MSPmentor

I’m about to state the obvious: More and more managed services providers (MSPs) and data center providers are introducing cloud-branded services. Nevertheless, I think it’s important to document how the managed services market converges with cloud computing. The latest moves involve Datapipe launching a managed cloud service, and OnLine Tech promoting a private cloud service. Here’s a look at the news and the broader trends.

Let’s start with the news:

• Datapipe, a managed services provider in New Jersey, has launched Datapipe Managed Cloud, a “complete managed services offering designed for Amazon Web Services (AWS). With Datapipe Managed Cloud, organizations have a partner to plan, migrate and manage all of its mission-critical IT applications running on one of the most widely used cloud infrastructure web services platforms in the world.”
• Online Tech, a Michigan-based data center provider, has launched a branded private cloud service to assist customers with their virtualization and scalability needs.

The big question: Are Datapipe and Online Tech simply trying to cash in on the cloud computing hype or do they have real, revenue-producing strategies here that will truly help customers? I think it’s a little of both.

Money Matters

Check in with venture capitalists and investors, and you’ll find that IT startups have to have a cloud strategy in place these days if they hope to get funding. Moreover, a real cloud computing strategy can lift a company’s overall valuation.

One prime example: CA Technologies acquired Nimsoft earlier this year for roughly $350 million or approximately 10 times revenues — which is pretty lofty. At first glance Nimsoft was well-known in the managed services software market. But during private discussions Nimsoft described its overall cloud computing strategy to CA, including the launch of Nimsoft On Demand. I believe those strategic cloud discussions ultimately lifted Nimsoft’s valuation…

History Repeats Itself

MSPs certainly need a cloud strategy but I think you need to proceed with caution. Remember: Thousands of break-fix resellers say they offer managed services — but they don’t. I think that white lie may repeat itself thousands of times as numerous MSPs try to position their legacy managed services as cloud services.

Instead of throwing a half-baked idea out in the market, I think smart MSPs are starting simple and embracing white label online backup and SaaS security solutions, which can be positioned as cloud services.

Branded, Purpose-built Bets

Still, folks like Datapipe and Online Tech are thinking bigger, betting on key offerings like Amazon Web Services and virtualization, respectively. I love companies that take calculated risks but I’m curious to see how this all works out.

During much of 2009, MSPmentor hyped Amazon Web Services as a public cloud that MSPs needed to check out. But more recently we’ve grown somewhat skeptical of AWS for a number of reasons:

• Kaseya tried — and abandoned — a strategy to deploy some of its SaaS tools using Amazon Web Services in early 2010 because of service level agreement issues, MSPmentor has heard. (The Kaseya SaaS tools were deployed using alternative cloud technology.)
• Other MSPs have told MSPmentor that it’s difficult to work with AWS, since one-to-one customer service isn’t a big piece of Amazon’s strategy.
• Still other MSPs say their customers hesitate to move information out onto a public cloud. Instead, it seems like SMBs are more willing to embrace well-known SaaS applications (NetSuite, Salesforce.com, Google Apps).

All those considerations aside the folks at Datapipe are pretty sharp and we’ll be watching to see how they leverage AWS going forward. Plus we’ll be watching Online Tech to see how customers potentially embrace private cloud computing.

And for the broader MSP market, I wonder: How many of you will have a branded cloud service by Q1 2011? Please keep MSPmentor posted…

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