MSPs Invest in Service Delivery

• By The WHIR, July 30, 2004

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MSPs Invest in Service Delivery

By Jeffrey M. Kaplan

This story appeared in the July/August 2004 issue of Web Host Industry Review magazine. Click here to subscribe for free.

July 30, 2004 -- (WEB HOST INDUSTRY

REVIEW) -- The MSPAlliance and THINKstrategies recently unveiled the

results of a joint 2004 Service Enabling Technology study for the

managed services business, with important implications for Web hosting.

As the industry regains momentum, market

leaders are aggressively expanding the breadth of their service

portfolios to win greater shares of the market. And, as the MSPAlliance

and THINKstrategies study found, this strategy is driving service

providers to make new investments in their service delivery

capabilities.

In 2003, the MSPAlliance and

THINKstrategies published a landmark benchmark study of the managed

services industry based on a survey of 50 managed service providers

that reported experiencing growth of more than 50 percent in revenues

and a nearly 25 percent expansion in customers that year.

Participants in our latest research

project included a broad array of MSPs, delivering a variety of remote

management services: specialized service providers offering security,

storage, messaging and networking services; major telecom carriers who

are adding a new layer of management capabilities to their traditional

transport services; IT outsourcing and service companies looking to

offer a new set of targeted services; local/regional VARs seeking to

offset slowing product sales with annuity services; and Web hosting

companies expanding their managed service capabilities.

The MSPAlliance/THINKstrategies survey

study found the majority of these companies are planning to

significantly increase their investments in new service enabling

technologies that can help them more effectively serve their customers

and manage their businesses. The survey participants reported they will

spend 21.7 percent of their total operating budgets on new service

enabling technology in 2004, compared with 17.5 percent in 2003.

The 53 MSPs participating in the

MSPAlliance/THINKstrategies Web-based survey said they plan to make new

technology investments in the areas of help desk management,

network/systems management, desktop management, security management,

storage management, messaging management, application management,

wireless network management, VoIP management, service management

(including provisioning and billing).

Network/systems, desktop, storage and

security management technologies are at the top of the investment plans

of the survey respondents. They are also making investments in

messaging, VoIP and wireless management technologies to support their

expansion into these new service areas.

One of the most significant and

surprising findings of the MSPAlliance/THINKstrategies study was that

the survey respondents were generally neutral rather than truly

satisfied with their current service enabling technology suppliers, and

in many cases uncertain about whether they would stay with these

suppliers. This should be an important wake-up call for the established

technology vendors and may represent an important opportunity to a new

generation of technology companies.

The bottom-line message of the joint

MSPAlliance/THINKstrategies studies is that the demand for managed

services continues to grow and the companies seeking to capitalize on

this trend are making significant capital investments in the enabling

technology necessary to support customer requirements.

The challenge will be better scaling and

targeting these investments to match the true level and nature of

customer demand as opposed to the overly aggressive build-out that

spelled the demise of many first generation Web hosting and managed

service providers during the dot-com boom and bust. As the Web hosting

industry rebounds, capital investment rises and the number of mergers

and acquisitions escalates. In response, competition is intensifying.

Stand-alone Web hosting companies are contending with a wide assortment

of contenders ranging from application service providers to utility

computing solutions companies.

Selecting, implementing and managing the

right enabling technology to support their service portfolios and

ensure operational efficiency and effectiveness will be a key factor

that will determine which Web hosting providers survive and succeed.

About the Author:

Jeffrey M. Kaplan is managing director of

IT strategy consultancy THINKstrategies. He can be reached at

jkaplan@thinkstrategies.com.

Tags:  security  billing  Storage  ETT  Iona  MSPalliance  NEC  THINKStrategies 

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