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If a three week online AWS re:Invent conference leaves managed service provider (MSPs) with any impression at all, it’s that the relationship with the world’s largest provider of cloud services is continually evolving. In the last week and half alone, AWS has launched a bevy of managed services that MSPs need to decide if they will incorporate into their own portfolios or perhaps provide some alternative capability on their own.

Selling services that rival an existing capability that a cloud service provider already offers is always a risky proposition. About the only time it’s really worth pursuing is if the MSP is convinced that same capability will be required across multiple clouds. Even then, it may be simpler to centralize the management of similar services running on multiple clouds on behalf of an end user organization that has deployed workload on multiple clouds.

Of course, AWS is trying to entice MSPs to deploy as many workloads as possible on its cloud. The interesting thing is the definition of that cloud now includes both racks and servers that are deployed in on-premises IT environments.

According to Doug Yeum, Head of Worldwide Channels and Alliances for AWS, the cloud service provider would still prefer to see most workloads be deployed in its cloud, but has come to terms with the fact that there are workloads that because of latency and governance concerns, still need to be deployed in an on-premises IT environment. In effect, AWS is now competing directly with providers of IT infrastructure for on-premises IT environments such as Dell Technologies, Hewlett Packard Enterprise (HPE) and Lenovo.

Of course, Microsoft and Google are pursuing similar approaches to hybrid cloud computing. The difference is neither has felt compelled to build their own servers and racks to run instances of their cloud platforms in an on-premises IT environment.

MSP opportunity to generate revenue

Regardless of who is providing what managed service where, Yeum says there is an opportunity for MSPs to generate revenue by focusing on cloud optimization, resiliency, availability and security. Further, IT organizations will always need help navigating an increasingly dizzying array of overlapping cloud services that may be more appropriate for one use than another.

Many MSPs also have vibrant cloud application development and management practices that they include along with the management of IT infrastructure. Other MSPs are now even building their own applications that they offer via the AWS Marketplace.

Finally, Yeum notes that MSPs such as Onica, have transitioned to innovative business models that offer access to expertise based on units of time known as a pod. IT organizations can then purchase a full pod, a half pod or a quarter pod based on the task that needs to be performed.

“The opportunity is huge for the MSP,” says Yuen. “Customers don’t want to pay MSPs to just watch a screen anymore.”

The challenge MSPs face is finding a way add value for their customers that isn’t about to become yet another service that will turn into an instant commodity.

Photo: Ivan Kruk / Shutterstock

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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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