Beware the Hosting Hype Cycle

Frequent MSPmentor readers know I talk and blog about the Managed Services Hype Cycle (based on Gartner's own Technology Hype Cycle chart). All technologies go through a maturity curve (a cycle of sorts) that involves a bit of pain (or lots of pain) for customers and MSPs. Now, some folks are starting to talk about a Hosting Hype Cycle. And it's an important discussion.

I came across the Hosting Hype Cycle headline while reading The Planet's latest blog entry. It's a good read, and it covers hyped offerings like "the cloud," virtualization, hosting and colocation. Do I agree with all of the perspectives? No. Does the blog do a good job pointing out to readers that industry pundits are hyping many technologies within the hosting arena? Absolutely.

Your First Moves

The Planet piece is a timely read for MSPs that are trying to determine whether they should build or partner their way into the hosting market. Either way, you can't afford to ignore the convergence of hosting and cloud services.

During the HTG Peer Group Summit in Dallas (April 2009), ConnectWise CEO Arnie Bellini recommended that small MSPs avoid the temptation to build their own hosting center, and instead gain some rack space in a local, established hosting facility. From there, you can potentially host Exchange Server or another application to get a "feel" for where cloud opportunities are going.

I like Bellini's advice, but it's not the only way to participate in the cloud. A few observations:

1. Seek to Understand Microsoft: I'd stick close to Microsoft and keep a close eye on the Business Productivity Online Suite (BPOS) initiative, which involves Exchange Online, SharePoint Online and other hosted Microsoft applications. I am not endorsing Microsoft's strategy. Rather, I think all MSPs need to understand where Microsoft is going in the hosted world. Then either cooperate or compete fiercely with the strategy. Either way, you need to understand Microsoft's moves.

2. Partner, Don't Build: Why host Exchange on your own when plenty of online service providers will let you leverage and rebrand their hosted Exchange services as your own?

3. Think Applications: Lots of MSPs stick to pure network and systems management. But don't forget, you can leverage Amazon Elastic Compute Cloud (EC2), RackSpace Mosso, and dozens of other options to move key customer applications into the cloud. Skeptical? Check out the recent cloud work by two VARs/solutions providers: Levementum and OpenBI.

4. Think Cloud Management: Level Platforms caught my attention a few days ago when the company announced a Managed Cloud Service that allows MSPs to remotely administer Microsoft BPOS applications and other third-party SaaS systems.

My ultimate conclusion: If you're just focused on "hosting" you're focusing on a commodity market. Move on. Move up. Think about how you're going to leverage hosting partners. Determine if it makes sense for your customers to move some applications to the cloud. Then figure out how you're going to manage those applications in the cloud. Finally, beware of the Hosting Hype Cycle.