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The Evolution of MSPs Points to the Cloud

By Laura Stotler

Managed service providers (MSPs) have had many names and have worn many hats throughout the history of technology. They are generally defined as outsourced technology companies that play a major role in driving the adoption of the latest products and services.

Now that the technology world is shifting to cloud computing on a broad scale, the question is: how will MSPs adapt and transition to a new business model? Infrastructure-as-a-Service (IaaS) provider ProfitBricks, a company that maintains thousands of servers and 37 data centers, has published an infographic (click to enlarge) examining the historical role of MSPs and how they fit into the cloud computing realm.

The story begins in the early 1980s when IBM launched its PCs and the financial and operations departments of small businesses began to take advantage of them. By 1988, the introduction of the IBM 286/386 brought computers to the masses, while the WordPerfect and Lotus apps simplified tasks like word processing and label printing.

By the early 1990s, large-scale Ethernet rollouts began and hard disks became commoditized, enabling PC memory management and databases. File servers were created sometime around 1993, along with the launch of Windows for Workgroups, GroupWise and NetWare. In 1995, the Intel Pentium chips became popular, as did RAM upgrades (an interesting note, an 8MB RAM upgrade for Windows 95 would run you $500 at this time!).

Following the PC proliferation came multimedia integration, with speakers and soundcards included with PCs. By the late 1990s, email became prevalent, the BlackBerry Enterprise Server launched and Windows NT started to make inroads in the market.

The early 2000s brought a broader focus on data, as tape backups became more sophisticated and Windows XP launched. By 2004, fax machines started to become obsolete, and software-as-a-service (SaaS) solutions started to become available through companies like Salesforce.com. The iPhone and the beginning of the bring-your-own-device (BYOD) trend debuted in 2006, with virtualization and laptops taking root by the late 2000s.

The current decade has seen the launch of BPOS/Office 365, which has caused MSPs to lose some of their email business, along with Microsoft ending its licensing SKU for Microsoft Small Business Server. MSPs began to evaluate Microsoft’s partner relations at this time, which has led to the present state of affairs and market opportunities available today.

As CFOs cut back on physical hardware spending and banks refuse to fund on-premise data centers, opportunities abound for cloud-based solutions. Many insurance companies are also demanding cloud-based disaster recovery plans from businesses, leading to a unique niche for MSPs to deliver cloud solutions and services.       

With 90 percent of companies already using cloud computing technologies and 60 percent making secondary shifts after completing an initial transition, the opportunities for MSPs to make the shift are many. ProfitBricks defines four business models that will helps MSPs deliver on the promise of cloud computing.

The Build Model centers on service providers procuring hardware and software for cloud construction, while the Provision Model consists of creating and offering a hub for providing vendor-based cloud services to customers. The Integrate Model encompasses integration and implementation of services for on premises or customized vertical cloud needs. And the Manage/Monitor Model features ongoing management and support for adding, scaling and troubleshooting services using a recurring per user/seat/device model.                                                      




Edited by Alisen Downey

MSPToday Contributing Editor

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