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Friday, August 3, 2012

What's the Difference Between Cloud and Managed Services?

Courtesy - MSPNews

It is often the case that before you gain mass acceptance of a new foundation, you first must destroy the old one. Consider the birth of application and managed services back in the 1990s. The success and adoption of these new service delivery models depended on convincing VARs that merely reselling products was no longer viable. Break/fix computing had to be debunked before managed services could truly be realized. This turned out to be very easy to do since many VARs during that time period were suffering from shrinking margins, decreased importance in front of the customer, and increased competition from distributors, online product hubs, and sometimes their own vendor partners. Today, some people are trying to marginalize managed services as a path to sell cloud. I would like to examine why I believe this is a wrong move and one that will ultimately be unsuccessful.

First, is it necessary to eliminate or lessen managed services in order for cloud to be successful? Absolutely not. Actually, cloud computing and managed services are tied at the hip in many regards and share a long and intertwined history. When application services were first introduced, many MSPs were created specifically to manage both the applications and the underlying infrastructure. From that starting point, many MSPs started to just offer infrastructure support. It is odd that today we seem to be completing the cycle and are back to MSPs becoming more interested in the application layer again.

Second, is there anything that really separates cloud and MSPs? I don’t think so for the following reasons. As I’ve already stated, application services and everything else that can be managed as a service are really one in the same. Historically, there is no separation between the two as they were really rungs on a ladder with applications being at or near the top. To say now that there is no need for infrastructure would be shortsighted indeed, given how much we rely on solid infrastructure and security for our cloud platforms (especially private cloud).

Cloud computing is simply a delivery mechanism for a managed service. According to Wikipedia “Cloud computing relies on sharing of resources to achieve coherence and economies of scale...” This is no different with managed services. MSPs aggregate tools, people, and develop processes which make the delivery of their service highly streamlined and efficient, both efficient in cost and delivery. So, if you accept this definition, why do we have two different terms for essentially the same business model?

Drum roll please. Cloud is an easy concept to explain. Whatever benefits managed services offer to organizations, cloud has been adopted for whatever reason as a ubiquitous term that everyone is using. It’s hip to be in the cloud. Non-technical people can easily grasp the meaning of cloud and start to define policies and strategies within their own organizations about how to best use cloud. Managed Services continues to be the dominant business model and will always be, in my opinion. But cloud does have a role to play in our industry as long as it is properly defined.

One thing is perfectly clear, and I’ll go ahead and BOLD THIS PARAGRAPH SO PEOPLE REALLY PAY ATTENTION HERE. While cloud may be really popular right now, I would caution everyone about being swept up too much in the hype. The following are all terms that have appeared (some have gone away) and tried to dethrone managed services but have been unsuccessful. Outsourcing, offshoring, business process outsourcing, strategic sourcing, thin client computing, Software as a Service, utility computing, and other terms have all unsuccessfully tried to challenge managed services as a dominant business model and marketing convention and yet managed services is still here. I have learned to be patient and let these trends play out before making any significant changes.

And, to be perfectly clear, I do believe in cloud, but only as a delivery mechanism for managed services. If cloud has a purpose in helping non-technical people understand the value of managed services, then even better. But, I do not think it will (or should) replace managed services. The two terms are simply two intertwined and will likely always be so.

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