Opinion: While smaller companies have gotten most of the attention from MSPs, larger customers seem to be more friendly to the model.Managed services are not a new idea, but forecasts of their rapid adoption have missed the mark. Instead, it has been a slow, sometimes agonizing, march to win customer acceptance and generate meaningful corporate adoption. This year, however, managed services likely will gain widespread attention and attract real demand.
Despite numerous analyst predictions and good press around managed services, customers have remained reluctant to relinquish all or part of their IT operations to an MSP (managed services provider). Sometimes it's because the MSP is located remotely and can't establish a face-to-face relationship to create enough trust. In other cases, local VARs seeking to add managed services to their portfolios have failed to understand the significantly different sales and support requirements of the model.
In both scenarios, aspiring MSPs have pushed the managed services concept on generally uninterested customers. But times are changing.
In the past, many customers considered IT operations an essential corporate asset, and even a competitive weapon, which they could not offload to a third party, especially when outsourcing arrangements missed business objectives and were either restructured or terminated early.
Today, a growing number of customers have accepted the infamous words of Nicholas Carr, who suggested in 2003 that IT doesn't matter. They aren't saying IT isn't important to their business, but they recognize that in the face of escalating competition and budget pressures, they must refocus on core competencies to strengthen their corporate positions.
As a result, a growing proportion of customers now believe it doesn't make sense to dedicate as much staff and systems to IT management when a third party can do it better at a lower cost.
Users also have become accustomed to the ease of use of today's on-demand consumer services and would like a similar set of online storage, security and other on-demand services in the office.
Although managed IT services aren't as popular as on-demand application services or SAAS (software as a service), Thinkstrategies' latest survey found that 40 percent of organizations already use one or more managed IT/network services offerings.
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This number may surprise many aspiring MSPs that have struggled to generate any meaningful demand. There are reasons for this incongruity. First, the managed services market is still very fragmented. Second, managed services are defined in a variety of ways by customers and providers. And third, much of the early adoption of managed services is coming in a segment where many haven't been lookingÑlarge enterprises.
Aspiring MSPs have focused on the small and midsize business market, but Thinkstrategies' research has found that large companies are more comfortable acquiring managed services to augment in-house staff and management capabilities. IT professionals within SMBs still view MSPs as a threat to their livelihoods. However, SMB decision makers are growing frustrated with the lack of reliability and low return on investment of their IT operations and are looking for alternatives.
As a result, Thinkstrategies predicts managed services in 2007 will shift from a vendor-driven to a customer-driven business.
The challenge for aspiring MSPs will be properly packaging, promoting and delivering their offerings to clearly demonstrate their value and generate profit from these business opportunities. «
Jeff Kaplan is the managing director of strategic consulting company Thinkstrategies (www.thinkstrategies.com) and founder of the Managed Services Showplace (www.msp-showplace.com). He can be reached at jkaplan@thinkstrategies.com.
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