Managed services are dead – long live the managed services provider!

A bold statement and one that whilst some people may believe to be true, I would like to put the argument that this thinking is wrong. One thing is for sure though, the way the industry views managed service providers is changing.

I would categorise the reaction to this change by managed service providers into three core areas: those that aren’t; those that are; and those that want to.

Those that aren’t

This is typically reserved for those extremely large companies. Their lack of desire to change is as deep-rooted in an arrogance – in other words, we are too big and it will be too difficult for our customer to change anyway – or a lack of capability to make fundamental changes to a business that is too large to control.

Those that are

As a rule, this is more akin to those companies who are smaller than ‘those that aren’t’ but have a very similar approach to their own business model. They find themselves in a position where change is achievable but it is more enforced, rather than there is a desire to adapt.

Those that want to

These are the companies that are not only making changes, but they are doing it to affect positive alterations within their own business as well as those of their customer. These are companies who more typically refer to their customers as a ‘partner’ and have the appropriate credentials to truly demonstrate that they can work together. These companies are likely to be small and can often be startups or companies with a short history.

Of course, those from a managed service provider background will insist that I am wrong or, of course that they are in the ‘those that want to’ category. I would argue that less than 20% of companies who operate in a true MSP space are in that category. The other 80% are in a sharp decline and, whilst they may be too big to go completely out of business, their market share is likely to change drastically in the next decade as existing contracts come to a close.

So why has industry started taking a different view? The trust is, it hasn’t. This is a view that industry has long had but has done nothing about or, more importantly, not had the opportunity to do anything about. Now the tide is turning.

From network infrastructure to end user compute, from application to print, more services are available in more ways than ever before. No longer is a circuit something that can only be delivered by a telco. No longer is a hosting solution something that can only be delivered by a data centre provider. The flexibility in being able to select the technologies that best suit the business, in the most cost effective manner and with the service wrap that meets business requirements is powerful and achievable.

So surely the correct answer is to take everything in-house and let the business manage everything itself, right? Managed service providers really are dead? Wrong. This is an approach that some ideologists are looking to entertain but it is a dangerous one. The flexibility offered through cloud computing has given the business choice. It has not given the business a mandate to follow a different path that must be adhered to at all costs.

A collaborative approach to service and the provision of service will be the new norm. Managed service providers are being forced to step up and change and this is to the benefit of businesses and a reform that is long overdue. This may not be met with good grace. Again, I argue that there are those that aren’t, those that are and those that want to. Lip service will not be tolerated and businesses’ flexibility to change is not limited to technology, the same can be applied to service provision. It is ‘those that want to’ that are the managed service providers who will flourish in this new landscape.