Customers want simplicity. At the same time, they need expertise. If a pipe bursts in the office you don’t try to fix it yourself, you call a plumber. The same goes for IT management. Companies big and small rely on managed service providers for the technology and know-how needed to care for IT processes and services. Indeed, the global managed services market size is expected to reach $730 billion by 2030.
At the same time, business customers (small and medium businesses and enterprises) want the convenience of one-stop shopping, just like their B2C experience.
The next evolution for MSPs, then, is to become that one-stop shop by expanding their catalog with digital services and evolving to a digital service provider (DSP).
Offering a Flexible Model
It’s clear that end customers want to consume technology more easily. According to research by Dynamic Yield, 76% of consumers say they shop on mobile devices because it “saves them time.” The same goes for business customers. MSPs simplify their customers’ experiences, cutting out the hassle of dealing with multiple vendors.
But today’s MSPs also need to be able to respond to market fluctuations and offer solutions in a flexible model that allows customers to upgrade or downgrade, terminate, or pause their services. For example, a retailer needs more bandwidth during peak holiday season, starting with Black Friday and Cyber Monday and all the way through the after-holiday sales. After that, things slow down, and those resources are no longer needed.
Bundled Is Better
Small to medium businesses want to deal with a single provider for most, if not all, of their business needs because IT is not their core business. They also want to pay as they go.
SMBs are usually more conservative about their bottom line and tend to steer away from stand-alone or siloed products. They want to be able to subscribe to a bundle of services and products, such as data storage that may integrate services like software-as-a-service (SaaS) and support, while benefiting from the ease of one-stop shopping.
MSPs can scale by partnering with a cloud platform provider that manages subscription and billing, vendor and product information, and vendor onboarding across multiple channels. A platform enables companies to create their own ecosystems, as well as connect vendor and go-to-market ecosystems. A platform also automates the distribution of traditional and digital products and services across partners in the digital supply chain.
Our research shows that the more committed an MSP is to providing services rather than selling hardware and infrastructure, the higher their margins. There’s increasing demand for anything-as-a-service (XaaS) solutions. At the same time, MSPs are trying to capture higher margins and grow recurring revenue. A cloud platform can provide end-to-end automation for everything from SaaS to billing to reconciling every step of the supply chain.
A digital ecosystem management platform allows MSPs to:
- Automate XaaS procurement to expand service offering and deliver XaaS bundles
- Launch a cloud marketplace to adapt to current and future demand for cloud computing services and to expand product reach and availability
- Launch a XaaS business to offer usage-based bundled solutions
- Provide a central view to the customer and the MSP on consumption across public and private clouds
Steps to Becoming a DSP
MSPs that evolve to DSPs will provide online services to their clients, including cloud services, hosting, and software development. Companies work with digital distributors for a variety of reasons, but there are three main drivers:
- Achieving a competitive advantage by leveraging technology
- Increasing efficiency and productivity
- Enhancing the customer experience
The goal is to make these services easier to buy, easier to sell, and easier to process, on your smartphone or other mobile device.
To convert to a DSP, start by publishing a catalog to expand your offerings, such as SaaS and infrastructure-as-a-service (IaaS) solutions–automating ordering and fulfillment.
Then launch your digital marketplace where you can sell your own products or a bundle of services. You can manage the catalog through a unified central system.
Next step is to accelerate time to revenue by creating your own solutions quickly and adding XaaS bundles, including hardware, software, and services for cybersecurity, IoT, productivity or networking.
Finally, expand to a hybrid cloud strategy. Centralizing management of private and public cloud infrastructures is key in this last step. Large enterprises have already moved their mission-critical applications to public clouds such as Amazon Web Services, Microsoft Azure, and Google Cloud Platform while outsourcing noncore applications to private providers.
All these steps will support MSPs in providing a flexible services consumption model that allows end customers to add or remove services as the business demands. They can pay as they are growing the business without a large up-front investment, and get everything they need from a one-stop shop of digital services.
ADONAY CERVANTES is global field CTO at CloudBlue.
