Why no rush to managed services?

Opinion

Why no rush to managed services?

So, it looks like managed services isn’t the panacea many people thought it was. Despite all the talk over the last few years that managed services was the way to go for partners to tie themselves more closely to customers, it appears that many resellers just “aren’t that in to” managed services.

According to research from Forrester , only 12% of resellers are offering managed services. I must admit to finding that figure a little surprising probably because there has been so much noise around managed services from vendors, distributors and channel partners.

And it doesn’t seem as if there’s going to be a mass migration towards managed services any time soon. Forrester found only another 5% of resellers expected to get into the market in the next two years. Even those resellers that are in managed services aren’t exactly going overboard. According to Forrester, managed services contribute (on average) around 15% of their overall revenues. That’s a respectable figure but not an earth-shattering one.

So unless something unexpected occurs, it appears that 80% of resellers will not have  a managed services business by 2015. Why not? Many of them just aren’t interested in managed services and they are unwilling to change their business model or meet the high infrastructure costs they associate with those services.

Unsurprisingly, Forrester thinks they’re storing up trouble for themselves. “Resisting business model change will leave value-added reseller partners in the dust of those that embrace change,” it warns.

Well, maybe. I suppose the first thing to ask is whether the lack of interest from the bulk of resellers merely reflects the reality of customer demand (or lack of it). Perhaps, for many of them, customers just aren’t that interested in managed services yet. There’s also the possibility that quite a few of them are waiting for vendors and distributors to put models in place that allow them to “resell” managed services on their behalf in response to whatever demand there is.

Forrester’s findings were in the context of a report entitled Seeding the Cloud Channel and in that context it’s probably worth mentioning that whenever I talk to people in the channel about cloud services, they always says something along the lines of “it’s just the next evolution in managed services”. If that’s the case, you might expect people to step up their involvement in managed services in the next year or so to be prepared for the cloud surge when it arrives. On the other hand, they might be hoping to skip that step altogether and go straight to offering cloud services when the time is ripe.

Anyway, to return to the central finding from Forrester, 12% may appear low but you have to ask whether that’s because the industry’s expectations don’t reflect reality. After all, if the vast majority of resellers were failing in their duty to fulfil a huge demand for managed services, other people would have stepped in to fill the gap. And if they had, they would be creaming it. And if those people were creaming it, surely resellers would have noticed by now and done everything they could to get up to speed with selling managed services as quickly as they could.

This was first published in May 2013

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