MSPs Invest in Service Delivery

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MSPs Invest in Service Delivery
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By Jeffrey M. Kaplan
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This story appeared in the July/August 2004 issue of Web Host Industry Review magazine. Click here to subscribe for free.
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July 30, 2004 — (WEB HOST INDUSTRY
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REVIEW) — The MSPAlliance and THINKstrategies recently unveiled the
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results of a joint 2004 Service Enabling Technology study for the
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managed services business, with important implications for Web hosting.
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As the industry regains momentum, market
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leaders are aggressively expanding the breadth of their service
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portfolios to win greater shares of the market. And, as the MSPAlliance
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and THINKstrategies study found, this strategy is driving service
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providers to make new investments in their service delivery
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capabilities.
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In 2003, the MSPAlliance and
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THINKstrategies published a landmark benchmark study of the managed
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services industry based on a survey of 50 managed service providers
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that reported experiencing growth of more than 50 percent in revenues
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and a nearly 25 percent expansion in customers that year.
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Participants in our latest research
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project included a broad array of MSPs, delivering a variety of remote
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management services: specialized service providers offering security,
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storage, messaging and networking services; major telecom carriers who
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are adding a new layer of management capabilities to their traditional
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transport services; IT outsourcing and service companies looking to
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offer a new set of targeted services; local/regional VARs seeking to
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offset slowing product sales with annuity services; and Web hosting
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companies expanding their managed service capabilities.
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The MSPAlliance/THINKstrategies survey
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study found the majority of these companies are planning to
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significantly increase their investments in new service enabling
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technologies that can help them more effectively serve their customers
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and manage their businesses. The survey participants reported they will
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spend 21.7 percent of their total operating budgets on new service
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enabling technology in 2004, compared with 17.5 percent in 2003.
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The 53 MSPs participating in the
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MSPAlliance/THINKstrategies Web-based survey said they plan to make new
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technology investments in the areas of help desk management,
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network/systems management, desktop management, security management,
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storage management, messaging management, application management,
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wireless network management, VoIP management, service management
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(including provisioning and billing).
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Network/systems, desktop, storage and
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security management technologies are at the top of the investment plans
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of the survey respondents. They are also making investments in
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messaging, VoIP and wireless management technologies to support their
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expansion into these new service areas.
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One of the most significant and
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surprising findings of the MSPAlliance/THINKstrategies study was that
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the survey respondents were generally neutral rather than truly
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satisfied with their current service enabling technology suppliers, and
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in many cases uncertain about whether they would stay with these
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suppliers. This should be an important wake-up call for the established
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technology vendors and may represent an important opportunity to a new
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generation of technology companies.
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The bottom-line message of the joint
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MSPAlliance/THINKstrategies studies is that the demand for managed
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services continues to grow and the companies seeking to capitalize on
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this trend are making significant capital investments in the enabling
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technology necessary to support customer requirements.
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The challenge will be better scaling and
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targeting these investments to match the true level and nature of
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customer demand as opposed to the overly aggressive build-out that
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spelled the demise of many first generation Web hosting and managed
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service providers during the dot-com boom and bust. As the Web hosting
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industry rebounds, capital investment rises and the number of mergers
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and acquisitions escalates. In response, competition is intensifying.
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Stand-alone Web hosting companies are contending with a wide assortment
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of contenders ranging from application service providers to utility
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computing solutions companies.
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Selecting, implementing and managing the
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right enabling technology to support their service portfolios and
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ensure operational efficiency and effectiveness will be a key factor
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that will determine which Web hosting providers survive and succeed.
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About the Author:
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Jeffrey M. Kaplan is managing director of
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IT strategy consultancy THINKstrategies. He can be reached at
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jkaplan@thinkstrategies.com.
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About

Since 2000, The Web Host Industry Review has made a name for itself as the foremost authority of the Web hosting industry providing reliable, insightful and comprehensive news, interviews and resources to the hosting community. TheWHIR is an iNET Interactive property. For more information on iNET Interactive, visit http://www.inetinteractive.com

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