April 26, 2004 -- (WEB HOST INDUSTRY
REVIEW) -- There has been much written about the managed services
industry in the last several years. The flood of opinions and material
written about managed services has been no less than staggering, and
much of it extremely pessimistic about the longevity of the managed
services model. Yet, here we are in almost mid-2004 and the managed
services/IT outsourcing industry has arguably never been better.
The advent of utility computing has
brought another wave of scrutiny upon the managed services sector.
Claims that this new business trend could spell the end of the Managed
Service Provider (MSP) model have been circulating for months now. But
the success or failure of utility computing, at least in the estimation
of this writer, is immaterial to the future of managed services. The
MSP market, if it continues to trend in the same direction it has been
going, should offer MSPs (and end-users) a great deal of security and
piece of mind.
Trends Driving Managed Services
During the heady days of the dot-com
phenomenon, MSPs were basking in the limelight of the tech media,
analysts, and venture capitalists. The business model made sense, the
technology was available (albeit expensive), and the demand was
present. And then the bubble burst. The economic stagnation of the new
millennium, shrinking corporate budgets, and the increasing reliance of
everyday business on IT made life difficult for everyone. But with new
adversities come unforeseen blessings.
The last several years have seen a
remarkable convergence of trends that bode well for the future of
managed services. The first, which I already mentioned, is the
continued reliance of everyday business on information technology. The
1990s saw an era of "let's build it because we can," whereas the 21st
century has kicked off with a resounding "let's only use it if we have
to." And believe me, a lot of companies have to use it. There are very
few industries today that can claim complete independence from
information technology. Virtually everyone, whether directly or
indirectly, comes into contact during the course of their day with IT.
This trend will almost certainly continue.
The second trend has been the increased
level of government regulation, both at the state and federal level, in
industries that rely heavily on IT (most notably financial services and
healthcare). Partially due to the slew of notorious hacking jobs
exposing the vulnerability of many IT network defenses and partially
due to other factors (including the corporate financial scandals)
government has never been more interested in making sure that data
flowing through IT networks remains private and secure.
The last trend is more abstract, but
nevertheless quite important. The lunacy of the dotcom era is
thankfully behind us. That period, while foolishly exaggerated at the
time, now seems to have taught us some important lessons. Most notable
of these is the lesson of focus. Companies are no longer enamored with
technology for technology's sake. Gone are the days when technology
spending ran rampant throughout corporate America with little or no
thought as to the strategic value that technology brought to the
company.
Today, a new and better approach to
technology reigns supreme. How does technology help me run my business
better? This is the new question of the day. Unfortunately, it's not
always an easy question to answer, but the there are people who can
help. Enter the MSPs.
The MSP Doctor
There was a time when physicians,
accountants, and lawyers held unquestionable positions in society
(insert your favorite lawyer joke here). That period also saw less
government regulation in those industries. Over the years as government
has obtained more oversight in those areas, the more vital and
indispensable those professions became. Today, the thought of
performing even routine healthcare procedures on oneself, or asserting
your own legal rights without a lawyer, or doing your own taxes, has
become inconceivable. The role of lawyer, doctor, and accountant has
been cemented in our culture. The same is becoming true of MSPs.
With laws such as the Gramm-Leach-Bliley
Act, the Health Insurance Portability and Accountability Act,
Securities and Exchange Commission Regulation 17a-4, the Sarbanes-Oxley
Act of 2002, and others, more and more executives are turning to MSPs
to better understand how to cost-effectively ensure that their
corporate IT networks do not run afoul of such regulations. Most
notably, MSPs focused on the financial services and healthcare
industries have seen a tremendous amount of growth during the last year
and a half as a result of regulatory compliance pressures. Many MSPs
have even begun to partner with national law firms to combine legal and
technical talents as one offering to companies.
The trend of legislating the privacy and
security related to financial and healthcare data will most certainly
continue in years to come. And with the increased flow of affected data
through various networks the role of the MSP as a trusted advisor and
solution to this problem will also likely increase.
So the next time you think your company's
IT network is suffering from legislative overkill, take two pills and
call your MSP in the morning.
About The Author
Charles Weaver is president of the MSPAlliance (mspalliance.com), a global
trade group for the managed services/IT outsourcing industry. He can be
reached at cweaver@mspalliance.com.
