their platforms are up to the new challenges and opportunities of MSP 2.0.
MSPs that are limited to the MSP 1.0 technology model will be drawing on a rapidly shrinking piece of the end customer’s IT budget. Their relevance as trusted advisor will quickly erode if they cannot continue to demonstrate technology leadership in this new era. And even for those traditional on-premise products that they can continue to manage, proprietary agents and other hard-coded techniques that were built for the MSP 1.0 world will continue to be rendered obsolete by vendor tools like Microsoft’s Systems Center Essentials and other standards-based vendor management capabilities.
The implications of this are significant—not only for the health of MSPs, but for technology adoption across the SMB market segment. For example, what MSP is going to recommend Microsoft Exchange hosted in the cloud and say goodbye to $300 of monthly revenue for managing the local Exchange Server? Which ones will willingly introduce virtualization if they can’t effectively manage all the layers and offer it on a managed contract? Even today, how many MSPs are not actively selling SBS 2008 and EBS 2008 to their customer base because their platform cannot quickly adopt to these core SMB technologies?
We are at a critical inflection point in technology. The winners will be those who embrace change. They will continue to strengthen their roles as “trusted advisors” by helping their customers navigate and exploit these developments for their own and their customers’ benefit – by orchestrating the new technologies so they operate reliably, efficiently and in harmony.
Note: Peter Sandiford is CEO of Level Platforms. Guest blog entries such as this one are contributed on a monthly basis as part of MSPmentor.net’s Platinum sponsorship.
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Tags: Level Platforms | Managed Service Providers | Managed Services | Managed Services 2.0 | MSP 2.0 | MSPs | Peter Sandiford
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I couldn’t agree with you more. This is a huge opportunity for those MSPs that are up for the challenge. Couple questions, do you expect we’ll see more VAR consolidation due to these requirements, or will they we willing to Co-partner on some projects? Also, with regards to VOIP/UC managed services, should we expect that MSPs will be interested in third-party management applications, and may shift away from specific vendor solutions?
Appreciate your insight!
Katherine: Good to hear from you.
Readers: I just wanted to point out that Katherine’s company, Nemertes Research, generates a lot of timely research related to managed services and unified communications.
This sounds like all the more reason to embrace value-based pricing. In terms of SaaS and Cloud computing, etc. I am keen on this but as Joe pointed out in a previous post, it is confusing and very blurry right now in terms of who is offering what and the direction everyone is headed (even on a daily basis).
It would be great to have a resource for MSP’s wanting to learn about the new 2.0 concepts and services because right now it’s a mixed bag of where to go and find out information.
From a business point of view, however, I think one thing left out of this discussion is a part of MSP 2.0 I believe will also be a large winner and that is understanding how to offer solutions to businesses not just services. Solutions will help the business achieve their goals not just deal with IT.
Amen….
This is perhaps one of the most lucid posts I’ve read in quite some time as it relates to the impact of an new era of computing on the channel.
Since it is neither realistic nor practical for the average MSP to thow the baby out with the bath water, the key is how the MSP will actually manage such a transition.
One critical component to the sea change will be suppliers and vendors that can effectively help the MSP maintain SLA integrity while improving overall profitability.
This is certainly timely and pertinent, and it’s good to see that an RMM tool manufacturer is able to articulate the problems the MSP faces today. What this post doesn’t address though is how the MSP tool vendors will need to change to accommodate the MSP, and the new model of the “Master MSP.” Distributed computing isn’t new, and in fact has been a major issue for the MSP for at least a few years now. In fact, I would say that distributed computing is the standard whether in SMB or not, but even more so in the SMB and upper Mid Market. Right now, the MSP manufacturers need to play catch up to give the MSPs the tools they need to truly deliver on the promises they make every day, the fundamental one of which they promise to know ahead of time and be able to proactively manage that customer’s infrastructure, distributed or not.
If some of that infrastructure is in the cloud and some of it is distributed and some is traditional LAN/WAN architecture, how will the existing MSP manufacturers need to change their tools to accommodate? The open architecture and integration mantra is surely relevant, and in fact critical to the success of the MSP manufacturers, but mostly importantly that integration actually has to work as advertised in order for the mature MSP to have a competitive advantage as they nurture and expand their practice today.
As MSPs mature the greatest challenge they will have is in hoping their tools mature along with them at a pace that keeps them at a competitive advantage over their local, regional, national and even worldwide competitors. Agility, responsiveness and the ability to produce the features the MSP needs is going to be critical for the MSP manufacturers today and tomorrow. I am not sure what 2010 will bring, but 2009 will be the year that the MSP tool manufacturers will have to step up and produce the features that the mature MSP needs.
Amy Luby
CEO, MSP Services Network
http://www.mspsn.com
aluby at mspsn dot com
Katherine,
In my view it will be impossible for any but the largest of VARs to have the range of technical competencies to address the typical SMB’s requirements. That means we will see more consolidation, peer-to-peer partnerships, opportunities for the rise of highly specialized second tier support organizations for specific technologies, outsourced NOCs in India or China, and as Amy suggests continued rapid growth of the Master MSP model.
I expect it will be a combination of all of these presenting a shift to a tiered services model and the requirement for almost unlimited collaboration models. Level Platforms supports most of this already at some level including support for real time synchronized PSA and help desk software, etc. and it expanding this support is a high priority.
VoIP/UC third party management applications also offer great alternatives to vendor solutions. But as with any SaaS-type application, management is critical since the MSP needs to be able to be able to answer the question, “my phone is not working” or “the sound was not clear” and this requires end-to-end monitoring and management. My point is that without these features in an MSP platform few MSPs will embrace these opportunities and hence the absolute need for us to deliver this MSP 2.0 capability before we become barriers to the adoption of new technlogy and delivery models.