external IT servicesA global survey of 890 CIOs shows that the percentage of IT managed by external IT services providers is climbing at a slow but steady pace.

Conducted by The Logicalis Group, a reseller and provider of managed IT services, the study shows that the number of IT organizations relying on managed service providers to manage more the 50 percent of their IT in 2017 increased three percentage points compared to the previous year.

Mike Martin, senior vice president for solutions and services at Logicalis U.S., says he expects that number to increase even more in the years ahead because more customers are moving away from owning their own data centers. Many of them increasingly favor public clouds and third-party hosting facilities where they can deploy platform-as-a-service (PaaS) environments to run custom applications. Alternatively, some find it easier to rely on software-as-a-service (SaaS) applications.

As the types of cloud services continue to expand, it becomes more cost effective to rely on an MSP to manage everything from provisioning services to providing the means through which applications running on diverse services are integrated.

Influence of digital transformation

The Logicalis survey finds that a total of 51 percent of respondents report that they’re replacing or adapting legacy infrastructure. Yet, when it comes to digital transformation many of those same CIOs are struggling to find their way. Only 5 percent classify their organizations as digital innovators, and just 20 percent say their organizations are early adopters. The top barriers to digital transformation are organizational culture (56 percent), cost (50 percent), and complex legacy technology (44 percent). Only 33 percent plan to specifically increase digital transformation budgets.

Obviously, the cloud is a big part of any future IT strategy. While the transition to the cloud has been underway for more than a decade, the rate at which production applications are being deployed in those environments has greatly accelerated. What remains to be seen is to what degree that shift will increase reliance on MSPs.

Historically, only about a quarter of organizations have used MSPs. Once an organization begins relying on external services to host their applications, though, it’s usually not too long before they decide to focus all their internal efforts on applications. Many businesses conclude it’s simply more efficient to rely on an MSP to manage the various clouds being employed to host commercial and packaged application software. Under pressure to deliver more code than ever at much faster intervals as part of a digital business transformation, many of those organizations want to be able focus all their internal resources on application software. In many cases that leaves the rest of the tasks associated with managing the IT environment up for grabs.

Cloud complications

Of course, that shift to the cloud also creates issues for MSPs that have been managing on-premises IT environments. As many of the applications that once resided on-premises are replaced by cloud applications, competition between MSPs promising to make that transition simpler naturally increases as well. Incumbent MSPs often finds themselves being de-positioned by so-called “borne of the cloud” MSPs that focus solely on cloud applications. Of course, many of those cloud-era MSPs are now being acquired by traditional MSPs, or in some cases, by IT vendors.

Regardless of who winds up delivering those cloud services, however, it’s clear that the leadership of those MSPs are as conflicted about what to focus on next as the CIOs they’re looking to serve.

State of North American Managed Services report

Photo: Digital Storm/Shutterstock.com

Mike Vizard

Posted by Mike Vizard

Mike Vizard has covered IT for more than 25 years, and has edited or contributed to a number of tech publications including InfoWorld, eWeek, CRN, Baseline, ComputerWorld, TMCNet, and Digital Review. He currently blogs for IT Business Edge and contributes to CIOinsight, The Channel Insider, Programmableweb and Slashdot. Mike blogs about emerging cloud technology for Smarter MSP.

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