European Managed Services: A Reality Check

In recent days I've been speaking with a range of distributors and resellers who work in the European market. Some of them are here with me at the VMware Partner Exchange conference in Orlando, Fla. Based on our conversations, I think managed services will succeed in Europe. It's already happening. But not in the way that managed services gained critical mass in the United States. Here's why.

In recent days I've been speaking with a range of distributors and resellers in Europe. They're bringing up topics like cloud computing, virtual desktop infrastructure (VDI), hosted PBXes, unified communications and virtualization. A few of those sources have North American channel experience. They know how the North American managed services market has grown. But they also know quite a few resellers that have struggled to embrace the MSP recurring revenue model.

With all those variables in mind, some of the executives think European resellers will march directly to cloud computing, while wrapping managed services into the solution. In other words: Customers will demand cloud-centric business solutions, and resellers will wrap managed services into the solution. A prime example involves hosted PBXes -- VARs can earn a recurring monthly fee for hosted VoIP. The VARs can also resell, lease or pursue hardware as a service (HaaS) with engagements for desktop phones and handsets. Somewhere within the deal, the VAR will wrap in a monitoring service to ensure the hosted PBX and desktop phones are working reliability.

The key takeaway: Managed services will likely be one key ingredient in a larger SaaS or cloud deal.

Remote Monitoring

The big wild card involves proactive desktop monitoring and management. Yes, all resellers need a tool to remotely monitor and manage customer PCs, laptops, netbooks, smart phones, etc. But will European resellers charge a customers monthly per-user fee for that monitoring service? I can't provide a definitive, blanked answer to that question. The question becomes even more intriguing as Virtual Desktop Infrastructure (VDI) takes hold. In the VDI world, most of the software intelligence lives up at the server. If there's an application problem, the end user -- in theory -- can simply fire up another virtual machine. In that model, there's a greatly reduced need to constantly monitor and manage PC desktops.

So am I down on the European managed services market? Absolutely not. When we unveil our fourth-annual MSPmentor 100 report on February 16, you'll see quite a few European MSPs on the list. We also highlight the top 20 European MSPs on a separate list. Some of the companies are growing their managed services revenues more than 50 percent annually.

Cloud Creates Pull for Managed Services

But one size doesn't fit all. Thousands of European resellers have yet to embrace managed services. And no doubt, aspiring MSPs need to spend a lot of time educating end-customers about the business value of managed services. Instead of getting into a lengthy managed services sales pitch -- "we'll give you a nice report every month" -- I suspect those European resellers will focus on emerging cloud and hosted applications, and then wrap managed services into the deal.

In theory, it sounds like a pretty simple conversation:
  • What are the customers' business issues?
  • Which applications -- cloud or on-premise -- solve those business issues?
  • Which managed services can ensure the applications remain optimized and available to customers?
Still, I'm getting ahead of myself. Most of my European channel sources tell me it's unfair to lump all European countries into a single IT conversation. Some countries are still in break-fix mode. Other countries have national telcom companies that are pushing into SMB IT services. And other countries have solid managed services momentum.

One size certainly doesn't fit all. But I do think, over the long haul, the cloud will be the single thread that pulls the European channel forward. Managed services will certainly be along for the ride.

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