Days before launching a new version of its software-as-a-service (SaaS) enterprise toolset for Office 365 and Salesforce, AvePoint executive John Peluso, chatted with MSPmentor about the role of managed service providers (MSPs) in a cloud-first world.

As it turned out, the enhanced AvePoint Online Services platform launched on the same day that Microsoft announced the end of partner competencies that don’t directly drive cloud business.

AvePoint – which dubs itself “The Microsoft Cloud Expert” – is a partner, and if Peluso knew the announcement was coming, he kept it under wraps.

But the vice-president of product strategy made no secret about his sense that IT service providers should act aggressively to capitalize on migration and other near-term cloud opportunities, and that they’ll likely need more transformation to ensure survival in the more distant future.

“The short answer is, it does pose a threat,” Peluso said.

As an independent software vendor (ISV), AvePoint maintains relationships with a wide range of channel companies, including MSPs, integrators, private hosting providers and others long-accustomed to revenue related to installing and maintaining systems.

“We’ve got some partners who have made a business doing three-year updates and maintenance,” Peluso said. “We’re seeing these customers now doing partnerships to help with onboarding of customers.”

Tweaking business models to drive adoption of Azure cloud platform is precisely what Microsoft intended with last week’s announcement.

And while many MSPs and other channel businesses have swiftly pivoted to capture a share of the cloud windfall, some partners publicly and privately expressed concerns about the pending changes.

Online forums were abuzz with reaction to the fateful blog by Microsoft Worldwide Partner Group general manager Gavriella Schuster that explained the decision and gave partners 18 months to develop cloud strategies.

This anonymous post was left on MSPmentor:

“What Gavriella Schuster does not realize is this monumental change for MSP’s is very costly (time & money) to have their engineers certified with the new competencies in a year, when the engineers just passed and completed the competencies from the recent competencies Microsoft is now expiring. It would be extremely helpful if Microsoft considered the MSP’s selling their products and services in their decision making and developed alternative strategies in growing their services rather than kicking these MSP’s in the pants.”

No doubt, many Microsoft partners and other channel firms are feeling similar anxiety.

In hindsight, Peluso seems almost prescient as he rattled off the myriad investments, initiatives and financial incentives Microsoft is employing to help its partners monetize the opportunities of cloud.

“There’s a push by Microsoft to bring as many players to the table as possible,” he said.

In the short term, those opportunities lie in service offerings that help enterprises plan cloud and hybrid networks, select appropriate applications and manage migrations.

“The reality is that for any company of size, it’s not going to be all that easy,” Peluso said. “That will be a great business for the next few years.”

After that, some service providers could face an uncertain period of innovation and reinvention.

“Once you do the migration, your ongoing value as an MSP, there’s a risk there,” Peluso said. “They’re not going to need you as much as they used to.”

He described a winning MSP model as one that successfully sells strategic advice and technical consultation as a value-add to traditional service offerings the often-discussed virtual CIO.

AvePoint also is looking to play a role in facilitating the transition.

In the next couple of months, Peluso said, the vendor plans to launch a partner portal interface that will enable users to sell managed services to Office 365 customers by way of its AvePoint Online Services platform.

“The worst thing in the world right now is to put their heads in the sand,” he said. “You’d better be doing something. I see problems if you don’t have a compelling value proposition beyond keeping the platform up.”

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