MSPs need to monitor changing attitudes toward cloud service providers

A survey of 1,000 IT leaders suggests that going into 2022 managed service providers (MSPs) will soon find themselves caught between their loyalty to the major cloud service providers and end customers that believe they are being overcharged for services that are not being delivered as consistently as promised.

Conducted by Civo, a provider of managed Kubernetes and virtual machines services for cloud applications based on its own infrastructure, the survey finds 82 percent believe large public cloud providers such as Amazon Web Services (AWS), Google Cloud, and Microsoft Azure overcharge customers. In fact, 81 percent noted that while cloud service providers known as hyperscalers try to provide the impression they are offering services at a low cost, well over two-thirds (68 percent) said those efforts are misleading.

In fact, just under three-quarters of respondents (74 percent) reported having seen an increase in cloud costs in the last 12 months. Further, these increases are averaging 66% year-over-year, according to respondents. Not surprisingly, a full 82 percent of respondents said the big three hyperscalers should reduce their pricing.

In all fairness, the amount of cloud services being consumed by organizations large and small have increased sharply since the onslaught of a COVID-19 pandemic and made it challenging to deploy and manage application workloads in many on-premises IT environments. The survey also makes it clear that just under half of respondents (47 percent) believe smaller cloud service providers will experience more outages, with 51 percent viewing smaller cloud providers as being less secure. Just over a third (37 percent) also noted that hyperscalers are simply more convenient to employ. Only 17 percent of respondents said they are locked into the cloud services they are currently consuming.

Cloud service providers can expect change in 2022

In the wake of a widespread outage that occurred across an expanse of cloud services provided by AWS the number of organizations that are at least reviewing their cloud strategy going into 2022 has undoubtedly increased in just the last few days. The truth is, however, major hyperscalers frequently have smaller scale outages. AWS alone in the last 12 months has had 27 outages of various services. AWS attributed its latest outage to a glitch in the network services it employs.

Of course, the ultimate cost of cloud service is often tied to how much of a service is being consumed. Savvy IT organizations negotiate substantial discounts either on their own or via an MSP that represents their best interests. The challenge right now is that given all the demand for cloud services, many of the providers of these services are not especially motivated to negotiate.

The only way that attitude is likely to change is if customers make it clear they are willing to deploy more workloads across a wider range of cloud services. The challenge they face, however, is that as they employ multiple clouds the total cost of IT tends to increase because they generally need to hire additional IT staff to manage each of these environments. That additional cost usually exceeds any savings that may be generated by negotiating harder with a hyperscaler.

In theory, of course, IT teams could work with their MSPs to employ a management framework that spans a hybrid cloud computing environment. However, the number of organizations that have the capability to employ such a hybrid cloud platform remains relatively few.

It remains to be seen how cloud computing will evolve in 2022 but the one thing that appears certain is a combination of outages, increased cost sensitivity and the attitude end customers have toward the major cloud service providers is, for better or worse, changing. MSPs, of course, will need to walk a fine line as they advocate for end customers with providers of cloud services that are not instinctively inclined to negotiate.

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