3 key ingredients for MSPs to succeed in the new world order
Managed Services Providers (MSPs) are at a critical inflection point that will determine their future and relevancy. On one hand, outsourcing momentum from enterprises continues to grow. This is evidenced by the Business Wire research where they estimate that the Global MSP size is expected to grow from USD 152 Billion in 2017 to USD 257 Billion By 2022, at a CAGR of 11%. One the other hand, MSPs face a clear and present danger from Cloud providers. In fact, most MSPs believe that cloud providers are a bigger threat than other MSPs.
MSPs possess significant advantages in terms of incumbency and trusted relationships built over the years, but they cannot afford to become complacent. MSPs will need to address three distinct opportunities as they navigate the emerging landscape.
- Security as a Service – Gartner states that “By 2025, 80% of enterprises will have shut down their traditional data center, versus 10% today”.https://blogs.gartner.com/david_cappuccio/2018/07/26/the-data-center-is-dead/ That is only 6 years away. This means companies need to also move many of their solutions to the cloud. One service that is likely to resonate well is Security as a Service. According to Statista, the Security as a Service (SECaaS) market worldwide was valued at US $3.87B in 2016 and is expected to increase to US $12.2B by 2022, a 22% CAGR. Two key reasons are complexity and staffing shortages in information security fields.
- Distribution and Automation – Next Gen data centers and applications are moving from on-prem to the hybrid on-prem and cloud architectures. NOCs will need to master distributed network architectures, multi-cloud connectivity, service virtualization and orchestrated automation. As a result, solutions have emerged allowing service providers to effectively virtualize and distribute network functions such as routing, firewall and secure DNS. The net result is a more flexible, scalable and cost-efficient infrastructure.
- Usage Based Billing and Bundling – Given the need for businesses to be more agile, MSPs need to evolve their commercial models. Solutions based on metrics that make sense to their customers and perceived as being fair in terms of value will be a key determinant of success. For example, instead of purchasing security products/services individually, customers will opt for Security bundles that include a combination of these services (i.e. SoC as a Service in Bronze, Silver and Gold packages). This also means that MSPs must be able to offer their technologies in a usage friendly approach, with volume and usage discounts built-into the program.
This new world order may be challenging but is also exciting and filled with opportunities. MSPs are perfectly positioned to help their customers navigate very complex needs.
In a subsequent blog I will address what Infoblox is doing to help MSPs as they embark on this transformative journey.