Future-Ready MSPs: Steering the Evolution of Managed Services

The role of technology in business transformation is indisputable. As organizations embrace digital transitions, managed services have emerged not just as a supportive backdrop, but as critical linchpins underpinning the very foundations of these businesses. Over the past decade, their importance has been underscored time and again, playing a pivotal role in ensuring businesses not only run but thrive in an increasingly competitive landscape.

The reason behind this growing significance is twofold. On one hand, the technological landscape of businesses is undergoing rapid, near-constant evolution, ushering in new challenges and opportunities. The demand for reliable, efficient, and agile IT solutions is more pressing than ever. On the other hand, managed services themselves have been agile, evolving in response to changing business needs and technological innovations.

But as with any evolving domain, the path forward is shrouded in both opportunity and uncertainty. How is the relentless march of technology shaping the future trajectory of managed services? What does the next phase of evolution look like for service providers? And most importantly, how can these providers adapt and position themselves for success in a future that promises unprecedented change? This article seeks to address these questions, providing a comprehensive perspective on the future of managed services, the transformative technological influences, the tangible benefits for businesses, and the imperatives for service providers as they navigate the evolving terrains of the digital age.

What are Managed Services?

Managed Services, while a term frequently thrown around in tech circles, encapsulate a profound shift in how businesses approach their IT operations. At its core, managed services signify a strategic relationship wherein organizations delegate the responsibility of managing and maintaining both their IT infrastructure and applications to third-party specialists.

Envision managed services as a robust safety net beneath the high-flying trapeze act of modern businesses. In an era where IT downtimes can mean significant revenue losses and reputational damage, these services ensure a seamless performance, keeping businesses agile and ahead of the curve.

The genesis of managed services can be traced back to the early 2000s. Those were simpler times for IT, with organizations needing assistance primarily with monitoring rudimentary systems and ensuring basic maintenance. The remit was clear: keep the systems running, and troubleshoot if something goes amiss.

But as we transitioned into an age dominated by the cloud, big data, cybersecurity threats, and more, managed services witnessed a metamorphosis. No longer limited to basic monitoring, they began encompassing a vast array of services – cloud computing management, robust data backup and recovery solutions, comprehensive security management, and much more.

Furthermore, the evolution was not just in the scope but also in the depth of engagement. Managed services started to move away from a reactive model—where providers would jump in to fix issues—to a proactive model. Here, potential challenges are anticipated and addressed before they can escalate, leveraging cutting-edge technologies and sophisticated algorithms.

Today, as businesses pivot and adapt to a rapidly changing digital landscape, the role of managed services has never been more crucial. They stand as the vanguard, enabling businesses to navigate technological complexities with finesse and ensuring that the IT infrastructure remains a catalyst for growth rather than a bottleneck. The journey from the early 2000s to now has been nothing short of transformative, and as the digital age continues its onward march, managed services are all set to play an even more defining role in shaping businesses' futures.

A Buoyant market

The global Managed Services Market is on the brink of a remarkable surge. Projections indicate an astonishing growth, with the market set to reach an impressive $393.72 billion by 2028. This is not mere happenstance or an anomalous blip on the financial radar; it is a testament to the intrinsic value and strategic importance of managed services in today's digital-driven business landscape.

Consider the context. The past years have seen a seismic shift in how businesses approach IT. With the digital transformation wave sweeping across industries, organizations are grappling with an increasingly intricate IT environment. This complexity has expanded the scope, scale, and stakes of IT operations. Now more than ever, organizations require holistic solutions that not only manage their infrastructure and applications but also anticipate, address, and adapt to the myriad challenges of a digital ecosystem.

Such factors have primed the market for an era of growth. A noteworthy report by GlobalNewsWire suggests that by 2025, a staggering 60% of organizations will lean heavily on managed services. It is a clear indication of the industry's trajectory - upward and onward.

The momentum in the market is not driven merely by the sheer numbers but also by the key players steering this growth. A quick glimpse at the industry's stalwarts provides insights into the breadth and depth of the services offered. Behemoths such as Fujitsu, Nokia, or Microsoft are leading the charge. Even large telecoms companies, including Deutsche Telekom AG and Verizon, offer a suite of managed services that extend far beyond just communication solutions.

These giants, with their vast resources, cutting-edge solutions, and global reach, are not only defining the contours of the managed services landscape but are also setting the pace for its future evolution. However, their presence does not diminish the role of other key players, each bringing specialized offerings and unique value propositions to the table, contributing to the dynamic and vibrant nature of the market. The future is not just promising; it is poised for transformative growth.

Trends shaping the future of Managed Services

The managed services sector, much like the broader technological landscape, is not static. As businesses evolve, and technological paradigms shift, the sector too witnesses significant transformation. Here is a look at the trends that are poised to redefine the future of this dynamic industry.

Booming Native Cloud Strategies: The emergence of microservices, containers, declarative APIs, and service meshes signals a change in the way software is conceived and deployed. They form the backbone of a cloud-native strategy—a transformative approach that leverages the cloud's full potential. According to Forrester’s 2022 Infrastructure Cloud Survey, a noteworthy 40% of businesses are poised to adopt a cloud-native-first strategy by the end of 2023. This is not just about jumping on the tech bandwagon; it is about achieving agility, scalability, and cost-effectiveness.

The Cloud Managed Services Revolution: As organizations increasingly pivot to the cloud, the need for expert navigation becomes paramount. Cloud managed services are evolving to offer holistic solutions that cover every facet of cloud strategy, from deployment and integration to ongoing management. The expertise that seasoned managed service providers bring ensures that businesses can leverage the cloud's benefits without being mired in its complexities.

AI and Machine Learning – The New Vanguard: With AI and ML technologies maturing, they are becoming integral to managed services. From predicting potential IT infrastructural issues to optimizing processes, these technologies allow for smarter, more proactive solutions. Moreover, as businesses realize the vast potential of AI but often lack in-house expertise, managed service providers with AI capabilities become invaluable partners.

IoT – Bridging the Physical-Digital Divide: IoT devices are proliferating across industries. From manufacturing to retail, the influx of data from these devices provides insights previously deemed unattainable. For managed service providers, this represents a dual challenge and opportunity—managing the increased data flow and deriving actionable insights from it.

Cybersecurity – An Ever-Evolving Battlefield: As cyber threats grow in sophistication, the onus on managed service providers to safeguard their clients' digital assets intensifies. This is compounded by increasingly stringent regulatory requirements. Modern managed services are expected to be at the frontline, both in terms of threat detection and compliance.

BYOD – A Double-Edged Sword: The rise of Bring Your Own Device (BYOD) policies in workplaces has been meteoric. While it offers flexibility and often boosts productivity, it also presents significant IT challenges. Managed service providers are increasingly stepping in to ensure that BYOD does not compromise security or compliance.

Remote Work and Collaboration: The surge in remote work has underscored the need for seamless, secure, and efficient collaboration tools. Managed services are evolving to ensure that businesses can collaborate without borders and without compromises.

XaaS – The Expanding Cloud Universe: The rise of "Everything-as-a-Service" (XaaS) is a testament to the cloud's versatility. From software to platforms to infrastructure, everything is available "as a service". Recent market data suggests that the XaaS market size will continue its upward trajectory, propelled by businesses seeking flexibility and scalability.

Championing the Customer Experience: As businesses vie for customer attention, the user experience becomes paramount. Managed services play a pivotal role in ensuring businesses have the technological infrastructure to deliver consistently stellar customer experiences.

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Should Managed Services Providers (MSPs) specialize (industry vertical and domain)?

The era of generalization is giving way to one of specialization, particularly in the world of managed services. This specialization can take several forms: focusing on specific industries (verticals) or honing in on certain technologies or challenges (domains). Here is an exploration of the debate and the merits of each approach.

The case for vertical specialization

The increasing complexity and specificity of industry needs make a compelling argument for MSPs to develop vertical expertise. When an MSP deeply understands the nuances, challenges, and opportunities of a particular industry, it can provide tailored solutions that generic providers might miss. This is not just about technology but about context.

A financial services firm's IT needs, driven by regulatory compliance, security, and high-frequency trading infrastructures, will differ vastly from those of a healthcare provider, where patient data, telehealth infrastructure, and regulatory compliance play pivotal roles. For MSPs, mastering the intricacies of specific industries can provide a significant competitive edge.

Recent studies fortify this stance. A joint study from IDC and Microsoft emphasized the benefits of vertical specialization. The findings were striking: a whopping 82% of partners believed that a vertical focus was crucial or very important for their growth trajectory.

The role of domain specialization

While vertical specialization is about depth, domain specialization is about breadth but with a focus. Some MSPs are opting to become masters in specific technological domains, whether it is cybersecurity, cloud computing, data analytics, artificial intelligence, or big data. Here, the idea is to be the go-to expert for a particular technology or challenge, irrespective of the industry.

For instance, in an age where cyber threats loom large, an MSP specializing in cybersecurity can serve a broad range of clients across industries. They bring to the table deep expertise in a domain that is universally relevant.

Balancing act for larger MSPs

For sizable managed service providers with ample resources, a hybrid approach might be feasible. They can maintain broad-based expertise while developing specialized teams or divisions focused on certain industries or domains. This allows them to serve a diverse clientele while also catering to niche demands.

Benefits of managed services

In the dynamic landscape of modern business, managed services have emerged as a beacon of reliability and efficiency. To understand the magnitude of their significance, let us delve into the myriad benefits they confer to businesses across scales and sectors.

Operational excellence and efficiency

Arguably, the most immediate benefit is the elevation of IT operation efficiency. Managed services streamline processes, ensuring that the technological backbone of an enterprise is robust and agile. With specialists overseeing IT operations, there is a marked reduction in downtime, system glitches, and other operational bottlenecks.

Cost benefits

Financial prudence is at the heart of every business decision. Adopting managed services can translate to substantial cost savings. Instead of bearing the expenses of an in-house IT team – which includes salaries, training, and infrastructure – companies can have a predictable budget with managed services. Furthermore, the indirect costs stemming from IT issues, such as lost productivity or business downtimes, are significantly reduced.

Access to cutting-edge technologies and specialized skills

The tech world is in a state of flux, with new innovations emerging at a rapid pace. Managed service providers are at the forefront of this evolution, equipped with the latest technologies and the skills to harness them. Partnering with MSPs means businesses can leverage these advancements without hefty investments in acquisition and training.

Unwavering focus on core business

By entrusting IT operations to experts, businesses can redirect their focus on what they do best. This could be product innovation, market expansion, customer engagement, or any core competency. With the assurance that the IT domain is in capable hands, the leadership can strategize and execute without IT-induced distractions.

Fostering innovation

Managed services do not just maintain the status quo; they actively promote innovation. With the burden of IT management offloaded, companies often find they have more resources – both time and money – to invest in research, development, and other innovative ventures.

Enhanced employee and customer experience

A smoothly running IT infrastructure enhances the overall workplace experience. Employees can work without disruptions, collaborate effectively, and access resources seamlessly. This operational efficiency indirectly benefits customers as well, as they experience faster response times, efficient service delivery, and consistent brand interactions.

Competitive advantage

In the age of digital transformation, the efficiency and agility of IT operations can be a game-changer. Managed services ensure that businesses are always on the cutting edge, giving them a significant advantage over competitors who might still be grappling with IT challenges.

Ensuring compliance and security

In sectors where regulatory compliance is stringent, MSPs ensure that businesses meet all necessary criteria. Furthermore, with cyber threats becoming more sophisticated, MSPs provide robust security measures, ensuring data integrity and safeguarding business operations.

How should MSPs position managed services?

The marketplace for managed services is rife with potential, but capturing this potential requires a meticulous and client-centric approach. Positioning managed services is not merely about showcasing capabilities; it is about resonating with client needs and articulating unmistakable value. MSPs should position themselves as partners in this transformative journey, offering not just services but strategic insights, expertise, and unwavering support. Let’s explore how MSPs can adeptly position themselves in this ever-evolving market.

1. Qualifying Opportunities

To ensure that resources are expended judiciously, MSPs must prioritize early and frequent opportunity qualification. A hasty commitment to an ill-fitted request for proposal (RFP) can divert crucial resources from more viable prospects. The three pivotal questions MSPs must continually ask are: Should we pursue this opportunity? Can we effectively compete for this opportunity? Can we reasonably expect to secure this deal?

2. Crafting the Value Proposition

At its core, a value proposition is about resonating with the unique needs and aspirations of various stakeholders. What does value mean to a CFO may differ starkly from an IT director or an end-user. By understanding these differentiated perspectives, MSPs can articulate tailored propositions that echo specific desires, addressing both the tangible and intangible benefits.

While I was at Fujitsu, we secured a substantial managed services deal with the second largest local government organization in Australia, which had an annual budget of $AUD1.2 billion and infrastructure assets valued at $AUD14 billion. Our success was not only due to the quality of our solutions, services, resources, price, and reputation; crucially, we understood what the organization valued. A key commitment we made was creating one hundred jobs in the local market.

3.?Engaging with clients

Successful engagement hinges on a deep understanding of client problems and the broader industry landscape. Before initiating dialogue, MSPs should:

• Research: This involves understanding the client’s industry, challenges, competitors, and goals. The deeper the knowledge, the more relevant the conversation.
• Position with stakeholders: MSPs should identify key decision-makers and influencers within the client organization. Tailoring communication based on stakeholder importance and interests can greatly amplify engagement effectiveness. The essence lies in forging strong relationships and establishing trust, ensuring that each interaction is value-driven and fosters meaningful conversations.

4.?Closing the deal

Securing a commitment is an art and science, intertwined. MSPs must:

• Listen actively: Understand and empathize with client concerns, objections, and aspirations.
• Showcase demonstrable ROI: Clients are more likely to commit when they can foresee tangible returns on their investment.
• Offer flexibility: A one-size-fits-all approach rarely works. Customizing offerings based on client needs can be the differentiator.

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The renowned American author, salesman, and motivational speaker, Zig Ziglar, once said, "Stop selling, start helping." This mantra should be the guiding force for MSPs. It is about not just offering services but delivering solutions. It is not merely about business transactions but forging lasting partnerships.

For further reading on this topic, consider the following articles:?Cracking the Code: How to Win Over Executive Buyers and Close Deals | LinkedIn ; Complex deal origination and closing: art or science? | LinkedIn ?and?Sell like a consultant and close deals! | LinkedIn

Conclusion

The managed services realm stands on the verge of unparalleled growth and evolution, driven by technological advancements and changing business dynamics. These waves of changes are not just reshaping the way businesses operate but are recalibrating the very essence of how they interact with their technology partners.

MSPs today are not just service providers; they are architects of transformation, enablers of innovation, and guardians of operational resilience. Their role has never been more pivotal as organizations, regardless of size or sector, recognize the power of technology not just as an operational tool but as a strategic differentiator.

But with these immense opportunities comes the responsibility to evolve, adapt, and above all, stay aligned with client needs. It is not the technology itself, but how it is woven into the broader business tapestry that will define success. Future-ready MSPs will be those who prioritize value over volume, partnerships over transactions, and vision over short-term victories.

For every business leader, IT specialist, and executive in the managed services sphere, the road ahead is clear. Embrace change, invest in understanding, and relentlessly strive to be not just a provider, but a partner. As we stand on the cusp of this new era, the future beckons with promises of growth, innovation, and transformative partnerships.