Understanding the Managed Services Hype Cycle

Some pundits say managed services will become a commodity. I disagree. Managed services are not a single technology. Rather, managed service provider (MSP) platforms are a way to continually deliver new solutions to customers.

Think of it this way: As one managed service matures (for instance, managed storage) a new managed service will emerge (for instance, video surveillance). In order to show this visually, let’s take a look at Gartner’s famed Hype Cycle chart.

Now stick with me, and I’l quickly explain how I see the MSP market evolving.

According to Gartner, a technology moves through five phases:

So, are managed services in stage 1, 2, 3, 4 or 5? Actually, it’s a trick question. I believe you have to look at individual managed services.

The chart above plots multiple services, and is part of a “Managed Service Reality Check” presentation I’m delivering today in New York. You can download a PDF of the presentation by visiting the MSPmentor Resource Center (registration required).

As MSPmentor’s chart shows, I believe managed storage, security, VoIP, email and data center co-location services are moving into stage 5, the plateau of productivity. Generally speaking, progressive customers now broadly trust those managed services.

The SaaS Challenge

But other managed technologies — particularly many software-as-a-service (SaaS) efforts — are heading for the trough of disillusionment. That may actually be good news for MSPs, which could be called upon to help customers fine-tune their SaaS application performance.

Some SaaS companies (like Salesforce.com) have climbed the slope of enlightenment. But Wall Street and the press continue to hype SaaS as a perfect technology solution that will withstand an economic slowdown. That’s quite an exaggeration.

To some extent, even MSPmentor is guilty of evangelizing SaaS because several of our key sources — from SugarCRM CEO John Roberts to insiders at Dell — remain so upbeat about SaaS.

Now Gaining Attention

In recent weeks, MSPmentor has also written about emerging opportunities like managed TelePresence, unified communications, video surveillance and digital signage. There’s also growing interest in managed services based on open source hardware and software.

Some readers would assert that we are “hyping” those technologies. I’m not sure I agree, but I think it’s safe to expect all of those technologies to eventually face some backlash.

One prime example: VARs that are merely reselling digital signage will crash-and-burn as LCD and plasma TV margins fall. The real trick is mastering the managed content services that push advertisements and other information out to that signage.

Please note: I realize plotting technologies on the Gartner Hype Cycle is an inexact science. Feel free to debate me on my technology placements. And let me know what additional technologies belong on the chart.

But don’t miss my bigger point: When people say managed services will become a commodity, they are overlooking wave after wave of new services that will ride across MSP platforms.

In many ways, managed services are like an operating system platform. As long as new applications and services continue to debut, the underlying platform remains extremely valuable.