MSPs need to make some tough strategic decisions

There’s an old African proverb that notes when elephants fight, it is the grass that suffers. These days in the land of IT, the elephants that are doing the fighting are cloud service providers and manufacturers of traditional IT infrastructure deployed in on-premises environments.

As more workloads are deployed in the cloud, manufacturers of servers and storage systems are now racing to provide a cloud-like experience in on-premises IT environments, in the hopes of keeping as many workloads running in local data centers as possible. 

In the age of the cloud, IT vendors across the spectrum have observed that there is a strong appetite for managed services. All three of the major cloud service providers basically provide customers with two options. Customers can either deploy workloads on a public cloud themselves or via a third-party managed service provider (MSP), or they can employ the managed services provided by the cloud service provider.

From a marketing and sales perspective, it is apparent cloud service providers such as Amazon Web Services (AWS), Microsoft, and Google are all trying to push as many customers as possible into relying more on the managed services they provide.

Manufacturers are moving down a similar path.

IT organizations or their favorites MSP proxy can still on their own deploy workloads on systems. However, Hewlett-Packard Enterprise (HPE), Dell Technologies along with its VMware subsidiary, and Lenovo are all moving to sell managed services. HPE claims it already has $2.8 billion in sales booked for an HPE Greenlake managed service and that by 2022 every platform it sells will be made available as a service.

The most intense fighting in the war for control over application workloads is currently focused on VMware environments. VMware, in collaboration with Dell Technologies, is squarely focused on managed services running on AWS, Google Cloud Platform, or on-premises IT environments that it will provide. Meanwhile Microsoft, via an alliance with CloudSimple, is counting on an ability to make instances of VMware available as-a-Service. 

Manoj Sharma, vice president of product management for CloudSimple, says that as these elephants prepare to do battle over both legacy VMware environments and emerging cloud-native platforms such as Kubernetes, traditional MSPs need to decide where they want to focus their efforts. The core issue is the rate at which cloud service providers can provision IT environments. For example, Microsoft, in collaboration with CloudSimple, can stand up an entire VMware environment in minutes.

“We can provision VMware in as little as 30 minutes,” says Sharma.

Options for MSPs moving forward

Sharma says MSPs could continue to compete directly against all the behemoths moving into their space or shift their focus to an applications layer that providers of infrastructure inside and out of the cloud don’t directly address.

Of course, any transition to managed infrastructure services provided by vendors isn’t going to happen overnight. MSPs would be well advised to take their time in deciding how to respond. Many customers will remain loyal to their existing customers for years. In fact, it’s not at all clear yet in a world made up of multiple clouds whether a vendor focused on a single platform will ultimately succeed. Eventually, there will be a move to consolidate control planes spanning multiple clouds.

In the meantime, providers of platforms are turning a small army of salespeople loose, to promote their own managed services. Many traditional resellers will aid them in that effort by deciding to resell those managed services. In the process, these resellers will label themselves as an MSP without making much of an investment.

The issue MSPs need to decide on is whether they are willing to make the investments required to protect all their turf, make a strategic retreat to the application level, or simply throw in the towel by agreeing to merge with a larger MSP entity. Whatever path an MSP pursues, the single most important intangible asset every MSP will need to have may not be pure technical and sales acumen, but rather the courage required to compete at a whole new level.

Photo:  T.Dallas / Shutterstock.