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On cloud, customers want value not cheap solutions

By , Routed Managing Director.
Africa , South Africa , 15 Aug 2022
Andrew Cruise, Routed Managing Director.
Andrew Cruise, Routed Managing Director.

Infrastructure is the foundation upon which businesses thrive and managed service providers build their businesses, but in today’s environment you need to offer unique solutions that show your customers value if you intend to grow.

A quick search of the current technology trends for this year and beyond reveals much of what we expect: the accelerated rate of digitisation in business and society, together with ever-increasing data volumes, have customers asking for stability, security, backup and redundancy, which are reliable and can scale. It’s a complicated task for any organisation.

The legendary Formula 1 commentator Murray Walker once said: “The lead car is absolutely unique, except for the one behind it, which is identical,” many managed service providers (MSP) are discovering specialising in the same solutions and providing the same cloud solutions from Azure, AWS or any of the other hyperscalers, poses another challenge. When MSPs offer similar solutions, they begin competing on price and risking margin. And the simplicity with which the customer can switch service providers places MSPs and their business at further risk.

The business of cloud, hybrid and multi-cloud is poised to become big business. If it is not on a customer’s technology roadmap yet, it will be soon. For clients of MSPs, cloud solutions for storage, network and processing mean costs and risks of setting up expensive infrastructure to try out new ideas are heavily mitigated. Hybrid solutions, for when public cloud services aren’t suitable, have also matured to the point where they can provide a ‘best of both’ solution.

In much the same way that hardware resellers became MSPs in the late 90s and early 2000s by growing their business by offering additional hardware, software and networking support services to customers, today’s MSPs are going to grow by being able to understand how to leverage the cloud in their client’s environments and offering a unique selling point. Unfortunately, offering the same solution as other MSPs and systems integrators is not it.

Microsoft partners are a dime a dozen, and its Azure services are an easy sell into many organisations, but they do not come without their own challenges. Sporadic outages, little support and surprise price increases are not uncommon. For MSPs competing on price, these issues erode what little margin there was in the deal. It shouldn’t be this way. Not in an environment that is in an intense growth phase.

Clients seek value, not the cheapest solution; the challenge for MSPs is how they define what is unique to them and demonstrate their value. For MSPs, there’s a good margin to be made, too, but it requires that MSPs step out of the perceived Azure (and other hyperscalers) comfort zone to offer a broader range of services.

Cloud will grow regardless. However, MSPs who offer value will grow exponentially. This may require a little bit of a learning curve to onboard new technology, but what is often found is that cloud operators will provide world-class support to ensure a smooth transition - something which hyperscalers tend to charge additional fees for.

Partnering with an accredited cloud provider is also more sensible than an MSP building its own cloud

Having large workloads move to the cloud is inevitable, but unless MSPs carefully consider how they solve this for their clients, they are putting themselves at risk.

MSPs are a valuable part of the ecosystem and sit at a crossroads: take the path most travelled and congested with people who look just like them, or choose the other? The destination might be the same, but the reward will be greater, not only for the MSP, but for the client, too.

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