Best in Cloud Services: Competition, Growth Fuel the 2024 MSP 501

Cloud revenue represents a high-growth area for managed service providers (MSPs), while also bringing about a high level of competition.

In this list (see the slideshow above), we, in no particular order, highlight 30 MSPs on the 2024 Channel Futures MSP 501 that counted on cloud services for their primary or secondary income stream and grew cloud revenue by 30% or more in 2023. These MSPs outpaced even a rapidly growing overall cloud services market. According to Canalys, total cloud infrastructure services spending grew 18%, to $290.4 billion, in 2023. It has continued to increase in 2024, up 21% year-over-year in Q1 and 19% in Q2.

Tapping into that growing market can be challenging for MSPs. Much of the cloud services revenue goes to the big three hyperscalers – AWS, Azure and Google Cloud – but our list includes MSPs that have also done well with their own hosted cloud services. They succeed by helping customers deal with rapid data growth while keeping costs down to compete with the hyperscalers.

How MSPs Battle Hyperscalers in Cloud Services Market

A few cloud services specialists shared their insights for selling cloud services against the Big 3.

“Cloud services is a fiercely competitive space, so it’s important to move quickly with the right expertise to capture attention and develop trust that can lead to the best outcome for both parties,” said Jaret Chiles, chief services officer at DoiT. “Aside from technical and compliance-oriented obstacles a prospect may be facing, one of the most common challenges oriented with the cloud is developing accurate and predictable budgets. These challenges require a strategic approach to understanding their needs and partnering with their finance teams to develop confidence in their plans for the future.”

Related:Download 2024's Next Generation MSPs, an MSP 501 List

DoIT's Jaret Chiles

DoiT, which ranked fifth on the 2024 MSP 501, provides access to its advanced proprietary technology in the areas of FinOps intelligence, workflow intelligence and workflow automation across multicloud infrastructures. It also offers expertise in services such as Kubernetes, data and analytics, generative AI and offerings from AWS, Azure and Google Cloud.

“The amount of data being created continues to expand at an incredible rate,” Chiles said. “With this comes increased demand for cloud services to store, manage and analyze that data. We’ve seen a tremendous demand from customers to help them explore more cost-effective ways to store the data as well as to perform analytics on it, all of which is driving new and exciting transformations for businesses as they discover innovative avenues of value creation for their customers and ways to monetize the data. Of course, training models with data developing AI solutions have been top of mind of almost every customer we talk to who are at varying stages of that journey.”

Expedient – No. 3 on the MSP 501 – generates roughly 75-80% of its revenue from cloud services hosted in its data centers, according to CEO Bryan Smith. Smith said his MSP’s cloud growth is driven by several factors: Customers have settled on a hybrid model, VMware users are taking a hard look at their virtualized workloads, and data growth is being pushed by AI.

Expedient's Bryan Smith

“The VMware-Broadcom transaction was a major shift,” Smith said. “For most people it had a very negative impact. But it had a really positive impact to our business. Now there are two conversations that everybody wants to have. They want to talk about their VMware workloads, and they want to talk about what AI means for the business. So moving those VMware workloads into a strategic part of the conversation was really good timing. When you marry the changes with VMware to the trend of putting the right workload in the right place for the hybrid platforms, those things really drove a lot of tractions for our types of services.”

Canadian-based XBASE Technologies – No. 13 on the MSP 501 – sells private and semi-private cloud infrastructure-as-a-service (IaaS) solutions tailored to clients with specific needs. That helps the MSP compete successfully with the hyperscalers.

“The primary drivers of our cloud services growth over the past year have been client frustrations with public cloud providers,” XBASE CEO Robin Chou said. “Many clients have become increasingly concerned about escalating costs, hidden fees, and complex billing structures that are hard to understand. Unpredictable data transit fees have also been a significant issue. As a result, clients are seeking more transparent, cost-effective and predictable cloud solutions, which our private and semi-private offerings provide.”

Cloud Services Allow MSPs to Deliver Outcomes

Despite talk of repatriation from public clouds to on-premises data centers, the leading cloud service providers see customers continuing to use the cloud but do so more intelligently. Expedient’s Smith said customers moving from a cloud-first to a hybrid cloud strategy creates opportunities for MSPs.

“Our message to people is cloud optionality, because one size fits none. It’s a matter of how you can have the right platform for the right workload and stitch it together,” he said. “The biggest reason why people can’t use hybrid effectively is it adds complexity when you’re running in different places. That’s the value that the service provider really brings into it — they simplify the overall operations.

“The analogy I often use is that I have a GMC truck, and I could go to the parts department and buy all the components and pieces and put it together. But I choose to just buy the vehicle from the dealership, because I'm buying the outcome of reliable transportation that fits my style. IT people historically put it all together themselves. Now you’re starting to see the bigger trend of buying the outcome, similar to what you do in other parts of your life.”

DoIT's Chiles said “human-led architectural expertise” can drive down costs.

“Cost optimization is a huge priority of clients, as well as developing more mature FinOps practices that create a deeper understanding of the unit economics of their cloud environment,” he said. “Many customers face the illusion of efficiency when they rely solely on the outputs of tools, where human-led architectural expertise can help uncover improvements that reduce the amount of horsepower an environment might need.”

XBASE's Robin Chow

Chow said XBASE doesn’t rely on reselling public cloud services because it results in loss of technical expertise and can open MSPs to economic and security risks from offshoring if they try to cut costs that way.

“At XBASE, we believe in maintaining a strong, local team of highly skilled engineers to ensure we deliver exceptional service and innovative solutions,” he said. “We prioritize investing in our talent and infrastructure to meet our clients' unique needs effectively, without compromising on quality or security.”

See our slideshow above to see the 30 companies from the 2024 MSP 501 that are doing cloud services the best.