From Reseller to MSP – A Complex, But Lucrative Business Transformation Journey

Business Transformation is Complex, but Manageable

Channel Partners selling technology solutions to small, mid, and large-sized businesses are having to transform their businesses to stay relevant as their clients move an ever-increasing number of business processes and workloads into the cloud.

This transformation requires carefully mapping the initial cloud and managed services portfolio against available customer base, internal technical and sales skills, service delivery tools, and available investment dollars. Further, modeling the total revenue and profitability impact of this transition is key to understanding the impact on cash flow, especially from smaller annuity streams, which need to be renewed annually.

How to plan and successfully execute the transition from being an on-premise services provider to delivering managed services and cloud solutions is where the channel ecosystem is expecting help from their vendor-partners.

Strong Revenue Upside to Business Transformation

From less than 50,000 in 2016, the number of managed services providers will grow to almost 75,000 worldwide in 2021. AMI-Partner’s tracking of these MSPs indicates most have yet to fully penetrate their existing customer base. On average, an MSPs has so far converted only 20% of their customers to managed services. Clearly, this opportunity remains untapped for the most part.

More significantly, by transforming themselves from a reseller to an MSP, one in two have acquired net new customers that were previously beyond their capacity to serve thus expanding their business in ways unforeseen.

Technology vendors can help accelerate this transformation within their partner ecosystem by setting up formalized advisory programs that impart strategic advice via workshops, as well track key metrics on a one-on-one partner basis.

The key is to uncover best practices used by channel partners that have successfully transformed their businesses and deconstruct and replicate their secret sauce across a broader network of partners.

~Deepinder Sahni, SVP

SaaS – The New “Cash Cow”

The conversation about software as a service (SaaS) has been going on for a long time.  The evolution of hosted applications is pretty interesting. It all started back in the 1960s when IBM and other mainframe vendors offered computing power and database storage from their data centers to the financial industry and other large firms.  Fast forward to the 1990s when, with the proliferation of the internet, Application Service Providers (ASPs) began offering hosted business applications. According to Wikipedia, the acronym (SaaS) allegedly first appeared in an article published in February 2001 by the Software & Information Industry Association (SIIA).

Some may think SaaS is passé and has been talked about to death, but although SaaS can be considered a “mature” market there are some very good reasons to revisit cloud software:

  1. Industry analysts and mainstream media all cite SaaS as a technology with strong growth prospects for both adoption and spending. AMI estimates that worldwide, small, medium and large businesses (SMLBs) spent $62 billion on SaaS solutions in 2017 and that figure is projected to more than double by 2021.
  2. Globally, about 22 million firms are planning to allot more of their IT budgets for hosted/cloud solutions as opposed to on-premise IT products and services with the largest portion slotted for SaaS applications.
  3. SaaS solutions are major forces driving growth as industry mainstays, who were formerly strong on-premise vendors, shift emphasis to the cloud. For example, Oracle reported Q3’17 overall cloud revenue increased 51%, but SaaS revenues rose 62% and Microsoft reported strong increases across all of its cloud offerings and is now the leading cloud service provider (Office 365 revenues alone increased over 10%).

“SaaS” comprises a wide variety of different cloud-based applications, from the most basic e-mail to solutions tailored for very specific industries.  Spending in 2017 on prominent hosted applications was strong. Beyond email, other leading apps included hosted CRM, business intelligence, productivity and highly customized line of business software (vertical or industry specific software).

As SMLBs seek to leverage technology to help them reduce OPEX, improve efficiency and employee productivity and improve the customer experience, many are looking to the cloud as a solution. About one-third of firms we surveyed reported migrating more applications to cloud services was very important to their company’s continued success. Firms reported a variety of reasons for adopting cloud solutions, including cost savings, scalability and flexibility.  Many businesses feel SaaS solutions allow them access to technologies that might otherwise have been out of reach cost wise, while others utilize cloud services because it enables them to reduce system hardware by using cloud vendors’ servers to store data. In addition, SMLBs will increasingly look to bundle SaaS solutions when making new PC and device purchases.  Popular bundles include hosted productivity suites, security, data back-up/recovery, online data storage, and online document collaboration.

Overall, projected growth for SaaS apps is strong through 2021 (20% CAGR).  Fueling this growth will be solutions such as productivity, point of sales, business intelligence, email, quotes & invoicing and travel and expense solutions.

Software as a Service is a concept that will continue to evolve as it is a win-win for everyone.  SMLBs will benefit as they shift legacy on-premise solutions to seat-based models for cost savings, flexibility and scalability, as well as access to new technologies. Independent software vendors (ISVs) offering cloud solutions will be able to attract and engage firms that may not want to incur the large capital investments required for on-premise installations. Cloud hosters, such as AWS, Microsoft Azure, Google and IBM, will benefit as more ISVs shift their current on-premise solutions to the cloud.

~ Eileen Zimbler, VP

Artificial Intelligence is Lending a New Dimension to BPO Managed Services

AI or Artificial intelligence is a rapidly emerging technology in today’s world. Literally everyone wants to automate repetitive processes to gain maximum output, efficiency and cost reduction.

So, what is AI? Artificial Intelligence is a way of making a system, a computer-controlled robot, or a software think intelligently, in a similar manner to which intelligent humans think.

Artificial Intelligence is indeed a highly interesting field of study but also presents many questions? Will Artificial Intelligence ultimately overtake human intelligence? The question of robots holding human beings ransom has already been explored by many popular science fiction authors. Only in the last month, Sophia, a lifelike robot who was the first to get a country citizenship (Saudi Arabia) emerged at a Techfest in India and answered several questions; including a marriage proposal!

AI finds widespread usage areas

Artificial Intelligence has multiple areas of application within fields like information technology (IT), inform-ation technology enabled services (ITES), business process outsourcing (BPO), media, telecom, education, healthcare and defense.

Let’s focus on AI applications within the IT/ITES/BPO sector. Indeed, due to the emergence of AI capabilities in BPOs, services managed by BPOs are finding a new dimension.

AI can make a paradigm shift within the BPO sector

In the coming years, AI capability will be a key criterion in selecting an outsourcing vendor. Currently, close to 70% of BPO engagements in India are based on traditional models, these are likely to undergo transformational changes in the future. A direct impact of this transition towards AI in BPOs will be a 15-17% decline in India’s outsource services industry workforce by 2021. The impact of automation is likely to be mainly on the less-skilled worker. However, companies might move the freed resource from volume-driven work to value-driven and complex jobs thereby adding value to their organization. This will significantly enhance the productivity and efficiency of BPO firms.

All BPO Service Providers incorporating AI and or automation capabilities, at the earliest, are set to gain huge benefits from this emerging trend; mainly due to the lower cost advantages of AI. Many analysts are predicting the AI market will grow by a substantial 50%+ over the next five years.

Service Providers are now implanting AI tools within client premises to troubleshoot basic PC-related infrastructure issues such as PCs not booting up, login issues and virus problems. These may seem to be easy fixes but are indeed a pain point for a company with a PC installed base in the thousands!

 RPA: A key capability needed for outsourcers in the future

Nowadays, more and more companies include ‘Robotic-Process-Automation (RPA) capability’ as a criterion when researching Outsourcing Service Providers. The latter are considering an onshore + automation solution as a substitute to a purely offshore one. They also consider the compliance aspects and productivity benefits of using robots over humans. On a positive note for RPA, this capability can permanently alter the business and pricing models in the ITO/BPO spheres. RPA also allows BPO providers to come up to speed and offer new services to existing clients.

Due to RPA impact, RPA capabilities offered by the service provider (SP) can well be the deal-maker in terms of deciding outsourcing contracts. Traditionally, greater manpower was needed earlier to complete a large volume of work. The emergence of RPA has changed this equation. With enhanced automation and greater processing capacity than humans, routine and rule-based work can be done far more rapidly, thus adding greater value. Emergence of RPA has created a cost differential in outsourcing engagement models.

RPA: An opportunity to extract better value from their staff

Despite the emergence of AI, traditional outsourcing will not become obsolete soon. In fact, RPA is expected to strengthen existing relationships. Deloitte Business-Process-as-a-Service (BPaaS) is investing heavily to further develop its existing RPA capabilities. It has already established several strategic alliances with companies offering RPA platforms, e.g. Automation Anywhere, Open Span, Grid Infocom and Bizagi. To hone its RPA capabilities and push further innovation in its engagements, Deloitte is developing an innovation & automation lab in its Woodmead office in Johannesburg, South Africa. This lab will house state-of-the-art facilities and will have the capability to offer clients a live demonstration of its latest automation tools and smart technologies.

Automation Impact: Innovation will win the battle!

The key advantage will be gained by those investing in the next wave of opportunities, not those stubbornly resisting innovation and obsessively trying to protect legacy business models for whom the death knell has sounded.

Firms with greater IT infrastructure management needs will manage them through better cloud-based orchestration tools. Now, the onus in the service industry is shifting to using only people for tasks requiring human skills unable to be replicated by software. The trend is snowballing as more tools for RPA and autonomics management are being widely adopted by enterprises & service providers alike.

Because of these innovations, service providers really have no options. Their very competitiveness is at stake and they must adopt Intelligent Automation aggressively if they want to remain viable for ambitious clients and competitive with their counterparts.

~ Subrata Sarkar

IoT 101

Internet of Things (IoT) is a popular buzz word around town. What is IoT? Why now? What are the growth elements?  How do I even segment these IoT devices?

Too many questions and too many ‘things’ to answer.

Let’s start IoT 101.

Definition:

Internet of Things refers to the networking of physical objects using embedded sensors, actuators, and other devices that can collect or transmit information about these objects (excluding smartphones and computers). As humans directly interact with the device for information exchange, therefore smartphones and computers are not considered IoT.

Tesla’s self-driving car is considered a partial IoT device as it has thousands of sensors and motors which can move without human intervention and take people from one place to the next.

IoT Market:

Murphy’s Law can be helpful to describe the IoT concept with a little tweak: Whatever can be connected, will be connected.

  • By a recent estimate there are over 20 billion devices connected to the internet as of 2017 and that number is forecasted to reach over 75 billion devices by 2025.
  • According to AMI’s Global Forecast Model, small, medium and large businesses spend on IoT technology reached over $800 billion worldwide in 2017.
  • There is a huge potential for IoT in developing economies in terms of adoption. Also, nearly half of the value is expected to be generated from developing countries.

Growth Elements:

Technology, being the root of all development, is at the center of every new breakthrough. The driving factors behind the development and adoption of IoT is the widespread availability of all the technical components and infrastructure.

  • Hardware: Many IoT devices rely on multiple sensors to monitor the environment around them. The cost of these sensors has dropped 30-70% in the past decade and prices are expected to drop further leading to more cost-effective sensors.
  • Internet: The expansion of the internet is another major growth element of IoT. Approximately 45% of the global population is connected to the internet. This increase in connectivity is paving the way for higher IoT adoption worldwide.
  • Smartphones: Smartphones can be a major driver for this segment despite not being an IoT device. IoT relies heavily on “remotes” to monitor and manage IoT devices. Today smartphones account for over 65% of mobile phones sold globally. These can be used as remotes to control IoT devices. According to AMI’s Global Forecast Model, businesses have installed over 4 million smartphones and over 1.3 million tablets as of last year.

IoT Segmentation:

IoT is very tricky in terms of segmentation because of various components involved and there are many gray areas between just being another tech product and an IoT product. Also, in terms of market adoption, it is difficult to identify IoT penetration in businesses and hence difficult to track spending. Here at AMI, we have identified 3 distinct segments for IoT to simplify tracking.

IoT Hardware:

Hardware is considered a building block in the IoT ecosystem. IoT Hardware includes spending on standalone components as well as those installed in devices, sensors, appliances, vehicles, machinery and many more. According to AMI’s Global Forecast Model, hardware components within IoT accounts for 50% of overall spending within the IoT segment. As we are in the initial phase of IoT growth, companies are setting up the necessary infrastructure for IoT thus increasing hardware spend.

IoT Software:

Some areas included in IoT software spend are IoT OSs, platforms, end user applications and cloud services (which is still in the early development phase). Software provides an integrated set of capabilities including mobile application libraries, analytics, security and device/services management.

IoT platforms include Cisco Jasper, Windows 10 IoT, Azure IoT Suite, Uptake, and Ayala.

IoT Services:

IoT services include solution design consulting, implementation, deployment, and management services as provided by service providers of all sizes such as Datatrend Technologies, Softweb Solutions, Accenture, IBM, AT&T and Verizon.

The IoT services market has wide reaching potential for one simple reason: IoT in business is well connected with other disciplines like security, data management and other vertical specific elements. No company can do everything alone and that’s where IoT service providers can help these companies achieve efficient results.

Finally, IoT will give birth to all new business models based on technology. Remember the Tesla car? Now imagine, Tesla selling just car service and not the actual cars. Anything-as-a-Service, selling transportation service rather than automobiles.

In a nutshell, companies are spending more on infrastructure set up and deployment. This is due to the initial growth phase of IoT being hardware centric. In the next few years, the market will experience an incredible growth in the IoT Software and Services industry. We will see companies spending more on platforms, security and analytics because of IoT expansion.

~ Ankit Mehta, Associate

VSAT – a Key Medium in Today’s Connectivity Ecosystem for India

The Current Ecosystem: A Wild Rush of ISPs to Provide Faster & More Data at Less Cost 

The Connectivity ecosystem in India is set for a paradigm shift with service providers literally falling over each other to woo consumers into accepting their voice and data offerings. “Free data”, “Unlimited Data”, “Minimal Payment”, “Fast 4G Uploads & Downloads” are some of their advertising catch phrases!

VSAT Remains in its Place

Within all this clamour, VSAT (very-small-aperture-terminal) or satellite broadband steadily holds its place. This type of system has some key advantages. It is a highly secure connectivity medium and connects widely scattered regions. It acts literally as a saviour for end-users seeking connectivity in different remote locations where other modes like DSL, Fiber Optics, 3G and 4G are simply not available.

The key advantage of VSAT is that it provides “always-active” and uninterrupted connectivity. Thus, VSAT is ideal for those businesses that require uninterrupted connectivity and real-time access for mission-critical applications. For these businesses, 100% uptime is a “must”.

Hughes Communications India Limited, a leading VSAT service provider in India, has stated, “Broadband satellite solutions are ideal for businesses that need high-quality and always-on data, voice, and video connectivity virtually anywhere, and which terrestrial networks cannot always deliver, especially in remote locations. Because satellite offers a true alternate communications path it is also ideal as vital backup for organizations that cannot risk outages due to the vulnerabilities of terrestrial networks.”

The backbone and main advantages of a VSAT system comes down to two vital applications:

  • Providing terrestrial broadband
  • Providing branch connectivity through Wide Area Networking.

 

 

 

 

Some Interesting Applications of VSAT!

Here are some unique cases where VSAT is possibly the only connectivity alternative in the absence of alternatives.

Deep into the Sunderbans (a dense forest – actually the world’s largest coastal mangrove forest) a Non-Governmental Organization runs a small school in a remotely located village. Yet it utilizes Smart Classrooms with E-Learning being its integral part. Internet connectivity is its backbone. However, none of the usual ISPs provide internet connectivity in this location. The only panacea for them is a VSAT solution.

At a popular, yet remotely located tourism resort in a hilly area in Northern India the tourists always request internet connectivity to keep in touch with their family and friends; yet no usual connectivity line is available due to its remote location. Once again, a VSAT comes to the rescue and is the only connectivity option available to the resort-owner.

A small pharmacy in Arunachal Pradesh (a remote state in Northeast India) needs connectivity for medicine ordering, stock updates, and interaction with its distributors. Here too VSAT is the only connectivity option available.

An engineering & construction firm focusing on the utility sector is working in a remote village in Rajasthan setting up a solar energy project. It needs connectivity to sync with its headquarters, branches and its remotely located employees. Once again VSAT is the only available option.

VSAT is Highly Entrenched within the Large Enterprises and Some Other Niche Sectors

Large enterprises often utilize VSAT as an effective tool for connecting their branches and locations across wide geographical areas. Some other areas where VSAT usage is significantly high are the banking sector (for connecting branches and remotely located ATM sites) and offshore oil & gas exploration.

The India government foresees a Digital India in the future, whereby all citizens (even those in remote villages) will enjoy the benefits of better connectivity. VSAT is the key tool that can provide the magic touch of connectivity to remotely located rural areas and thus facilitate vital applications like healthcare, e-Governance, e-learning, and rural banking to name a few.

SMEs an Unexplored Yet Latent Sector for VSAT

AMI has investigated the usage of VSAT by the small and medium enterprise (SMEs) sector and finds that the key hurdles to VSAT adoption by the SME sector are threefold.

  1. There is a seeming lack of awareness regarding VSAT in general.
  2. An apprehension about the proper value proposition of VSAT.
  3. A general lack of knowledge about VSAT’s various aspects.

This is clear from some of the queries voiced by SMEs related to availability, customization, pricing options, training, services and channel partners.

Due to the sheer size of the SME universe in India as well as globally, there is a huge latent market for VSAT adoption in the future.

VSAT for the Future, there are Numerous Opportunities 

The onus is on the VSAT service providers who need to dispel the fear and apprehension in the mind of the  prospective customers especially the SME sector that has a highly unmanaged IT infrastruc-ture. Channel Partners are the only route to reach out to this sector, due to their wide geographic dispersion. Joint campaigns by VSAT service providers and their Channel Partners in specific geographies can play a highly positive role in the propagation of the benefits of VSAT.

There are some challenges related to the regulatory and licensing environment that has impeded growth prospects of VSAT service providers. Some knots need to be smoothened related to questions about extent of Foreign Direct Investment and amount of Satellite bandwidth available. Authorities like ISRO, TRAI and DoT can play a vital role in these areas. Once these issues are sorted out, there is no doubt that the VSAT market in India can leapfrog to new heights.

~ Dev Chakravarty

“Blockchain” and “Cryptocurrencies”: What do they mean for businesses?

Overview

Even if you are not up-to-date on the latest trends and technologies that are changing the world, you probably came across words like “Bitcoin”, “Cryptocurrency” or “Blockchain”. There are many strong opinions floating around on whether these are just digital world Ponzi-Schemes or game-changing technologies.

What is “Cryptocurrency”?

In simple terms, Cryptocurrency is a digital currency that is created and managed through computer programming rather than being printed by a government or agency.

The first breakthrough came in late 2008, when Satoshi Nakamoto released a paper on “Peer-to-Peer Electronic Cash System” and announced “Bitcoin”, the first cryptocurrency. Bitcoin is the most popular cryptocurrency. Litecoin, Ripple, Stellar and Etherium are few other cryptocurrencies that have gained popularity over the last few years.

Where does “Blockchain” come in?

The technology behind bitcoin and other cryptocurrencies is “Blockchain”. Blockchain is a digital platform/medium for storing value and compared to just information.

As such, blockchain technology is complex, but the underlying concept is quite simple. It is a public ledger or a distributed database running on millions of devices spread across the globe. It is open to anyone with the key here being, not only can information be stored but anything of “value” can be stored on the database. Money, contracts, music, intellectual property rights or anything that has an intrinsic value can be stored and move around securely.

Unlike traditional solutions, where an intermediary like a bank, government or a company establishes trust and security, with blockchain the trust is established through collaboration with millions of users across the globe and code that cannot be hacked. This makes the entire system difficult to manipulate and ensures integrity.

Until now, blockchain has made significant strides in the financial industry alone. The technology aims to reduce cost and complexity of financial transactions through a decentralized system that is faster, more secure and completely transparent.

As the technology matures and gains traction, other industries have started adopting and developing applications specific to their industry. The stakes are even bigger for industries such as supply chain, music and manufacturing where certain use cases make half the eco-system unnecessary.

Impact on Businesses/Adoption

Financial Services

Some of the well-known brands and financial institutions have adopted the technology to various extents. Major brands like Microsoft, Dell, and Expedia have started accepting bitcoin for purchases over their e-commerce platforms.

Payment solution providers, such as Square and Stripe, are also offering solutions that accept bitcoins either directly or by partnering with third-party providers such as CryptoPay.

MoneyGram has recently announced the use of “Ripple” another emerging cryptocurrency for international transfers.

Entertainment

Blockchain is expected to disrupt the music industry in a way that is sending music labels and global distribution firms into a frenzy.

Imogen Heap, a Grammy-winning artist started “Mycelia”, that develops songs with smart contracts built in. Smart contracts enable the automatic distribution of payments to all involved in making the song including the artist, musicians, recording studios or anyone else as soon as a purchase is made by a user. There are no licensing terms, contracts, exchange of money from user to distributer to artist. Everything happens instantaneously and everyone gets paid without any delay.

The use of blockchain technology to create and distribute songs will not only ease payment and copyright issues but could eliminate piracy as well.

Transportation & Logistics

IBM’s “Blockchain for Supply Chain” has already shown the advantages of using blockchain technology. The platform provides companies with greater transparency, visibility and efficiency across the entire supply chain.

One truth across the supply chain network

Traceability and transparency are some of the most important foundations of logistics. IBM Blockchain optimizes business transactions and trading relationships with robustly secure business networks on blockchain—both at scale and globally.

Blockchain offers a shared ledger that is updated and validated in real time with each network participant. It enables equal visibility of activities and reveals where an asset is at any point in time, who owns it and what condition it’s in.” – IBM

Walmart’s “Food Safety Solution” is a clear example of how this technology is here to stay and transform the business world.

Collaboration/Sharing Economy

Blockchain technology has penetrated areas that are quite niche as well and probably un-heard of. One such example is the “Brooklyn Microgrid”. The company aims to create a peer to peer energy trading be system built on block chain. The platform enables solar energy producers, be they home-based or industrial scale, to sell excess-electricity thereby minimizing the loss of energy and providing energy at low costs in the neighboring areas.

The Future

Blockchain technology still has a long way to go before it becomes mainstream. The adoption levels are quite low despite some big names in the ecosystem. As companies continue to develop and test new applications, confidence in the technology increases and further drives adoption.

Businesses will soon start to look beyond cryptocurrencies and focus on the underlying technology, the “Blockchain”. Irrespective of how we look at it today, the blockchain powered platforms will take over and the traditional systems will fade away. It’s only a matter of “How Soon”.

Food for thought: In the age of digital transformation where cloud presence, big data, and robotics are the buzz words and the focus of every business is on “Cloud Transformation”, blockchain might take over behind the scenes and re-write the digital landscape completely.

~ Karthik Pannala, Associate

Leave the Security Nightmare to your Trusted Managed Security Service Provider

Adoption of new technologies like mobile, analytics and cloud are resulting in a diverse and complex IT environment unlike anything we have seen, spanning multiple delivery models, vendors, processes and data. Both the business and technological drivers are responsible for this level of complexities. The business drivers increase the communication and transaction, whereas the technological drivers represent the fast-paced growth. At the same time, vulnerabilities are growing fast, whereas the budget for the security group is flat and faces resource crunches. Managing such a complex environment can be challenging. As a result, organizations cannot do it alone and need to look for a trusted IT services provider to help them quickly respond to business demands, manage ICT complexities, support desired levels of availability and adopt technology innovation. Managed services span a range of capabilities, creating options for organizations looking to benefit from externally provided services that allow them to focus on more business-critical issues and strategic functions and activities.

As per AMI’s Global Market Model, 24% of the global small, medium and large businesses (SMLBs) ICT spending will be driven through Managed Service Providers (MSPs), during 2021 with a 17% CAGR growth over 5 years. The scenario is even more promising when it comes to APAC SMLB organizations with a CAGR growth of 20% on MSP business contributions by 2021. Be it small companies, mid-sized or large businesses, look to trusted managed services providers to address a range of the issues around cost, complexity, service quality and risk. With the increase of hybrid IT environments based on the workloads, cloud is the new normal and has become the mainstream for managed services delivery. Around 55% MSPs in APAC countries interviewed for AMI’s WW Managed Service Provider study, indicates using a Hybrid Cloud model to run their business.

With these increased complexities in the enterprise ICT infrastructure, security has become a much deeper executive discussion because of the modern diversity of channels through which businesses can be attacked. Mobility, bring your own device, virtualisation, the cloud, and social media have all opened new doors into the organization. Adding pressure to organizations is the fact that technologies, business models, regulatory environments, and the threat landscape are evolving continuously. So, security has become a broad discipline that affects the entire organization and calls for a range of highly specialized and dynamic skills and technologies that most businesses don’t currently have. Organizations need enough highly qualified engineers and security specialists to run the security systems 24/7, analyse the information continuously, and be able to respond immediately. This also needs continuous technology updates and the cumulative experience, insight, and knowledge of thousands of independent security experts globally to pre-empt attacks. This almost impossible mission must be achieved. Thus, giving thrust of managed security services adopted by businesses globally. Providing security services as part of the broader managed service offering was always a key offering from the leading managed service providers and will continue to be so. Around 80% of the MSPs interviewed in APAC highlighted managed security services as one of their key offering which is expected to contribute over a quarter of their overall managed service revenue annually.

The opportunity for partners offering managed security services will not go away any time soon. Driving that trend is the shortage of security talent to deliver the right service in-house. There is no shortage of tools to help secure networks and data. However, tools alone can’t prevent security breaches. Managed Security Services typically offer the security solutions like Managed Firewall, Managed Intrusion Detection and Prevention, Managed Email Gateway, Managed Web Gateway, Managed Web Application Firewall (WAF) and Monitored & managed integrated security appliance service. These services, for the most part, include 24/7 technical phone support, on-site consulting, around-the-clock security monitoring and maintenance, access to the client security portal and comprehensive reporting.

To maintain the SLA clauses in the managed services environment, it is critical for the organization and the services provider both to have a clear picture about the performance metrics, security tools and policies and resiliency level the organization requires. Balancing the performance and service-level requirements with the right cost is an important exercise. Nearly 35% of MSPs in the APAC region believe customers are likely to move to a lower-priced competitor, hence they look for better support from their respective partners to remain competitive in the market. MSPs in APAC budget roughly 7% of revenues to promote their managed services which indeed needs to get a boost, as the overall market potential for Managed Service business grows in this region.

~ Surjyadeb Goswami,  Regional VP APAC

Managed Security Market Gaining Strength by the Day

Many companies have been the victim of cyberattacks including Malware, Denial-of-Service(DoS) and Ransomware. A recent example being Equifax, where hackers were able to get personal and confidential details of approximately 143 million people. SMBs are more vulnerable to these attacks due to a lack of expertise and budget. Managed Service Providers (MSPs) are leveling the field for SMBs and LBs by providing these specialized security services. The Managed Security market is growing exponentially with the rise in cybercrimes and security threats. Business factors such as meeting the needs of compliance and data protection laws, budget constraints, lack of in-house expertise and increased adoption of cloud services are shaping the future of the Managed Security market.

According to AMI’s Global Model, SMBs around the world are spending approximately $11 Billion on Remotely Managed Security, which is expected to grow at a CAGR of 14% by 2021. The increasing demand from SMBs is the key driver for this growth. As the services offered by SMBs increase, the need for high-level security for sensitive and confidential information is also expected to increase. AMI’s MSP study shows that 22% of an MSP’s total revenue is generated by providing Managed Security Services to clients and it will continue to grow. This is a great opportunity for MSPs to expand their security offerings.

 Region wise, North America is expected to remain the largest market for Managed Security Services as most managed security service providers and technology vendors are based in the US. The U.S. is expected to account for 92% of the market by 2021 for Remotely Managed Security Services.

Challenges:

Data is the new currency in this era and that is the biggest challenge for Managed Security Providers. As the data increases, MSPs find it difficult to provide scalability due to the lack of integration between various security platforms and tools. There are no pre-packaged technologies that fit all the security needs of various types of businesses. These security needs are business specific and require considerable time, effort and monetary investment.

From a SMB’s perspective, there is always a risk involved with the handling of critical information through a third-party security provider, including the risk of sensitive information getting into the wrong hands. So, establishing trust with these businesses is a big challenge for MSPs. Additionally, according to the MSP study over 60% of Managed Security Service Providers find it challenging to maintain close relationship with vendors.

Expectations from Vendors:

MSP’s share in overall revenue for the vendor is growing quickly as SMBs shift their focus to core business offerings and outsource all other IT services required to run the business. Certainly, MSPs are expecting competitive prices and premium customer service from vendors. Additional selection criteria include:

  • Delivering technologically superior platforms and tools compared to other competitors in the market
  • Highly scalable and customizable technology solutions according to the customer’s needs
  • In addition to technology, vendors are expected to carry all the relevant certification and audit credentials to be compliant with the data privacy and security laws especially in regulated verticals such as Healthcare, Banking, etc.

These are a few of the many challenges and selection criteria uncovered in AMI’s MSP study. This research demonstrates that expansion of managed security offerings such as Endpoint Security and Remote Monitoring and Management (RMM) could be a major contributing factor in the growth of the managed security market. MSPs should pay attention to several growth factors such as flexibility for changing requirements, high level of automation, regular security testing, quick customer support and the ability to provide end-to-end security solutions. Taking steps in these directions will help MSPs to stay on top in this competitive market.

~Ankit Mehta, Associate

Black Friday for Small Businesses? Why Not?

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Quick Trivia: A company in NYC with less than 10 employees is out of paper for printing. What would they do?

Contact a service provider sitting 5000 miles away who provides managed print services.

Walk across the street and buy a bundle from Staples.

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According to AMI’s Global Model, 30% of IT hardware procured by small businesses in the United States is through a retail channel such as Best Buy or directly from a vendor.

(Click here for an interactive demo of AMI’s Global Model)

Due to the lack of simple procurement solutions and the proliferation of e-commerce, small businesses continue to buy IT hardware through consumer-focused channels. The trend is likely to continue until we see a ground up change in the way Channel Partners target small businesses.

As the buying behavior of small businesses continue to align with consumers, companies can target small businesses using marketing strategies that are developed for consumer holiday seasons

Would it work for me?

Dell Inc. appears to have identified a market. The company has been putting out black Friday and holiday season ads specifically targeting small businesses.

Is Black Friday the only time?

For businesses, there could be many buying seasons like budgetary or quarterly cycles, conference seasons, industry events such as Google IO, Worldwide Developer Conference. But most companies attending industry events have small businesses at the tail end of their priority list. They generally market solutions for medium or large businesses.

Consumer focused events like Black Friday or Cyber Monday, provide an opportunity to tap into small businesses that have similar buying patterns to individual shoppers. Such businesses typically do not have the resources to contract with Channel Partners or sign long term agreements.

In Conclusion

A sale to small business is not always via a lengthy sales pitch and long-term contract. There is still quite a lot of interest in “Buy It Now” products, it’s only a matter of identifying these businesses.

Learn more

Ask us about small business buying patterns and behaviors. Find out the most preferred purchase channel for your product category. Email us at ask_ami@ami-partners.com

~Karthik Pannala, Associate

How are Regulated Industries using Managed Services?

Government is tightening rules and regulations on data storage and security especially in regulated industries such as healthcare, and financial services. These sectors include doctor’s offices, banks, and credit unions, where sensitive information is collected and stored. Firms in these industries are leveraging the expertise of Managed Service Providers (MSPs) to setup and manage compliant IT environments. Hence, these providers are on the front lines ensuring data security and navigating a myriad of laws and regulations on behalf of their clients.

According to AMI’s Global Model, SMBs across the world are spending almost $63B on remotely managed services, this spending is forecasted to grow at 15% CAGR by 2021. SMBs in regulated industries such as Banking/Finance and Healthcare account for nearly 20% of this spending and is forecast to grow at 12% CAGR by 2021. This represents overwhelming opportunities for MSPs in these industries especially in providing specialized managed services such as security, storage and networking to mention a few.

MSPs serving these industries are handling responsibilities above and beyond handling managed services. The focus is not only on keeping people and systems working, but also on making sure they work in a legally compliant manner. These MSPs typically have a dedicated compliance and security department that stays on top of regulations such as the Health Insurance Portability and Accountability Act (HIPAA), and the Payment Card Industry Data Security Standard (PCI DSS). In case of a successful hack, investigators determine whether the victim organization followed all laws, had appropriate policies and procedures in place, and if the IT department was properly designed and capable of handling the security needs. The aim is to examine if the IT department was susceptible to that breach or hack. MSPs serving these industries need to be diligent and take an active role in encouraging their clients to update their policies and meticulously follow procedures.

A recent study conducted by AMI shows that MSPs are increasingly focusing on these regulated industries to expand their portfolios and customer base. Larger MSPs with more than $10M in annual revenues are forming vendor partnerships with the needs of their regulated industry clients in mind. The top of mind concern for these MSPs while partnering with vendors, be it an Remote Monitoring & Management (RMM) vendor or a Professional Services Automation (PSA) vendor or a hosting platform provider, is to ensure that they carry relevant compliance certifications and audit credentials. In addition, serving regulated industries and demonstrating vertical industry specific expertise allows MSPs to stand out in a crowded, commoditized MSP market. AMI’s MSP Study shows that MSPs focus on services such as Disaster Recovery as a Service (DRaaS), and Archiving as a Service (AraaS) especially in regulated verticals. It is imperative to store/archive historical data as well as to have systems up and running all the time with fast up time in case of an outage.

The stakes are high for businesses as far as security and compliance are concerned. Businesses are looking for ways to offload these cumbersome tasks on experienced partners in order to focus on their core missions. So, MSPs are increasingly targeting these regulated industries that cannot afford to be lenient with their security standards.

~Kunika Sodhi, Associate