MSPs Must Prepare in Case AWS Managed Services Targets SMBs

The entry of Amazon into managed services is a logical business development that could evolve into a play for managing the IT infrastructure of not just large enterprises, but organizations of all sizes.

Those were among the thoughts of Charles Weaver, CEO of MSPAlliance, a coalition of technology services providers.

Last week’s launch of AWS Managed Services, aimed at enterprise-grade users of AWS public cloud, might represent the first in a series of falling dominos that could ultimately lead to eroding public cloud revenue for MSPs.

Charles Weaver, CEO of MSPAlliance

“This changes things,” Weaver said. “What I think every MSP has to ask themselves is, what if Amazon continues to expand this managed services program down into midmarket; small and medium businesses?”

Amazon’s move into managed services – and the potential that its key public cloud competitors, like Microsoft, Google and IBM could soon follow – is not completely unexpected, Weaver said.

“Not only am I not surprised, I expected it,” he said. “This is the behavior of the vast majority of hardware and software vendors throughout the channel for the last 10, maybe 15 years.”

“They have been steadily moving into managed services, literally offering managed services, and telling partners ‘you don’t have to do this, just resell ours,’” Weaver explained. “(MSPs) are resellers again.”

He cautioned that his comments are not intended as anti-vendor or anti-channel, and that he doesn’t discourage vendors from making sound business decision, just because they might be disruptive to MSPs.

“I don’t mind them doing it,” Weaver said, adding that tech services providers just need to understand the implications of their partnerships. “I think that gets to the mentality that (some) vendors have that managed services providers don’t really add value.”

He offered two thoughts on how MSPs should respond to the new potential threat.

First, recognize the vulnerability of a practice that disproportionately relies on white labeling or reselling the offerings of other vendors.

“My advice to MSPs is if they look at giving up – through a strategic relationship – a part of their managed services to another third party…it begs every MSP who partners with that company to ask, what is my risk?” Weaver said. “They (could) be partnering with a direct competitor.”

Additionally, MSPs should look to opportunities in private and hybrid cloud, marketing against the growing trend of public cloud cyberattacks.

“Public cloud is under assault globally,” Weaver said, citing recently publicized attacks against Yahoo!, and U.S. nuclear installations. “I think it’s undeniable that private or hybrid (cloud) computing is making a big comeback, or at least is presenting itself as a very compelling alternative to public cloud.” 

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