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February 27, 2023
By Chad Reese
For decades, organizations across industries have relied on managed service providers (MSPs) to manage their IT infrastructure. Recently, the shift to the cloud, remote and hybrid work and rapid digital transformation initiatives related to the pandemic have all contributed to a greater reliance on MSPs for everything from basic IT tech support to protecting company networks from cyber threats.
Today, increasingly complex hybrid and multicloud environments have created new ways for MSPs to drive long-term value for clients and increase revenue streams. MSPs have done so by helping clients migrate to the cloud and by shifting to emphasize subscription-service offerings that create consistent, predictable revenue rather than relying on one-time product reselling transactions.
It was the Roaring ’20s for MSPs as recently as a few months ago when it was predicted that average MSP revenue would grow by approximately 50% in 2022. But amid a potential economic slowdown, there are signs that the period of easy growth for MSPs may end. Companies are now slowing the pace of their technology spending, implementing hiring freezes and even laying off tech staff after rapid growth periods that coincided with the pandemic.
Despite the potential economic downturn, there’s a silver lining for MSPs. Even as companies adjust their IT budgets, many will continue modernizing applications and migrating to the cloud, and as a consequence, IT environments will continue becoming more complex. Already overworked ITOps and DevOps teams will have to do more with less. This is where observability, supported by advanced artificial intelligence for IT operations (AIOps) capabilities, comes into play. MSPs can provide deep value.
Observability with AIOps solutions are the clearest path forward for MSPs to expand their customer capabilities and offerings. Modern observability provides customers with unified and comprehensive visibility for today’s modern, distributed applications and multicloud IT infrastructure. By helping companies understand issues and proactively recommending solutions to ensure optimal performance and reduced downtime, observability helps organizations optimize performance and deliver better user experience while keeping costs to a minimum.
MSPs have started embracing observability, but because of several converging trends impacting the industry, this will be the year that observability becomes a core component of MSP offerings. The following outlines the top five reasons that more MSPs will turn to offer observability solutions.
Observability and AIOps will help fill gaps in tech talent and enable clients to do more with less. As companies continue experiencing higher employee turnover in tech roles and implement hiring freezes, it’s important that every team is highly productive to support the company’s mission-critical services. Observability and AIOps allows organizations to be more efficient through automated issue identification and resolution, reducing the time teams need to spend on code debugging and troubleshooting. By offering observability, MSPs can help their clients gain deep and meaningful visibility into their IT infrastructure without needing IT employees to manually monitor systems.
Observability and AIOps support stronger security. With global cyberattacks increasing by 28% in the third quarter of 2022 alone compared with the same period last year, it’s imperative for organizations to stay ahead of potential breaches. With observability, MSPs can fully understand their client’s network and find hidden and unknown security exposures. Data insights from observability can then be used to safeguard clients from potential attacks, long before they happen, by pointing to where the vulnerabilities are in source code. And if the attack has already occurred, observability can help provide more detailed information on what actions attackers took inside the network — and help improve their security posture in the future.
Observability and AIOps means more recurring revenue. A recent report shows that MSPs expect to generate 63% of their income from subscription-style services in 2022, moving away from product reselling. Hybrid observability solutions offer MSPs the opportunity to benefit from a new, consistent revenue stream.
Observability and AIOps help address the hybrid reality. Demand for cloud-migration services and assistance in the cloud is growing among MSP clients, with hybrid environments becoming the norm. By offering observability, MSPs can provide customers with the right tools to manage multicloud environments and seamlessly transition to the hybrid cloud space. Observability provides the necessary visibility into key data layers that inform the cloud-migration process. Once clients are in the cloud, it can be used to continue tracking network and application statuses.
Observability means MSPs are one step closer to offering autonomous operations. Artificial intelligence and machine learning are quickly becoming the new standard for simplifying the IT process and creating a system that can run on its own. Observability lets MSPs offer clients automated issue detection with advanced AI technology that pinpoints and fixes problems as they arise in real time. There’s less possibility of human error if a system is autonomous, and it also frees the MSP staff to focus on other ways to provide the best service for their clients.
Through observability, MSPs will help customers come one step closer to the future of fully autonomous operations, providing visibility across an organization’s entire environment to identify issues and take corrective action without human involvement.
Chad Reese is president of Americas sales and global channel at SolarWinds. A technology industry veteran with 25 years of experience serving in leadership positions at IBM and, most recently, VMware, Reese leads sales at SolarWinds in the Americas and is responsible for the company’s global channel ecosystem. You may follow him on LinkedIn or @solarwinds on Twitter.
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