Will the Cloud make MSPs extinct?

There’s a lot of uncertainty within the MSP market right now. Larger companies are moving into the market, causing downward pricing pressure. Some MSPs think the only way to survive is to join forces with current competitors so they can take advantage of economies of scale and escape the pricing pressure for now. Others are looking for opportunities with different products and services.

Despite the search for new service offerings, many MSPs have been slow to fully adopt cloud services. MSPs tend to think that using services like Office 365 will still allow them to make a little bit of money off the service, while continuing to charge for the maintenance, monitoring, and management of the client’s workstations and servers. What that MSP doesn’t realize is the client will continue to look for ways to save capital costs in areas of their business, and will at some point scale back on the equipment for the MSP to manage.

Here is where the cloud can really give the MSP leverage in the marketplace. The MSP has the opportunity to provide leading-edge services to clients using the cloud. The client’s server infrastructure can easily be placed within a public cloud where the MSP can still provide maintenance, monitoring, and management services. In most scenarios, the MSP is able to earn margin on these cloud services, which means an additional revenue source. While moving clients to the cloud makes you look like a leader in the marketplace, it also gives you a more robust system to support.

By moving into the cloud, MSPs no longer need to worry about the cost of tasks like drive replacement, power failure, and server hardware failure on systems that have been moved to the cloud. Those items are now the cloud service provider’s responsibilities. The MSP can focus on providing more value to the client through services that are more strategic than tactical. When you combine those advantages with the additional revenue the cloud can provide, it sounds like a pretty good plan.

As an MSP, you can profit tremendously from the cloud. Don’t get caught assuming that your clients will continue to invest in equipment for you to manage onsite. Be proactive, and protect your clients and your business by developing a solid cloud strategy and practice for your client base.