In the rapidly evolving business world, Managed Service Providers (MSPs), until recently, have been the last word when it came to providing comprehensive, single-point Information Technology services. However, it’s become clear that times have been changing for a while now. The arrival of cloud computing championed by tech giants Amazon, Google, Azure, and others is challenging their preeminent position. Offering a staggering variety of solutions, with not just easy access, but also with industry-setting standards, services like Amazon Web Services (AWS) and Google Marketplaces are calling the shots. AWS for example with 200 plus web services (1) (3) and a pay-as-you-go flexible model boasting reliable, scalable, and highly secure features is the front runner of the lot with 32% of the market share. Azure and Google come next in the race.
As more organizations opt for these consolidated, single-window solutions – a recent study (2) shows that nearly 80% of Fortune 500 companies like Netflix, Walmart, Instagram, and even NASA use AWS – , the ascendancy of MSPs may very well look to be a thing of the past. And so the question arises as to whether MSPs can still hold their own against a competitive, rapidly-growing ensemble of players that constitute the giants of the tech world.
Why an MSP
In my podcasts, I often narrate the story of my enthusiasm to maintain a well-cared-for lawn, and my consequent decision to invest in a lawn mower. For a few weeks, I went about this task religiously enjoying my hi-tech gadget, only to experience my enthusiasm wane as my life got busier with meetings, events, and other priorities. And so I ended up hiring a professional who specializes in lawn care.
This analogy aptly applies to MSPs. Just like the lawn care professional, MSPs are specialists who handle technology needs with expertise and consistency, allowing businesses to focus on their core competencies.
Though the pandemic is often cited as one of the major reasons for the upsurge in their demand, due to a greater demand for cloud storage and increased cybersecurity demands, the truth of the matter is that their growth is also the consequence of an expanding IT, communications and cybersecurity landscape, growing pressures on in-house SOCs and cybersecurity teams to cope, and an increasing recognition by decision makers of the benefits that they bring to the table. MSPs have evolved swiftly and proficiently after their slow start, evolving into one-stop IT, Communications, and Cybersecurity Solution Centers, that are just too important for organizations to ignore and not have on board.
MSPs – where they stand, what they offer
In order to better engage in the debate, it is necessary to look at the genesis, growth, presence, and evolving role of MSPs. It is interesting to note that MSPs do not go very far back, coming to the fore only in the late 1990s / early 2000s. Their genesis can be traced to the early Application Service Providers (ASPs) that then offered organizations remote application hosting services. Starting out with remote management of servers and networks, MSPs gradually expanded their services to offer comprehensive full-time services that elevated them to the status of ‘strategic partners’ of organizations.
Today MSPs can offer services that include data center storage and management, network management, mobility management, infrastructure management, backup and recovery management, communication management, security management, cybersecurity, compliance and risk management, and even payroll services.
With such a wide array of services on offer, MSPs have evolved into a kind of extended arm of the organization’s SOC, IT Department, and Cybersecurity team.
The pace of technological advancement is such that keeping up requires specialized knowledge and a dedicated approach – something that MSPs have shown they can provide proficiently. The value of the MSP becomes more evident when one considers the benefits that it brings to the customer organization. Here are just three from a large list of benefits that constitute their USPs:
Expertise: MSPs provide specialized knowledge and skills, ensuring organizations have access to the latest technological advancements and IT strategies. Their solutions are characterized by their scalability, flexible plans, industry-standard security and monitoring, and cost-effectiveness.
Focus on Core Business: By outsourcing IT management to MSPs, businesses can concentrate more effectively on their core objectives and strategies, enhancing overall productivity and focus.
Compliance & Risk Management and Business Continuity: MSPs are adept at ensuring organizations comply with the latest regulations and effectively manage risks, an increasingly important aspect in today’s regulatory landscape. They offer uninterrupted service, ensuring business continuity without the hassle of downtimes, thus maintaining high service availability.
The Threat to MSPs
Tech giants like AWS, Google, IBM, et al, however, with their pre-eminent services referenced here, are not the only threat faced by MSPs. Today’s market is witness to a new breed of buyers; ones who leverage the vast expanse of information available online. They are savvy, well-researched, and often come equipped with a surprising depth of knowledge. An illustrative, albeit extreme, example is that of an African teenager who attempted a heart transplant after researching it on Google. This anecdote underscores the level of empowerment that access to information provides to individuals today.
Moreover, the rise of forums and online communities, especially among government buyers, has led to a more interconnected exchange of experiences and insights. Buyers are no longer isolated entities making decisions based on vendor inputs alone; they are part of a larger, more informed network, influencing and being influenced by their peers.
The case for MSPs
How important a position they occupy today, can be gauged by the rapid growth that the MSP market is experiencing. The demand for managed services has grown exponentially in recent years. Mordor Research (3) predicts that the MSP market will grow by almost 80% to $274 billion by 2026, up from $152 billion in 2020. More and more organizations are entrusting their IT and cybersecurity needs to MSPs. A global managed services survey by NTT found that the percentage of organizations outsourcing more than 50% of their IT needs rose from 25% in 2020 to 38% in 2021.
To their credit, MSPs have stood their ground in the battle with the commoditized web service markets that we are witnessing. Most are swiftly adapting to the changing market dynamics. They are actively participating in peer groups, embracing continuous learning, and adopting best practices. As technology rapidly advances, it takes a collective effort to stay updated and relevant – a role perfectly suited for MSPs.
They are no longer just service providers; they are partners in the true sense, aligning their expertise with the strategic goals of the organizations they serve. This transition from a service provider to a strategic partner is crucial in a landscape where technology is a critical factor in business success.
The benefits that they bring are perhaps the acid test of the value they bring to the table, a benefit that no C-suite can ignore. Primary amongst these is a dedicated specialist offering 24/7 personalized attention, business continuity, customized cutting-edge cyber security solutions, process and cost efficiencies, flexible consultancy packages, employee training, and the comfort of working with a specialist while teams focus on the core business activity and demands.
With their technical expertise, strategic importance, comprehensive services, and adaptability, MSPs are well-positioned to remain vital partners in the business world, offering a blend of expertise, strategic insights, and cost-effective solutions.
The future is collaborative, and MSPs are key players in this collaborative landscape, driving businesses toward efficiency, security, and growth.
Antagonists however may make the point that the services they offer are still available with the web providers. True. Yet there is no discounting the fact that for personalized, customized, dedicated consultants, who are integrated into one’s business, they will be hard to beat, and harder to replace.
Let the detractors say the jury is still out. My lawn mower experience is enough to convince me (and others who I am sure will concur) that they are here to stay.