Impact of AWS Managed Services on MSPs

Recently AWS launched the AWS Managed services  as part of the their offering.  This has made customers  excited and has created confusion for managed services providers. It is very clear that AWS wants to deliver all the services in the same way as they are consume other AWS cloud services. This service may be limited to few areas in the current stage but looking at the history and innovation at AWS, I will not be surprised if it becomes a viable option for managed services providers who are just delivering basic services.

For the customers who are currently supporting their AWS environment by themselves or want to insource IT Support, AWS Managed Services is going to help them to achieve the outcome. Whether this is good or bad news for Managed Services provider it will depend upon how they approach this. With this release there will be significant changes to previous MSPs Responsibility in IAAS and PAAS as shown below in picture:

AWS Managed Service Impact on IAAS and PAAS

For MSPs to remain relevant in the long run, they need to take some bold steps and move out of their comfort zone. This may involve building new capabilities or realign their long term strategy with various cloud providers. Whichever approach MSPs take, it has to be quick and bring real business values to enterprise. Simple cost savings and having lower TCO is not something which enterprise are expecting. MSPs need to become partner in enterprise strategy to go to market instead of being just a supplier. Below are some of the steps which MSPs can take:

1) Focus on niche and strategic consulting.

IT MSPs should start helping customers with industry verticals knowledge and provide strategic consulting to achieve particular outcome instead of current approach of being reactive to business requirements.

2) Build Complementary capabilities for customer developers

Things like AWS CodeBuild is further going to reduce work required for developers to prepare and run the environment. Developers will become more independent and agile. MSPs should try to complement organization with providing services like managing security of the environment and data.

3) Take benefits of AWS capabilities to automate and reduce manual efforts while providing IT Managed Services

MSPs should take benefit of the new capabilities launched by AWS to reduce their manual effort and move up in the value chain. Instead of fighting the change, they should embrace it. MSPs existing tools should scale to support new capabilities if they have to act as single point of contact for customer for in-life support.

4) Become competent on Application and Digital Management

This trend of bundling managed service with products is not limited to AWS only. Other hyperscale cloud provider are expected to follow soon on this. IT MSPs need to start moving up the stack and start managing applications and business services. If MSPs are not able to catch up with Digital business and application services, they are expected to lag behind.

5) Recognize and Embrace the IT Managed Services Changing Scenario

Gone are the days where customers used to outsource whole IT environment to MSPs. If MSPs cannot recognize the new Revenue stream, it is expected that Year-on-Year they will start to get irrelevant.

In conclusion, we are in the Digital Era where every industry have to find to a new better way to deliver their services. Amazon created the public cloud industry by delivering easy to use self-service compute services and now they are trying to do the same for Managed Services. This can be very disruptive for existing players and if they do not innovate they will become irrelevant.

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