Indirectly Speaking: Amazon, Managed Services and Retooling Your Business

Big dog-small dogAmazon’s foray into managed services might rankle those of you already among the MSP ranks. It makes sense. We are, after all, talking about the online giant that’s gone from overthrowing the book market to barnstorming into a slew of unrelated industries including media and shipping. And they are poised to dominate all of them.

But let’s not panic. For now, Amazon’s managed services offerings are aimed at Fortune 2000 enterprise firms that also are customers of its AWS cloud platform. There’s no evidence that the company plans to scale down into the SMB territory that is the bread and butter for most of today’s MSPs. And so, rather than viewing Amazon’s managed services’ move as an immediate competitive threat – it isn’t – MSPs might want to consider it a catalyst to retool their own businesses for the future.

What action items should channel firms consider? Adopting more advanced tech services, for one. MSPs need to think beyond the basics of network monitoring, patch management, backup and provisioning to remain competitive. Today’s customers are clamoring for ways to take advantage (from a business perspective) of all the data they generate. Those companies also want to implement a solid cloud strategy, and avail themselves of emerging technologies, from IoT and social media to advanced analytics and SaaS-based applications.

That requires expertise and management capabilities. In other words, organizations need help. Smart MSPs should think like a business consultant, focusing, for example, on shepherding their customers’ migrations to the cloud with solutions that will grow revenue or trigger other types of strategic value. They need to get creative and be the digital advisor for everything from their customer’s social media marketing activities to the granular specifics of a vertical industry. From those efforts, your customers will find value that Amazon will not be able to match.

I’ve spoken to several folks running channel businesses today, and while the majority do not believe that Amazon’s play here is going to thoroughly disrupt their market, none are 100% sure of it. They do agree, however, that managed services as we know it needs to change. And rest assured, if Amazon ever does expand into the SMB market, it will do so with an attractively priced set of basic services that could quickly commoditize the market. Trying to compete on price alone would be a fool’s errand. It’s time to move up the value stack for your customers.

Carolyn April is the Senior Director of Industry Analysis for CompTIA