Mpumi Nhlapo, T-SystemsThe managed services space is booming. This is widely seen as the result of two major factors: the past decade’s financial crunch prompting companies to become leaner, complemented by the rapid commoditisation of business technology. Combining the two has led to a wave of change, says George Kalebaila, research director for telecommunications, media and IoT, IDC.
“It’s not just the pressure on budget. Many organisations are adopting an opex model to contain costs and ensure that these costs remain manageable. Another aspect is commodity-type or repetitive services that organisations outsource to service providers so that the quality of the service is standardised, because you might not have the capability to measure the quality of services provided in-house. However, if you externalise it, you can monitor and ensure the quality of service provided is up to standard and is of the expected quality.”
Specialist skills
Kalebaila highlights skills as a major concern for companies and an area where focused MSPs can lead the market. But for this reason, there are few generalist MSPs, says T-Systems’ head of marketing and partner services, Mpumi Nhlapo.
“Outsourcing was more about managing contracts and sales, whereas managed services is being part of the journey to transform the organisation. if you’re going to be part of that, a big function is to help provide specialist skills in specific areas,” he says.
An MSP can cover many different bases. But when a company contracts an MSP, it wants attention given to specific niches within the organisation. For example, an MSP can be contracted specifically around IoT or AI services, says Nhlapo. “The difference here is that you have focused, specialised organisations that look at very specific parts of the business and help bring those into or manage them in digital space.”
Access to skills
The arrival of cloud platforms have given business systems a huge boost, but also introduced more complexity into the mix. According to Justin Trent, CEO of Alto Africa, this rapid skills acquisition is a big challenge. “Azure, AWS, Google compute are all complex platforms when you scratch the surface, and require a real investment in training to even understand them properly, let alone get the most out of them. Companies also need to realise that techies love nothing more than learning new skills – unless they’re moving their infrastructure along, and keeping up with the latest technologies, staff retention can also become an issue,” says Trent.
This is a prime spot for MSPs as they provide the foundations on which the customers’ IT staff can build and experiment. Critical skills are always changing, so large companies find it difficult to hold onto top talent. Since they‘re more flexible, and since retaining specialised talent is even more crucial to their business models, MSPs are becoming the go-to partners for specialised skills. “
“The MSPs solve that issue by allowing enterprises across the board to have access to the skills they need to keep up with changing technological requirements and embrace the emerging technologies they need to,” says Kalebaila.
Security is paramount
There are many skills out there that companies require, but one deserves closer scrutiny than the rest. Today’s technology simply doesn’t work well if kept locked in the company tower. Increased complexity and expansion of company ecosystems have made security the biggest technology risk of the day.
“Security is probably still the biggest question around cloud adoption and so it should be,” says Trent. “Security is also more complicated than it used to be as people are more mobile, using multiple devices and accessing services from multiple service providers. it’s for these reasons that companies are turning to MSPs to assist with security.”
Attitudes among local businesses toward security are still very passive and security is still regarded as a grudge purchase, not a core requirement. This is a big opportunity for MSP's.
But it’s important that an MSP plays to its strengths, which may not necessarily be security. In that case, it bodes well for MSPs that partner with other service providers strong in those related fields, says Nhlapo. He adds: It’s key to determine where the MSP is really strong and where they have a value proposition better than the customers can have on their own. Security is very key for us, because our skills and experience and reach means it’s very difficult for anyone to match.”
Global competition
MSPs play in a very connected space. They often use connectivity and web services to deliver the necessary applications and support to customers. Of Alto Africa’s support issues over the past 18 months, 99.4% were resolved remotely. MSPs can scale, respond quickly and do so with a small footprint.
Yet that same connectivity opens the market to foreign competition, says Kalebaila. “Cloud does remove geographical barriers, but in turn it opens MSPs up to international competition as well. Again, because cloud provides scale, you can spread your costs and offer competitive rates. That said, cloud doesn’t mean that there’s no need for local context, localisation and customer engagement as part of the competitive advantage. What local MSP's could do is to provide that intimate customer engagement with local end-user enterprises and that’s something a global provider possibly can’t do.”
Such flexibility also makes it easier for vendors and OEMs to compete in the service space. Yet MSPs are smaller and more focused. So, again, the potential of partnerships shouldn’t be underestimated, says Trent.
“I think what’s more interesting than competition is actually the partnership opportunities that now present themselves. In particular MSPs who use the same systems are able to partner with other MSPs to provide a true 24/7 coverage model without the expense. They’re also able to outsource certain support functions to other MSPs without relinquishing control over their clients.”
The trends suggest now is a great time for MSPs, providing they’re able to provide specialist services, pool appropriate skills, play to their strengths, and always be open to partnerships. It’s a highly competitive game, Nhlapo says. “The competitive landscape has shifted quite rapidly. You have to find opportunities and parity, because they do the same you do. That comes from understanding your customers and what matters most to them. You might get services from AWS or azure, but they can’t cover all the bases, such as sureties around compliance. But a good MSP can."
MSPs in SA: Is it time?
The adoption of managed services correlate to the technology maturity of a market. MSPs flourish under certain paradigms, such as agile environments that are becoming part of modern business strategy.
“South Africa’s ICT environment is maturing, and business consumption models are evolving,” says IDC’s George Kalebaila. “We’re also seeing more enterprises moving to opex consumption models and with cloud adoption becoming more important, it’s reducing the cost of providing some of these services, especially for MSPs and it’s making their business case even more attractive.”
The boom in connectivity has opened doors for services, especially those provided by cloud platforms. Maturity around cloud is growing: the CIO with on-premise business systems, but a cloud-driven personal technology lifestyle, is becoming scarcer. As the concept of cloud grows more familiar, conversations about using it for business have become easier. This is a notable shift away from value-added sales and a win for the continual-improvement thinking that cloud thrives on.
But all things are relative. While such mature growth is very evident in South africa’s major city centres, the pace varies dramatically in other commercial hubs. There are still countless large towns and medium-sized cities with lacklustre mobile coverage and little in terms of fibre networks. These matter, especially for cloud-related services, and remain a challenge for businesses with far-flung branches.
Even if connectivity isn’t a factor, many companies still prefer the old-school way of procuring technology and aren’t facing enough agile competition yet to be forced into a change. Such situations will certainly change, but if MSPs want to find new customers, they should be prepared that those customers may not yet realise they need to change. MSPs that can negotiate that transition are in for a tough task, but potentially gain lifelong customers as a result.
Cloud’s impact
Cloud doesn’t cover the gamut of MSP offerings, yet in many ways it has become quite ubiquitous with the very idea of delivering services. The impact of cloud has been the same on the MSP world as on other sectors, says Alto Africa’s Justin Trent.
"Born in the cloud MSPs (and other businesses for that matter) have none of the legacy processes, operations, resource overhead or even mentality that hamper traditional MSPs and IT support businesses,” he says.
This is a big challenge as well, he adds, as is evident in the number of incumbents still trying to push those models against the best interests of their customers. Many traditional solution providers are struggling to break away from hardware- and software-licencing income streams. This speaks of cultural barriers that need to be overcome.
Cloud also underlines the growing role of connectivity in the business world. Even if a company opts to own its own systems, there are still communication and integration barriers to overcome if they want to take advantage of modern technology norms such as data sharing and advanced process automation. Many of the skills and progressive thinking required to stay ahead of the curve will be placed on partners.
This is where MSPs have a big advantage, as they’re often expected to append solutions to existing environments instead of tailoring entirely new product stacks. So it could be argued that even though a cloud strategy isn’t an absolute requirement for MSPs, the kind of thinking and methodologies that are parcel to cloud must be ingrained in the MSP for it to continue to be useful to its customers.