Many Managed Service Providers (MSPs) believe the cloud offers huge opportunities for driving growth and boosting profits, but there are many challenges and obstacles to overcome if MSPs are to successfully deliver multicloud solutions that deliver the fullest value.
To explore the opportunities and challenges faced by MSPs in a multicloud world, CloudHealth by VMware commissioned Forrester Consulting to conduct a survey to explore the state of the cloud for MSPs. The online survey was conducted on 245 Managed Service Provider respondents and interviews were conducted with directors, VPs and executives within MSPs that have responsibility for organizing service offerings.
The survey confirmed that most MSPs have started offering cloud services and are now entering phase 2 of their multicloud journey. Respondents expected their cloud offerings to drive an average of 40% growth over the next two years but are experiencing problems with customer retention and have a skills gap that is hampering their efforts to provide solutions that delivered their fullest value. Multicloud management was one of the biggest problem areas, with 80% of MSPs saying the multicloud challenges were impacting their ability to provide services to clients.
Competition is fierce and MSPs are struggling to achieve a large share of the market, which is saturated with vendors. 74% of MSPs said finding new customers is a challenge, and when they are found, retaining them is difficult, with 79% saying customer retention was one of the key business challenges they faced.
Many companies are now adopting a cloud-first approach as part of their digital transformation and are now far more knowledgeable about the cloud. Buyers expect more product information, have higher support expectations, and are getting increasingly technical, so MSPs must mature to continue to meet their clients’ needs.
In response to demand, many MSPs are now prioritizing the cloud and are concentrating their resources on security and data initiatives and are expanding their multicloud capabilities and are trying to improve the user experience.
MSPs are now using multiple public clouds and 60% of respondents said multicloud is their primary delivery method for solutions that cover security, application development, and business applications. While multicloud provides considerable opportunities for growth, to ensure success MSPs must be able to deliver the same levels of insight and visibility across each cloud, otherwise it will be difficult to create a cohesive customer experience.
The report makes several recommendations for MSPs to help them achieve their multicloud goals. The first is to specialize in new areas that drive value. Buyers are focused on business outcomes and require MSPs to understand their unique circumstances. “Technology discussions will be centered around the buyers’ department, sub-industry, geography, size of firm, and the layers of the tech stack that are involved in driving the right outcome. MSPs will need to deliver on the cloud, security, and data initiatives surrounding these buyers’ needs,” explained CloudHealth in the report.
Buyers are seeking muticloud solutions that can meet their business needs, are easy to use, provide business continuity, flexibility, and give them the insights they need. It is essential for MSPs to be able to deliver those solutions and be knowledgeable about each, otherwise client retention will continue to be a challenge.
The multicloud universe is vast and constantly changing and success cannot be achieved in isolation. MSPs need the help of others to succeed and must form strategic partnerships to help them achieve their goals. “MSPs shouldn’t shy away from partnerships with vendors and industry professional services firms to help deliver multicloud services to customers,” suggests CloudHealth. “Today’s buyers are demanding increasing levels of specialization, something MSPs should seek to embrace with the help of strategic partners rather than attempt to go at it alone. MSPs looking to succeed must prioritize partnerships as a competitive advantage, building and nurturing relationships with adjacent, non-competitive firms.”
MSPs may need to change businesses and operational processes that have proven successful in the past. MSPs that are able to innovate, adapt, and find new solutions to meet clients’ needs are the ones that will be successful in a multicloud world.