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The Cloud Managed Services Market is Growing — and That’s Good for MSPs

Click to learn more about author Jay Chapel.

Lately, we have been talking to quite a few providers of cloud managed services that play in both the private and public cloud spaces. These conversations have centered around how cloud management needs are evolving as enterprises’ hybrid and multi-cloud needs have accelerated.

Most refer to this market as cloud managed services (for once, no acronym associated), and many of these managed service providers (MSPs) also sell migration services to bring customers from the private to the public cloud and for cloud services between Amazon Web Services (AWS), Microsoft Azure, and Google Compute Platform (GCP). So, these MSPs can help you move your applications to the cloud, sell you the cloud services you’re using, and manage and optimize your cloud services. It’s a rapidly growing market with a lot of M&A activity as MSPs race to provide differentiated cloud managed services that enable them to help enterprises get to market faster, better, and cheaper.

The global cloud managed services market size is expected to reach $82.51
billion USD by 2025, according to a study conducted by Grand View Research,
Inc. Enterprises are focusing on their primary business
operations, which results in higher cloud managed services adoption.
Business services, security services, network services, data center services,
and mobility services are major categories in the cloud managed services
market. Implementation of these services will help enterprises reduce IT and
operations costs and will also enhance the productivity of those enterprises.

Taking a step back, I had a look at Wikipedia to make sure we were all aligned on what managed services providers are and what cloud management and cloud managed services are.

  • A managed services provider is most often an information
    technology (IT) services provider that manages and assumes responsibility for
    providing a defined set of services to its clients either proactively or as the
    MSP (not the client) determines that services are needed.
  • Cloud management means the software and technologies designed for
    operating and monitoring applications, data, and services residing in the
    cloud. Cloud management tools help ensure cloud computing-based resources are
    working optimally and properly interacting with users and other services.
  • Cloud managed services enable organizations to augment
    competencies that they lack or to replace functions or processes that incurred
    huge recurring costs. These services optimize recurring in-house IT costs,
    transform IT systems, and automate business processes, allowing enterprises to
    achieve their business objectives.

The “net-net” is that MSPs providing managed cloud services enable enterprises to adopt and manage their cloud services more efficiently.

In March 2018, Gartner published a Magic Quadrant for public cloud infrastructure
managed service providers if you’re interested to see who they rank as the best
of the best in when implementing and operating solutions on AWS, Azure, and GCP
(note this includes multi-cloud but not hybrid cloud). Several large SI’s are
on the list like Accenture, Capgemini, and Deloitte, along with newer born in
the cloud, pure-play MSPs like 2nd Watch, Cloudreach, and REAN Cloud.

What’s interesting to us about this list is
the recent M&A activity we have seen with many of these companies. Here are
a few we were able to remember over a beer (shout out to the Crooked Run
Brewery in Sterling, VA):

As you can see, there is a clear bias towards buying “born in the cloud” public cloud-focused MSPs, as that’s where the lack of enterprise expertise lies. And, of course, the hyper-growth is occurring as companies migrate from the private to the public cloud. Many of these providers started off supporting just AWS and now need to or have begun supporting Azure and Google as well to support the “big 3” cloud service providers in this new and emerging multi-cloud world.

MSPs that want to get into the cloud managed services game need to realize the pains are different in the public cloud and that their focus needs to be on helping enterprises with security and governance, managing cloud spending, the lack of resources/expertise, and the ability to manage multi-cloud.

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Source: https://www.dataversity.net/the-cloud-managed-services-market-is-growing-and-thats-good-for-msps/

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