Managed services providers eye cloud computing promise

Dallas — With growing enterprise interest in cloud computing and the technology’s promise of massive savings and ease of application control, managed services providers (MSPs) are very eager to get their heads in the cloud.

At the third Seismic Partner Conference in Dallas, Texas, where some 250 vendor partners of technology distributor Ingram Micro took participated in a series of panel discussions and seminars aimed at growing their two-and-a-half-year-old MSP market, more than a few expressed excitement over cloud computing.

“I want to know more about cloud computing. I want to know how we can make money from it,” says Mike Maki, principal of Clear North Technologies, an MSP based in Eden Prairie, Min. “One of the challenges we’re seeing right now is there are now a lot of companies out their that may be offering a back-up solution online in the cloud versus what I am offering which more tailored.”

Maki worries that because of the economic downturn, many potential customers would be attracted to the cheaper cloud computing offerings.

The term cloud computing is a metaphor for the Internet. Cloud computing is a style of computing that often provides application resources as services over the Internet. Incorporating technologies and practices such as software-as-a-service (SaaS), cloud computing services typically provide common business applications online through the use of Web browsers while the software and data are stored on servers.

“We’ve all done some form of cloud computing in the past. It’s just a matter of recognizing those services. It’s not really new, it’s just that everybody is focusing on it now,” says Rob Rae, sales manager for Ottawa-based MSP Level Platforms.

For instance, he said, his company offers client tools that help them monitor cloud services. “Cloud computing fits well with where the MSP industry is heading,” Rae said.

Cloud computing and the managed services market were made for each other and many MSP should not find it to hard to find profitable cloud computing offerings, according to John D. Cowan, managing director of 6fusion, a Cayman Islands-based company providing on-demand computing technology and advice to service providers.

“Cloud computing is ideally vertical independent and therefore can be applied almost anywhere,” he said.

For instance, small and medium sided businesses (SMBs) – the bread and butter clients of many MSPs – typically want to leverage cloud computing technology but are also constrained by small budgets from seeking large vendors.

“It’s simply not true that the technology will lead to businesses setting up their own cloud computing services. Many SMB customers actually need trusted advisors in cloud computing because they themselves often do not have the time or resources do it alone,” said Cowan.

This is where MSP’s can take advantage of the situation, he said. “Just as they already manage some of the client’s equipment, MSPs can also offer to set up and manage cloud computing services.”

Savings for businesses moving applications delivery to a SaaS model can be very attractive according to Cowan. “Custom desktop applications accessed through traditional methods can cost anywhere from $60 to $80 a month per user. Using a hosted application model, many businesses can cut that cost to only $10 to $15 a month per user.”

But rather than “taking the risks” of creating their own cloud computing platform, Cowan argues that many SMBs would rather use services already developed for them.

Here’s a list of things that CIO’s look for in cloud computing vendors:

* Competitive pricing
* Clear and simple service level agreements
* Industry and business understanding
* Complete solution offerings
* Data and application control

“What customers don’t necessarily need are expensive and large cloud computing vendors,” Cowan said.

To offer this type of service, MSP that do not have the cloud computing expertise should identify a cloud computing partner who can provide the back-end technology, he said.

However, Cowan cautioned that MSPs should be careful and choosing their cloud computing partner. “Remember, as an MSP you should be marketing your own brand. A partner that is more interested in having their brand front right and centre of a customer deployment will be of little help.”

While not recession-proof, cloud computing and SaaS are growing trends, according to Joe Panettieri, executive vice-president ad editorial director of Nine Lives Media, a Centerport, New York-based marketing company and MSP advisory firm.

As the MSP market continues to grow we’re seeing more and more managed services providers plugging more services into their offerings, he said. “The biggest thing right now is the blending of SaaS and managed services.”

There are so many cloud services out there and end customers are trying to figure out which cloud services they need. Ultimately some customers may need a combination of different cloud services, according to Panettierri.

“The biggest challenge for the MSP is tying together billing systems for multiple clouds. But ultimately they’ll need one dashboard to see all those tools at once,” he said.

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Nestor Arellano
Nestor Arellano
Toronto-based journalist specializing in technology and business news. Blogs and tweets on the latest tech trends and gadgets.

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