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2011 Managed Services Ouija Board

2011 Managed Services Ouija Board

Who needs another year-end prediction list?  We both do. They’re fun to write for me, and a quick Holiday read for you.  So let’s get to it.  Here are 10 no brainer calls for the managed services market as we head into 2011.

1. Managed cloud to the forefront: The next wave of cloud adoption will be driven by newly hatched monitored, managed and compliant cloud compute offerings. See recent announcements by Rackspace, OpSource and NaviSite. The race is on to prove to skeptical CIOs that you can run critical apps in the cloud and not risk being the next T.J. Maxx.

2. Proven players acquired for big $$$: The money guys have figured out that only a small percentage of MSPs are bankable. So operationally mature MSPs with proven go-to-market models will command big premiums from buyers. Who will the buyers be?  Telecoms looking to boost so-so stock prices and PE funds created to roll up regional players into a national footprint.

3. Talent shortage: Who knows how to design and price IT managed services?  Who knows how to sell the stuff at a profit?  Who knows how to build and run a 24X7X365 Operations Center that delivers on SLA promises?  Turns out, battle tested MSP talent is in scarce supply. Look for salary inflation as too many market entries chase too little talent.  Payoff time for proven MSP pros.

4. VAR to MSP movement slows: This is too bad. Many VARs will misinterpret enhanced hardware sales associated with economic recovery as proof that the hardware resale model still has legs.  They will lose focus on their transformational VAR to MSP projects chasing short-term channel sales. Hint: Stay the MSP course. Invest now, while you are flush. Pure play VARs are still dead men walking.

5. Fewer software vendors: MSPs will still have plenty of choice for systems management software but it will be delivered through fewer companies. There are just too many software vendors chasing the MSP market right now. Look for an industry shakeout with the trusted players adding good products to their portfolio through acquisition of the guys without critical mass.

6.  Hot job - dashboard architect: Why are most monitoring dashboards so plain, so awkward, so hard on the eyes?  Easy. Most MSPs go cheap on dashboard implementations. They let command line loving engineers design the interfaces that define their day-to-day customer relationships. Nuts. Look for the market leaders to employ creative talent to jazz up dashboard look and feel to at least the same standards as their home page.

7. Hot market - Brazil: In other emerging markets government mostly consumes IT. But MSPs in Brazil sell into healthy middle and enterprise markets in addition to federal and state government. All the MSP growth levers in place in the US (virtualization, cloud) are rolling in Brazil at double-digit clips. That plus Rio…

8. FlexPod vs. V-Block: Who’da thunk it. Infrastructure is sexy again. Especially to geeks of the “pre-sized, pre-configured, validated data center architecture” market segment. Look for a titanic MMA-type struggle between rivals NetApp and EMC. MSPs should be the beneficiaries of the competition – more comprehensive data center storage solutions at even cheaper prices. This brawl will be worthy of pay-per-view.

9. Lightweight software trumps fat: No revelation here. MSPs gladly take 10% less functionality for magnitudes better “time to value." Purveyors of systems management “frameworks” that take months to deploy with an army of consultants on site are not for long in the MSP market. No ROI = No PO.

10. IT 100% outsource to service providers: OK, I am way jumping the gun this one – by years.  But Henry Ford and William Deming were onto something. Economic scale matters. Design, quality, and testing matter. Focus matters.  MSPs are uniquely positioned to leverage these domains most commonly associated with manufacturing into the delivery of highly effective and efficient IT services. More than a trend.  It’s the IT end game.

Phil LaForge is VP and GM, service providers at Nimsoft. Monthly guest blogs such as this one are part of MSPmentor's annual platinum sponsorship. Read all of Nimsoft's guest blogs here.

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