'The New Normal': the profound impact of digital transformation on managed services

My role has seen me travel around the world working with partners on developing and building a profitable Cloud business. One of the most common things I have heard consistently is that competition is really heating up and digital transformation is becoming more than just another buzz word for many partners and customers alike.

The partners who heard Steve Ballmer's early rally cry to move to the cloud differentiated themselves based on the fact that they knew how to work with the cloud. They shot ahead of the competition and enjoyed the glory of winning all of the cloud deals. The reality however is that those days are behind us. We are playing in the big leagues now and the competition is getting fierce and customers are demanding more from their partners. The partners who will be successful in the future will have to differentiate his or her practice from the wide and growing variety of competitors in the market.

Microsoft recently released its annual Hosting and Cloud Study - Digital Transformation Opportunity for Service providers: Beyond Infrastructure. One of the key findings showcased in this study is how Managed Services has become the New Normal: 62% of cloud/hosting infrastructure spending comes bundled with value-added services. Furthermore, the study also uncovers how Managed Services has had a critical impact and role to play in how businesses are approaching Digital Transformation. Over 71% of respondents stated that Managed Services has enabled them to optimize their operations, with 74% finding that leveraging Managed Services had enabled their business to improve its overall product and service quality. With this in mind, what types of activities should Managed Services Providers (MSP) be thinking about?

In general, a cloud MSP performs three types of functions:

• Cloud Assessments
• Cloud Enablement
• Cloud Operations

The first two--Cloud Assessments and Cloud Enablement--are traditional SI type activities: taking the shape of one-off projects of a particular duration, often billed on a per-hour/per-diem basis. The third of these--Cloud Operations--represents traditional MSP type activities – including ongoing management and monitoring of cloud services, often billed on a recurrent basis. The challenge however is how to think about continuously evolving and optimizing the delivery of these operations at scale. This is where automation is king.

From onboarding to implementation to ongoing support tasks, anything you can automate should be automated. Automation makes things faster for the customer and is seamlessly repeatable, which makes it possible to train many (cost effective) people to complete the task.

A successful Cloud MSP needs to be strong and be able to demonstrate experience in all three types of activities to provide end-to-end solutions to their customers. This in turn establishes credibility and trust in the partner's ability to understand their customers business, all of which are seen as key attributes that respondents from the study saw as critical in selecting partners to execute on their Digital Transformation journey.

The reality of today’s channel is that there are over 100,000 partners transacting in the cloud.  It has become hyper-competitive. As a result, we’ve seen pressures on the price points partners are charging for some of the more foundational activitie,s such as mailbox migration and basic managed services. The best partners have a healthy sense of paranoia, realising that what is a competitive advantage today likely won’t be in 12-18 months. If you remain focused on your competition you'll often sit still waiting for your competitors next move. However, being customer obsessed allows you to continuously innovate and empower your customers to be focused on their core business and ultimately deliver customer lifetime value.

Sam Restifo is Senior Business Development Manager, Hosting & Managed Service Providers, at Microsoft Australia. As a Cloud & Services Industry Leader, Sam's passion and focus is on development of a long-term technology vision of customer-centric cloud and data centre services to drive business development, capability, innovation, strategic planning and delivery for a wide range of mission-critical products and services.