The IT channel has begun its radical cloud transformation over the past several years, and managed service providers (MSPs) have emerged triumphant in the first round. The dynamic managed service evolution — which introduced new service offerings, business models, delivery models, and market shifts — is responsible for MSP market growth now outpacing the rest of the IT industry. It is also responsible for ushering in the next stage of MSP development, one that Forrester calls the age of "MSP 1.1," that will inevitably lead to a flood of competition as cloud computing blurs partner business model lines and disrupts traditional partner ecosystems. Tech vendors must refine their partner programs in light of this impending inflection point to harness the revenue potential of these up-and-coming shining stars.
- "Managed service provider" is an oft-misunderstood term. Many misinterpret or abuse the term "managed service provider," which is causing rampant confusion in the market. MSPs are third-party organizations that proactively manage IT resources for customers utilizing remote automation.
- The managed services market continues to grow robustly. Growth in the managed services market continues to be strong, and more channel partners are trying to get on board. Traditional VARs, distributors, and retailers are trying to establish a managed services business, either by acquisition or by business model transformation.
- The MSP market is still evolving. MSPs have evolved from their traditional support roots to provide single managed services and are now looking at integrated managed services and hybrid managed/cloud services. Vendors and MSPs are developing their business models to reach the next level of maturity.
- Cloud will lead to the creation of super MSPs. As the industry matures, the services offered by MSPs, hosted service providers (HSPs), and cloud service providers (CSPs) will increasingly overlap. Forrester expects the commonality between these three partner types to act as the fuel to merge these partner types into one.
- MSPs compete in a crowded market. Contemporarily, MSPs compete in a landscape that has a multitude of provider types, with widely varying business models. There is much overlap in the services offered by these providers as technology converges and as traditional partner lines blur.
- Channel conflict is going to be everywhere. Over the past 24 to 36 months, virtually every leading tech vendor (including Amazon.com, Google, and Microsoft) has introduced channel conflict in selling cloud services directly to end user organizations. The cloud is set to create channel conflict between tech vendors, MSPs, HSPs, CSPs, and RMM and PSA vendors, and vendors must examine their intentions to keep their partners on their side.
Vendors mentioned: All Connected, Apptix, Annitel, Autotask, Brennan, Compushare, ConnectWise, Gladiator Technology, Kaseya, Level Platforms, NUI Solutions, Oki, Perimeter, and Sungard.