Grassroots MSPs heed on-demand call

by Jeffrey Kaplan

April 22, 2004 —

I recently had the privilege of participating in the Global MSP Network (GMN) Spring 2004 conference, which offered an insider view of the realities of today's managed services business and provided broader insight into how utility computing is taking hold at the small and mid-size business (SMB) level.

The GMN was formed in 1999 with the emergence of the managed service market
to give providers (MSPs) a peer group in which they could trade information
and advice about their business challenges. The GMN consists of an
assortment of pure-play MSPs, value-added resellers (VARs) and integrators
who are evolving their service offerings, delivery systems and
marketing/sales strategies to respond to their customers' desire to offload
the daily hassles of IT management and adopt various utility computing
alternatives.

The GMN conference was a highly interactive, best practices forum for this
group of relatively unknown regional MSPs to share ideas about how to handle
growing demand for their services.

While the behemoths of the market - like IBM, HP and EDS - push their vision of on-demand, utility computing, these little-known MSPs are making the vision a reality. Although they may not have the broad-based brand recognition of their larger counterparts, the GMN members are delivering packaged IT service solutions that provide tangible business benefits for their SMB customers.

The utility computing services provided by GMN members range from IT infrastructure deployment and management to business applications, storage and security. Their solutions are primarily aimed at the SMB segment of the market that has become receptive to utility computing solutions because of their frustration with the growing complexity and cost of IT.

Although the GMN members at the Spring 2004 conference generally serve SMBs, their experience echoed the perspective voiced by Fortune 500 CIOs at last month's UtilCompWorld conference. The CIOs speaking at that conference considered a wide range of application, desktop, security, storage, networking and Web hosting services to be stepping stones to utility computing.

While the utility computing initiatives of Fortune 500 companies grab the headlines, the far smaller-scale services provided by the MSPs at the GMN conference is further proof that adoption of utility computing is equally strong at the SMB level.

That said, the GMN members readily admit that their success in delivering utility computing solutions is driven by their traditional face-to-face sales and service delivery techniques. Their customers are buying into the utility computing concept based on trust and close working relationships with their suppliers.

This gives an advantage to local IT service companies and regional VARs with longstanding customers. It means that companies who are jumping onto the utility computing bandwagon with a set of remote services and no local, on-site presence are going to face resistance and will likely fail. As the old adage goes, "think globally, act locally."

But being local is no sure recipe for success. As the GMN members have
learned, utility computing service providers must continuously fine-tune
their business models, value propositions, marketing messages, service
packaging, pricing and delivery capabilities to attract and better serve
customers.

In a previous column, I espoused the belief that industry standard-setting initiatives are essential for the utility computing vision to become a reality. Equally important will be organizations like the GMN that permit practitioners to share their business challenges and develop new models for success.

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