Blog: 2023 – The Year of the Cloud Managed Service Provider

Written by Frank York

The Rise of the MSP

Managed service providers, (MSPs), enter 2023 with exciting marketing opportunities in the cloud that call for bold and immediate action. What key ingredients will advance an MSP to the front of the line? As competition intensifies, how does an MSP differentiate itself in a crowded marketplace and secure new revenue streams?

MSPs have been around since the 1990s. They come in all shapes and sizes and are generally distinguished by what services they provide. The global managed services market was valued at 267.3 billion in 2022. The MSP Alliance estimates that as many as 150,000 MSPs exist globally, while MSP Resources reports that there are 40,000 in the USA. According to the Cloud Managed Services Global Market Report 2022, the cloud managed services market size in 2022 was $99 billion and is expected to grow to $164 billion by 2027.

The Cloud MSP Market Heats Up

S&P Global reports that 50% of organizations use cloud MSPs to support their cloud environments. Even more striking, however, is that of those who engage cloud MSPs, 73% expect to utilize MSPs to a greater extent as time goes on. The market potential is significant. Gartner reports that in 2023 public cloud spend worldwide is expected to reach nearly $600 billion.

The Sweet Spot

The successful MSP brings new products, services, or features to its clients in ways that both surprise and delight. A surprise in that the MSP offers added value unexpectedly and before the client fully realizes that the new features are needed or even available. A delight in that the offering is intuitive, clearly solves issues the client is facing, and enhances the client’s cloud experience and competitive edge. By bringing surprise and delight to the client relationship the MSP confirms that it is the trusted advisor and IT expert, expanding its presence in the cloud marketplace and promoting retention of its existing clients.

Client Challenges are Opportunities Knocking

Clients partner with MSPs for multiple reasons, but are primarily looking to reduce their costs, access technological expertise, obtain scalability and experience real-time support. The bottom line is that they want to focus on their core business objectives and leave the technical stuff to the MSP.

• Skill Shortage
  The top issue facing today’s IT departments is a shortage of workers and resources. Multiple reports document the increasing gap between IT needs and availability, as well as the impact on the industry. McKinsey, IDC , and Gartner are some of the noteworthy sources that highlight the detrimental impact the talent gap imposes on the cloud economy, with management consulting firm Korn Ferry projecting that by 2030 there will be a global shortage of 85 million tech workers. More and more businesses are turning to MSPs to replace the dwindling labor market.

• Security
  Security is another top issue facing cloud organizations today. The number of bad actors and security attacks continues to grow in frequency and sophistication. Businesses are turning to MSPs to stay ahead of security risks, both in terms of security management and security consultation. MSPs must develop advanced security offerings that address cyber risks.

• Increased Regulation and Compliance Requirements
  Organizations computing in the cloud face increased regulation from governments that are beginning to enforce compliance measures more aggressively, especially with soaring security breaches. Areas of finance, healthcare, and education are all expected to receive more scrutiny, creating a demand among clients who are active in these areas for outsourced compliance expertise and monitoring from MSPs.

• Migration and Digital Transformation
  Businesses frequently pursue digital transformation incrementally, increasing the likelihood that gaps will exist in their cloud infrastructure. Services may be duplicated or prove to be inadequate for the compute tasks they are assigned. Even when aware of these deficiencies a business often lacks the expertise or resources to make corrections. In a similar manner, mergers and acquisitions combine disparate and certainly redundant IT features. A cloud MSP can identify the shortcomings of these transformations and implement whatever remediation measures are needed.

• Technology
  For years cloud computing has been touted as a necessity to compete. Today it is suggested that a cloud presence is necessary to even survive.

   

  “Businesses that successfully exploit cloud computing will have a competitive advantage, and it might even determine whether they survive.” Gartner

  The cloud environment continues to evolve. Organizations are presented with competitive features that were not even dreamed of only a few years ago. Once the allure of the cloud consisted primarily of spinning up resources on one of the big three cloud platforms to enhance speed and agility. Now, sophisticated innovations such as edge computing for better security and decreased latency, containerized applications greater efficiencies, and XaaS, the internet of anything and everything lead to complexities that overwhelm an organization’s IT staff and conjure up the appearance of a cloud compute arms race. This ongoing dynamic will only drive greater dependence on the competence and expertise that a skilled MSP brings to the table.

• Architecture
  Businesses have numerous design configurations from which to choose. On premises, public cloud, private cloud, multi-cloud, hybrid cloud, and combinations of each present a plethora of options. There are benefits to be gained by choosing different configurations but making the parts work together seamlessly and with actionable visibility is a challenge that prompts many organizations to turn to MSPs.

• Growth
  The number of workloads in the cloud continues to grow but there is one segment of the cloud economy where growth is particularly noteworthy for MSPs. Small and Medium Sized Businesses (SMBs) are migrating more rapidly to the cloud. This is significant as they largely lack the internal technical skills to operate in the cloud and consequently must engage MSPs for those resources. Flexera’s 2022 State of the Cloud Report reveals that 63% of SMB workloads will reside in the public cloud in the next twelve months and that their budgeted spend in the cloud rose YoY in 2022 from 38% to 53%. Zdnet reports that the majority of SMB tech spend is in the cloud and will reach $291 billion by 2026.

The Future is Now

Facing this next season of opportunity, MSPs should constantly be on the alert for solutions that propel them to that MSP sweet spot. CloudSaver’s Tag Manager is a SaaS solution that will surprise and delight every client that computes in the cloud. It tackles the tagging issues that are very hard for cloud businesses. So hard that many organizations no longer even attempt to achieve complete tagging of their cloud resources – a foundational necessity for cloud health.

Every vertical in an organization’s tag environment, from cost optimization, security, performance and governance, is significantly enhanced with a healthy tag environment. Tag Manager’s seamless integration with the client’s platform and third-party applications scores a win for both the client and the MSP.

The MSP will surprise its clients with a one-of-a-kind solution that adds immediate and evident value to the MSP’s services. The clients will be delighted by the ease and intuitive features of Tag Manager. They will be amazed by their newfound ability to solve tagging challenges and open the door to outstanding performance.

By partnering with CloudSaver an MSP adds new revenue streams and expands its market share. The MSP will distinguish itself in the cloud marketplace and stand apart from other cloud MSPs.