Five Trends for the MSP Market for 2014

Kevin Derman, First Distribution’s Cloud and Hosting Business Unit Manager has appeared on the industry website PlusPoints, to list the following five trends that he forsees happening in the Managed Service Provider (MSP) and Cloud industry space next year.Kevin_Derman_08_small

1.    Growth

Fuelled by a continued move from CAPEX to OPEX, the consumer’s drive for BYOD (Bring Your Own Device), and by a proliferation of offerings designed for the MSP market, my prediction is that we will continue to see growth rates in excess of 20% in this segment of the market. Microsoft has stated that their SPLA licensing model is growing at five times the rate of their Open License model, demonstrating the trend towards this licensing model.

2.    Demystification of the Cloud

Forbes recently stated that when people were asked what ‘The Cloud’ is, only 16% could adequately explain the concept. This is not surprising, as ‘Cloud’ is not a real thing, but rather an abstract concept representing on-demand and flexible services.  2014 will see a familiarisation of the term ‘Cloud’ and the focus and importance will shift towards the services that Cloud technology enables. MSPs and the IT community will bear this responsibility of demystification, as it will be critical to drive business growth.

3.    Local is Still Lekker

Local MSPs will continue to see growth and dominate the share of enterprise services in our market. The reason behind this is the fear, the lack of understanding of regulations involving data sovereignty, the POPI act and the high bandwidth costs we still have in our country. MSPs should capitalise on this window of opportunity to gain customers and delight them with their service offerings.sun_cloud

4.    Specialisation and Consolidation

MSPs need to continue to evolve their businesses to stay ahead of the curve. It is no longer an option to build your offering only on a hosted mail solution or hosted CRM platform. Customers are now demanding a menu of options to suit their business needs. Flexibility and agility in this market will be rewarded with longevity. Dealing with multiple companies for multiple solutions requires energy and additional cost, and hence there will be a strong move away from the multiple partner strategy. Those who do not evolve will most likely be acquired, as there is much value in their customer base, presenting a lower cost of acquisition for these customers.

5.    MSP as a Business Consultant

In the past we witnessed the role of the IT manager transform from one of an enabler, to one of being an integral business driver. IT has become a main component of strategy and providing a competitive edge in business. The role of the MSP will also transform from one of being a service provider, to one of being a partner and a consultant to their customer. Customers will look to MSPs to help differentiate their businesses, as well as assist them in modifying and perfecting business processes. We will also start seeing MSPs specialising in verticals, for example in the financial, mining and SMB industries, in order to maximise their strategic value which they supply to market.