The Future of Managed Services

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