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

Got MSP?

Managed Service Providers (MSPs) are upping the stakes in the current cloud land grab. By rapidly expanding their portfolio of service offerings they expect to capture larger share of wallet. Their customers are aligned with this approach as they seek out full-service providers able to meet all their technology needs.

A Growing Market

By 2021 MSPs will deliver close to 25% of all technology products and services globally, up from 18% today. This is an impressive business transformation story – thousands of IT resellers and systems integrators (most of them small companies with less than $10M in revenues) have displayed a clear vision and competent leadership in enhancing their organizations’ capabilities and infrastructure to keep revenues growing in this challenging business climate.

The number of MSPs worldwide will grow from 50,000 to 75,000 between 2016-2021, with the total IT products/services they deliver growing from $500 billion to over $1 trillion during the same time.

Their services portfolios, which initially included pure infrastructure services such as storage, security essentials, compute power, web hosting, and application hosting, have now grown to include value add and higher margin services such as disaster recover/business continuity, e-discovery, vulnerability assessment, compliance management, application management, SaaS, and mobile device management among others.

Business Challenges

Despite being in a high growth business, MSPs face tough challenges which require constant attention and fine tuning of their business models. Some of the top challenges are:

  • Differentiating their services from those of other MSPs is a top priority to counter margin erosion and hyper-competition.
  • Absorbing newer technologies, tools, and solutions, packaging them for client consumption, and providing follow up services requires a constant learning and training.
  • Investing in datacenters is yet another critical challenge, which is often detrimental to smaller MSPs.

How Technology Vendors Can Help

Technology solution vendors that are supplying to MSPs can often play a big role in helping MSPs address these challenges. By fully understanding the nature of MSPs operational and business needs, vendors can design their products and programs to enable their MSP customers to win in the market-place.

Key features can be built into products and programs to make them a nuts-to-bolts solution, or packaged to work with other third-party solutions typically used by MSPs. Examples of the types of features that MSPs would like vendors to include in their solutions are:

  • Automation of overall solutions architecture.
  • Automation of customer on-boarding and migration processes.
  • Dynamic and predictive throughput/capability scaling.
  • Performance monitoring and predictive dashboards and controls.
  • Vertical industry-specific sales, marketing, and technical know how.
  • Vertical industry-specific compliance and reporting features.
  • Online university – modular online training videos and certification.

These are some of the insights we have uncovered in our tracking of the worldwide MSP segment. For additional insights and a detailed description of our MSP tracking service and various deliverables click here.

Alternatively, please email John Rezac (jrezac@ami-partners.com) for more details or to schedule a webinar that will walk you through our MSP coverage and insights.

~Deepinder Sahni, SVP

Payroll Software-as-a-Service

We all like to be compensated for our work. Whether it be the new normal of direct deposit, the antiquated live check, or the somewhat controversial pay card (No one is [legally] paid in cash anymore, are they?), payday is a date we circle on the calendar. Companies have the option of outsourcing payroll or keeping it in house. Software can be on-premise or subscribed to as a service. AMI’s research shows the SaaS option is growing but on-premise solutions are still used in most SMBs. Let’s take a look at the SaaS option and see if the cloud makes sense for payroll in the SMB space.

SaaS is Sassy 

According to AMI’s Global Forecast Model, SMB spending in the US on Payroll software-as-a-service will have a CAGR of 13% through 2020. While double digit growth is nothing to dismiss lightly, other SaaS categories are approaching a 30% CAGR over the same time span. Overall, SMB SaaS spending in the US will have Continue reading “Payroll Software-as-a-Service”

Layered Security Solutions

Earlier this week, AMI-Partners joined a call hosted by Trend Micro Inc. that discussed the firm’s collective capabilities in security, covered in three categories titled Hybrid Cloud Security, Network Defense, and User Protection. With security threats becoming more sophisticated, targeted, and frequent, having a layered security solution can prove beneficial in the SMB space. Yearly subscription prices per user range from $38 – $62 for this layered approach to security, which does not put it out of reach for the SMB market. These security solutions (Standard and Advanced packages) are available for both on-premise and hosted delivery.

Competition & Worldwide Spending

Trend Micro, a global security software company that develops products for servers and the cloud computing environment for consumers, governments, and the SMB market, competes in a crowded field with such well know names like McAfee, Microsoft, and Symantec. With an eye toward increased market share and profitability, the company is working to provide business customers with multiple solutions for cybersecurity. The firm is ranked as the top worldwide content security provider for small business (4 years running) by Canalys and claims to block 250M threats each day.

According to AMI’s Global Forecast Model, total worldwide SMB security spending Continue reading “Layered Security Solutions”

SMBs Jumping on the Cloud-Based Managed Services Bandwagon

The rate of change in today’s IT landscape has made it challenging for SMBs to manage IT functions due to tighter budgets and fewer resources. This is pushing SMBs to compensate for their lack of in-house IT capabilities by hiring Managed Services Providers (MSPs) to provide 24*7 IT service and support.

Most MSPs today aim to serve two goals:

  1. To alert their clients about any risk before or when it happens.
  2. To address all the alerts they get.

This approach has resulted in a shift from the traditional “Break-Fix” mentality to a “Fix/Prevent” one where IT issues are addressed before management or employees are disrupted.

Is 2016 the year for Cloud-based MSPs?

The MSP world is changing fast and the latest evolution is the shift to Cloud. According to AMI’s Global Forecast Model, SMBs will spend US$96 Billion on managed services in 2016 growing to US$154 Billion by 2020. To capture this opportunity most MSPs are transitioning towards cloud and hybrid environments by offering services like Remote Monitoring and Management (RMM). This is a great approach as most SMBs have servers that need to be available 24*7 and these servers need round the clock monitoring and management. Apart from RMM, MSPs offer services such as Backup and Disaster Recovery, Help Desk Support and Daily Health Reports to SMBs as they lack in-house resources capable of detecting security flaws or tracking utilization.

In a recent survey conducted by AMI-Partners exploring MSPs’ transformation to Cloud, one MSP stated, “Our cloud business grew from 0 to $3M over the transformation process. It puts us in a good place that we are able to be a single stop shop for SMBs looking for a particular solution, and we can provide that.” MSPs in this study saw their year-on-year revenues grow by 20-30% as a result of this transformation. This raises a question: Will 2016 be the year for cloud-based managed services?

With the increasing popularity of cloud-based services such as XaaS (Everything as a Service), MSPs will be able to provide managed IaaS, SaaS, PaaS in addition to managing security and other services on-premise. Subsequently, cloud vendors like Microsoft, Amazon and IBM are helping MSPs through this transition by providing tools and services such as backup management, 24*7 support and infrastructure management to mention. These tools provide consistency and manageability across blended deployments and deliver improved service quality, and flexibility with hybrid cloud environments.

Security concerns and lack of knowledge is worrying for businesses

A recent AMI study showed that security is the most pressing concern with cloud adoption. One of the most effective ways for MSPs to alleviate this concern is to partner with major cloud providers like Amazon or Microsoft. These trustworthy brands provide benefits such as IP protection and make cloud adoption easier by providing materials such as resource libraries, sales & marketing training, and technical & business support to MSPs. The study also revealed that SMBs are not fully aware of the benefits of cloud. It is important to stress to SMBs that cloud is more secure, scalable and cost beneficial now than it has ever been before.  Moreover, MSPs must assess their customers’ needs and build a value proposition unique in their market.

In order to succeed and thrive in this changing landscape, MSPs need to address these concerns and misconceptions early. With the right strategies and partnerships, there are many opportunities for MSPs.

~Kunika Sodhi, Associate

Prysm Introduces Ground Breaking Technology to the India Marketing Initiative

The AMI Bangalore team had the opportunity to attend an analyst meeting organized by Prysm – a Unified Communication company which specializes in collaborative conferencing solutions. The event showcased how an innovation in the conferencing world could be interactive and immersive at the same time. This new technology will allow users to present, share, reposition, resize and edit various types of content through on-screen touch, PCs, or mobile devices. No longer will conferencing be just about video walls, but a platform which is also scalable, energy efficient and eco-friendly. This is made possible through the platform’s foundation use of Laser Phosphor Display (LPD) technology.

Prysm’s new technology will allow businesses and their employees to collaborate in real time across locations and screens ranging in size from mobile devices to large-scale video walls. This is done through a unique combination of hardware and software as a service (SaaS).

In India Prysm’s primary focus remains on IT companies, Indian conglomerates, Fortune 500 companies and public sector units. Among the small and medium business segment Prysm is targeting the niche segment of the “Analytics” SMBs, who have a global impact. Partnering with Prysm would increase these SMB’s addressable outcome of analytics. They would also be able to enhance their experience through the benefits offered by Prysm’s content and collaboration tools.

Prysm does not consider its competitors as barriers to its market expansion plans in India. As the Prysm technology is completely compatible with other legacy applications; so it has a unique way of partnering with its own competitors. For example, Cisco uses Prysm video walls in its telepresence technology thereby providing complementary content to Cisco and simultaneously enhances the overall experience.

A unique feature of Prysm is its “Multi-content Mirroring” offering the capability of collaboration for users from their devices, regardless of location. They can resize documents and move them as needed; moreover, snapshots act as a long-term repository for important real time data.

“We are spreading our wings globally,” mentioned Amit Jain, CEO and founder of Prysm.  “Nevertheless we continue to view India as our global centre of decision making and we visualize ample opportunity for strategic deployment of Prysm solutions by top CIOs,” Jain concluded.

One of the Prysm’s key strategies in India is the “pull through effect”. There are two types of “pull through” – one comes through MNCs with large footprints in India using Prysm solutions; hence an adoption here could lead to a pull through of a larger group; e.g. someone like Shell or Cisco who have a reasonably strong development and backend office in India. The other strategy is to make channel partners their internal customers and then allow sales activity through them.

Prysm does possess an innovative video collaboration technology that fosters innovation by continuing to push the barriers of traditional communication. However – the caveat areas will include: bringing out the true value proposition of its product, flexible & affordable pricing, and strong channel partnership & distribution strategy. Indian businesses, particularly SMBs are extremely price sensitive and it remains to be seen how reasonably Prysm is able to price its product so as to capture its coveted place among SMBs. Dedicated channel partners for Prysm are a “must” since India end-users are habituated to partners who provide continual support. An additional hurdle is increasing the awareness levels of this relatively “new” technology.

Prysm does have a significant potential for success with this pioneering video collaboration technology if it is able to address the above areas and proceeds to enter the market with a focused Go-To-Market approach and strategy. It will be interesting to see how the use of video collaboration technologies fosters innovation by continuing to push the barriers of traditional communication.

~ Sonam Prasad, Senior Associate

SAP—Thinking Digital

Run simple, think digital—that’s the goal of SAP’s recently introduced business unit, SAP Digital. The enterprise applications software giant is turning some of its attention to the “little guy” by selling directly to small businesses, individuals and small teams through the SAP Store. SAP’s new strategy appears to be a savvy move, considering that worldwide software as a service (SaaS) spend is expected to grow 23.5% annually through 2019 according to AMI’s Global Model. The SAP’s new unit will simplify the consumer journey by streamlining the purchase process and product implementation processes.

SAP hopes to accelerate its 2020 growth expectations by capitalizing on the “digital revolution” which is disrupting the software industry. According to Madhur Aggarwal, COO of the new unit, “digital is about new audiences, new offerings, and new revenue streams.” SAP is providing digitally native offerings built for personal consumption, which will include software, education, content and data. The strategy is to target the individual or team buyers rather than entire enterprises. While large organizations might experience benefits from this new strategy, the primary value add will go to individuals, whether in small or large businesses.

SAP is taking a page from Apple’s book by establishing a store that is convenient and easy to navigate. Customers can purchase products quickly across multiple devices. The SAP Store eliminates the need for vendor presentations, complicated demos and purchase orders. Moreover, contracts have been simplified to provide transparent pricing. Whereas traditional sales cycles could take 3-9 months of relationship building, SAP Digital allows customers to search and try products in as little as 5 minutes. Through SAP Digital, solution implementation is reduced from months to as little as 15 minutes.

There are currently over 100 products—many from third party publishers—spanning 12 product lines listed in the SAP Store. Notable offerings include SAP Success Factors Perform and Reward for Small Businesses (HRM solution) and SAP Digital for Customer Engagement (CRM solution). Many products include free versions that can be upgraded for additional functionality and further scaled for large enterprises.

The foray into digital also serves to benefit SAP’s partners. The onboarding process for third parties has been streamlined and partners can go from exploratory discussions to having their products sold via the SAP Store in less than 30 days. This not only allows SAP to quickly expand its portfolio, but will serve to help the organization achieve its goals of attracting new customers and revenue streams.

SAP Digital is sure to be an overall win for the company. However, there are some challenges that the organization will need to overcome. It remains to be seen if individuals within large organizations with complicated procurement processes will have the authority to make large purchase decisions within a space such as SAP Digitial. While one or two individuals may be able to make large software decisions within small businesses, larger organization are unlikely to leave these decisions in the hands of a single buyer. Nevertheless, SAP Digital presents the opportunity for convenient exploration and discovery, and this will be a significant benefit to key decisions makers across all organization types and sizes. If SAP’s mission is to help organization Run Simple, then SAP Digital is another step in the right direction.

Joseph Bertran, Associate

Come for the SaaS, Stay for the IaaS

I recently wrote a blog about progresses in security within the cloud.  I think the blog spoke well to how the cloud will quickly adapt to be compliant and store private, secure data for the businesses that are restricted by that compliance, but it did not address several other areas of concern for a typical small or medium business (SMB).  While several SMBs are very concerned about being compliant and making sure that no one has access to their data; I think the larger, more general concern should be the integrity of the data itself.

Continue reading “Come for the SaaS, Stay for the IaaS”

Tablet PCs are gaining momentum among SMBs worldwide, enabling cloud-based solutions

AMI has a new press release about tablet PCs:

New York, New York—March 24, 2011—Small and mid-sized businesses (SMBs, firms with less than 999 employees) continue to strive to regain their place in a troubled economy. Recent AMI research indicates that SMBs who have embraced mobility generated 40% higher revenue growth over the last 12 months compared to those who did not. As the mobile workforce trend continues, mobile devices, including tablet PCs, will play an integral part in supporting these employees.

You can read the whole release here.

Web-conferencing Solutions for SMBs – a Recent History & a Basic Question

Recent findings show continued SMB interest in conferencing solutions, but how much of that will be premium (paid) solutions? Digging deeper into AMI’s 25 country tracking of the market, small businesses (SBs) are trending to bootstrap many free solutions together. Examining various cross-cuts of our data, strong clusters surfaced. Roughly 1 in 4 showed explicit interest in paid solutions.

Continue reading “Web-conferencing Solutions for SMBs – a Recent History & a Basic Question”