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November 18, 2010

Managed Services Market Crowded, Standing Out Difficult, Insider Says

By David Sims, TMCnet Contributing Editor

The managed services market is crowded. “Our ongoing MSPmentor 100 research suggests the best MSPs continue to grow rapidly,” notes industry insider Joe Panettieri. “As more MSPs pop up it’s getting more difficult to stand out in the crowd.”

For more than a decade, he says, “many MSPs and software companies have worked very hard to explain the value of managed services to end customers. Now, seemingly overnight, the cloud computing hype has caught on with end customers.”

As a result, consumer ad campaigns from Microsoft (News - Alert) and other big IT companies “will further educate SMBs about cloud computing’s value. The result: Some MSPs are riding the hype wave and branding around cloud.”

In late October TMC (News - Alert) reported that Chas Arnold, partner and executive vice president of Atlanta’s DynaSis, knows how you, the overworked IT manager, feel. “As an IT manager, you wear many hats: network administrator, hosting manager, help desk manager, installation executive, and the list goes on and on,” he says.

It’s unavoidable that your job is all of those things, Arnold says, suggesting that hey, “why not focus on those tasks that bring the company the most benefit? A third-party managed service provider can help with the day-to-day operations while you focus on the bigger picture.”

Panettieri says last month IPED veteran Ryan Morris wrote on the MSPmentor site that in an MSP engagement, “the terms shift from time+materials to SLA-based... but the essential service is the same: networks are monitored, databases are patched, servers are maintained. The fact that things can be done remotely is a productivity bonus, but not the essential component of the contract. The core agreement with customers is that an MSP will service their IT without being tied to the number of hours of service performed. Outcomes vs. Inputs.”

No doubt, Panettieri says, cloud computing and managed services “are closely related. MSPs already have recurring revenue models in place so many cloud computing concepts are near and dear to MSPs. Not by coincidence, Ingram Micro (News - Alert) North America has a single VP — Renee Bergeron — leading the distribution giant’s cloud computing and managed services efforts.”

Will cloud computing overshadow managed services, Panettieri asks? “In some ways yes. When CA Technologies (News - Alert) acquired Nimsoft earlier this year, the official CA press release mentioned Nimsoft’s momentum with MSPs and the Nimsoft’s cloud strategy. But much of the high-tech media doesn’t pay attention to the MSP sector, so blog sites like TechCrunch and GigaOm played up the cloud computing angle.”

David Sims is a contributing editor for TMCnet. To read more of David’s articles, please visit his columnist page. He also blogs for TMCnet here.

Edited by Juliana Kenny

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