Thursday, February 17, 2011

The MSP Market Opportunity for Cloud Computing ... No Pain, No Gain

Isn’t technology wonderful?  Every time a disruptive technology hits the market place it creates opportunity – changing the game board and paving the way for a new class of winners and losers. It levels the playing field and enables emerging companies to take market share from established players. In the cloud space, there are new technologies that enable MSPs to integrate traditional managed IT services with the cloud. They allow the MSP to offer added value over commodity cloud services from the major players (think Amazon, Google, Microsoft, etc.) and reinforce their role as a trusted advisor for customers.  With the right technology, MSPs can create a managed cloud service that complements traditional IT solutions, improves the business value realized by customers and differentiates them from non-cloud-savvy competitors. Cloud computing is the best game-changer we’ve seen in decades.
One of these new cloud-enabling technologies comes from Abiquo, a supplier of cloud management software for MSPs. Abiquo software automates the process of cloud management making the delivery of cloud services easier, more efficient, more open and more adaptable to customer requirements. They allow the MSP to offer a managed alternative to commodity cloud services.
The MSP market opportunity for cloud computing is real and its now. During 2010, IT spending saw double-digit growth for the first time in a decade signaling an end to the great high tech recession.  And leading the way, data center modernization is fueling this growth as companies prepare their infrastructure for private and public cloud computing services.  According to IDC, public IT cloud services will grow more than 5 times the rate of traditional IT products during the next three years and worldwide revenue from public cloud services are forecast to reach $55.5 billion in 2014.
The SMB/SME sector will be the next segment of accelerated growth for cloud services.  As reported in CRN, according to a recent industry study conducted by MarketBridge, 70-85% of SMB/SME businesses expect to move major applications to the cloud during the next 12 months and 67% of them prefer to acquire software and applications from a third party – a clear endorsement of the managed services model. It just makes sense that cloud services will converge with traditional managed services and provide major growth opportunities for MSPs and their technology suppliers.
But how will cloud vendors and their MSP partners exploit this opportunity while the market window is wide open?  Formulating a business plan and executing a go-to-market program for cloud services is neither easy nor obvious. MSPs will need to answer some strategic questions about their managed cloud offerings and how they translate to customer value. They will need to define a cloud services business model with pricing and service bundles that generate substantial margin relative to operating costs. They will need a customer acquisition program and a scalable sales process to build an incremental revenue stream. And they will need to monitor and manage growth using some new performance metrics.
The cloud is the next big thing for managed service providers - that much is clear. But technology enablers and new business practices are required to reap the rewards.  It will require careful planning and hard work – but the rewards are worth it. In fact, some would argue that to failing to plan for the cloud is planning to fail in the coming era of managed services. So take the first step and consider the prospect of managed cloud services for your business.  Check back with us as we take up new topics in managed cloud services. And please, share your thoughts and experiences below.

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