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It’s usually easy to pick out which server management software being relied on to manage the local data center environment is located. Find the oldest, slowest server and chances are high that’s where the management software is running. After all, the best servers in the environment are reserved for maximizing the performance of the applications running in that environment. But as cloud computing continues to mature there’s a burgeoning effort to move the entire IT management plane in the cloud.

A survey of 633 IT and network managers published this week by Extreme Networks, a provider of switches and routers, finds that 17 percent of global customers have already implemented a cloud-managed network and nearly 55 percent are investigating or plan to deploy cloud solutions within the next two years. The survey also finds that 18 percent say they currently use the cloud to support network or system management, while another 27 percent plan to do so within five years. Enhanced access to resources from any location (60%) and ease of management (53%) were top reasons organizations said they are moving IT management to the cloud.

Moving the IT management plane

Moving the IT management plane into a remote data center facility is hardly a new idea for managed service providers (MSPs). That idea is at the core of the business model they operate on. What is changing is that more customers are starting to realize that the IT management plane doesn’t need to run on-premises. Once that concept starts to germinate in their minds it’s only a short leap to the next logical conclusion. The IT organization itself doesn’t need to operate that management plane when there is an MSP that will do it for them.

MSPs, of course, have two basic approaches available to them to provide those services. They can build their network operation center to host all the management applications required themselves. But MSPs should also take note of the fact that providers of IT management tools are making their offerings also available as cloud services that expose application programming interfaces. That can effectively reduce the total cost of providing management services because not every IT management application need to be hosted in a NOC operated by the MSP. They just need to be able to access those management whenever they need it. Some so-called borne of the cloud MSPs don’t even have what traditional MSPs would recognize as a NOC. They merely leverage programmable resources in the cloud via multiple consoles to provide services.

How MSP economics are changing

The economics of being an MSP are clearly changing. There are more distributed workloads in the age of the cloud that need to be managed. At the same time, the total cost of managing all those distributed workloads is declining. Most MSPs today are managing more workloads per administrator than ever. As technologies such as machine learning algorithms enable further advances in IT automation the economics of being an MSP should improve even more. The downside is that barriers in terms of cost of entry for becoming an MSP is declining at the same time. Because of that issue more traditional resellers than ever are now adding managed services to their portfolio, which serves to put pressure on the pricing of managed services. The good is that at a time when the supply of managed services is expanding, so is demand.

Historically, MSPs have accounted for anywhere between 15 to 25 percent of IT services consumed. As IT becomes more distributed the percentage of IT services being delivered by an MSP should increase, especially as IT organizations focus more of their attention on applications rather than infrastructure. In essence, it is now the best and worst of times to be an MSP. The challenge as always, is figuring how to maintain the right level of profitability in pursuit of those increased opportunities.

Photo:  ra2studio / 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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