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Marching Orders 2017: Reconsider Cloud Managed Services

What should you do to make the most of technology business opportunities in 2017? For this "Marching Orders" series, we put that question to a number of channel luminaries, including top Microsoft channel executives, consultants, Microsoft partners and other regular RCP contributors. This entry comes from Aziz Benmalek, vice president of Worldwide Hosting & Cloud Services at Microsoft.

We truly have "crossed the chasm" and are in the "early majority" stage of the cloud-adoption curve. Cloud is disrupting traditional IT faster than we think, which means increased opportunity for cloud service providers.

One of the biggest opportunities for partners moving into 2017 is helping customers navigate the superior functionality of cloud offerings, and managing their production workloads running in the public cloud. In fact, 451 Research indicates that cloud managed services are projected to be a $43 billion market by calendar year 2018, growing 60 percent faster than infrastructure-only services.

Whether your primary business model is IT consulting, systems integration, managed IT services, datacenter hosting, outsourcing or value-added resale, cloud managed services give you an opportunity to add a new, higher-margin business line that can provide a more stable, steady stream of recurring revenue.

Managed services are not a new business model. For more than 20 years, large enterprises have relied on service providers to manage their IT assets. Whether they're an outsourcer, a remote monitoring and management (RMM) provider or a managed IT provider, service providers have been managing their customers' workloads -- either in their own datacenters or those operated by their customers. Cloud, however, requires a new method of management because of its focus on scale, elasticity and automation. For CIOs, cloud represents a paradigm shift in the way they think about embracing IT, and they are demanding a new way to think about data governance and security.

The hyperscale nature of cloud provides a completely new meaning to scalability, elasticity and resiliency, and has redefined how applications are architected and delivered. Device and data proliferation means customers can do so much more with their IT assets, with cloud providing the computing resources to do so. The pay-as-you-go model provides a fail fast, agile method of app development. In fact, DevOps has completely changed the way applications are developed and maintained.

In addition to the benefits provided to customers, managed services ensure you have a constant revenue stream as opposed to a project-based method. With the consumption-based model, service providers are providing monthly billing to customers for managed services packages and adding to the packages over time as the customers' cloud needs grow. Margins are typically higher, too, compared with professional services and just reselling services. Managed services also provide the opportunity to diversify a service provider's portfolio and add new offerings like cloud dev/test, cloud backup and data recovery, cloud-native app design, et cetera.

Amidst the sea change the cloud has enabled, MSPs have a huge opportunity to help customers transition to (and embrace) this paradigm shift in technology by guiding customers in all aspects of their cloud journey. From consulting to migrations to operations management, customers rely on cloud MSPs to show them all the benefits that come with cloud adoption. As a cloud MSP, you have the opportunity to truly engage with customers to meet their needs end to end. Whether around cloud migrations or net-new app development in the cloud, you have the opportunity to truly become a trusted adviser.

Last year, Microsoft launched the Cloud Solution Provider (CSP) program specifically for partners looking to tap into this booming opportunity. This year, we hope you'll join the more than 500 partners providing managed services on Azure via the CSP program.

Posted on December 26, 2016 at 7:34 AM