The next chapter for MSPs: The Journey towards digital service provider
By Mark Wass, Strategic Sales Director NEMEA, CloudBlue
Customers expect simplicity and expertise when it comes to managing their IT needs. Just as they would call a qualified plumber to fix a broken tap in the bathroom, companies of all sizes and across various industries rely on managed service providers (MSPs) to maintain their IT processes and services. Like a plumber equipped with the right tools and knowledge, MSPs provide the necessary technology and expertise to ensure efficient IT management.
This also applies to a digital-first world where most consumers do some sort of business transaction on mobile devices. In fact, 73% of UK consumers prefer to shop through mobile devices.Business customers (Small and Medium business and Enterprise) also want the convenience of one-stop shopping just like regular consumers. The next evolution for MSPs is to become that one-stop shop by expanding their catalog with digital services and with this becoming a Digital Service Provider (DSP).
Managed Service Providers (MSPs) are companies that remotely manage a customer’s IT infrastructure and/or end-user systems, typically on a proactive basis where they add professional services, technical support, and continuous managed services to support the service. The global managed services market size is expected to reach $731 billion by 2023.
Working with an MSP enables agility while keeping costs in check. When a bank uses a ticketing system for its call center, for instance, it needs infrastructure support and technology that an MSP provides, as well as other front-end systems. The bank is in a better position to grow its business by outsourcing its IT infrastructure, freeing up in-house resources.
Companies need to be able to respond to market fluctuations and offer solutions in a flexible model that allows customers to upgrade or downgrade, terminate, or pause their services. For example, a retailer will need more bandwidth during the peak holiday season starting with Black Friday and Cyber Monday, and all the way through the after-Christmas sales. But after that, things slow down and those resources are no longer needed.
It’s clear that end-customers want to consume technology more easily and the same goes for business customers. MSPs simplify their customers’ experiences, cutting out the hassle of dealing with multiple vendors.
Big tech manufacturers, telcos, and tech vendors are even creating Managed Services practices within their companies or transforming themselves into MSPs.
As an example of common MSP services, we see companies like IBM and Accenture are providing:
- IT support
- Backup and disaster recovery solutions.
- Cloud and edge computing that includes networking infrastructure management
- Data analysis and reporting
- Unified communications and PBX solutions
Small to medium businesses (SMBs) want to deal with a single provider for most, if not all, of their business needs because IT, likely, is not their core business. They also want to pay as they go.
Better together through bundling
SMBs are usually more conservative about their bottom line and tend to steer away from stand-alone or siloed products. They want to be able to subscribe to a bundle of services and products, such as data storage that may integrate services like Software-as-a-service (SaaS) and support, while benefiting from the ease of one-stop shopping.
MSPs can scale by partnering with a cloud platform provider that manages subscription and billing, vendor and product information, and vendor onboarding across multiple channels. A platform enables companies to create their own ecosystems, as well as connect vendor and go-to-market ecosystems. A platform also automates the distribution of traditional and digital products and services across partners in the digital supply chain.
Our research shows that the more committed a company is to providing services rather than selling hardware and infrastructure, the higher its margins. There’s increasing demand for anything-as-a-service (XaaS) solutions. At the same time, businesses are trying to capture higher margins and grow recurring revenue. That’s the appeal of becoming a managed service provider. In turn, MSPs rely on a cloud platform to provide end-to-end automation for everything from SaaS to billing to reconciling every step of the supply chain.
A digital ecosystem management platform allows MSPs to:
- Automate anything-as-a-service (XaaS) procurement to expand service offerings and deliver XaaS bundles
- Launch a cloud marketplace to adapt to current and future demand for cloud computing services and to expand product reach and availability
- Launch a XaaS business to offer usage-based bundled solutions
- A central view to the customer and the MSP on consumption across public and private clouds.
The path to becoming a DSP
Managed services are a next-level solution that enables businesses to scale by reducing risk and costs, improving efficiencies, and fostering partnerships with suppliers. The next chapter for an MSP is to reposition itself as a digital service provider (DSP). DSPs provide online services to their clients, including cloud services, hosting, and software development. Companies work with digital distributors for a variety of reasons, but there are three main drivers:
- Achieving a competitive advantage by leveraging technology
- Increasing efficiency and productivity
- Enhancing the customer experience
The goal is to make these services easier to buy, easier to sell, and easier to process, say on your smartphone or other mobile device. As a modern MSP converting yourself into a Digital Service Provider you start by publishing a catalog to expand your offerings, such as SaaS and infrastructure-as-a-service (IaaS) solutions – automating ordering and fulfillment.
Then you launch your digital marketplace where you can sell your own products or a bundle of services. You can extend your catalog and marketplace to your Operating companies; this way you can efficiently distribute bundles across your global operation and manage the catalog through a unified central system.
The next step is to accelerate time to revenue by solutions quickly and creating your own XaaS bundles, including hardware, software, and services for cybersecurity, IoT, productivity, or networking.
Finally, expanding to a hybrid cloud strategy. Centralizing management of private and public cloud infrastructures is key in this last step. Large enterprises have already moved their mission-critical applications to public clouds such as Amazon Web Services, Microsoft Azure, and Google Cloud Platform while outsourcing non-core applications to private providers.
All these steps will support MSPs in providing a flexible services consumption model that allows end customers to add or remove services as the business demands, and. Pay as they are growing the business without a large up-front investment, everything from a one-stop shop of digital services.