A profound transformation is under way in the IT channel. As with the post-millennial shift to managed services, this change is creating serious challenges for channel players to learn new technologies, find the right talent to do the work, and revisit business models.
Fueling this transformation are technologies such as the Internet of Things (IoT), edge computing, artificial intelligence (AI), and SD-WAN (software-defined wide area networks), which have slowly gained traction in the past two years. In 2018, adoption of these technologies is likely to accelerate as businesses step up efforts to enhance operations and the customer experience.
For channel companies, this is a challenging time. Traditional managed services are becoming commoditized, forcing providers to seek new profit-generating opportunities. This takes you out of your comfort zone, which can be disconcerting, but businesses don’t thrive when they refuse to adapt or miss cues to innovate. Success in the IT channel has always been closely linked to adopting new technologies and solutions to stay ahead of the innovation curve.
Managed service providers (MSPs) and solution providers can view change as a threat or opportunity. One causes paralysis, while the other prepares you for the future. If you plan to be around for the long term, start treating the channel’s transformation as an opportunity and finding ways to leverage it.
The first step is to assess your readiness for new technologies. IoT, for instance, will require remote management of edge sites that will place computing power and analytics at the perimeter of the network to enable real-time decisions.
As these sites proliferate, providers will face the challenge of linking them, staffing them, and finding the expertise to run the vertical-focused applications that the brunt of IoT implementations will involve. Clients will want to invest in IoT and edge technologies, but most will not have the resources to dedicate staff to running them, so they’ll need providers to do it.
Meanwhile, SD-WAN will change how networks are managed. The technology supplants much of the hardware that traditionally has run networks with easier-to-use software controls. This will create technical and operational challenges for channel companies that don’t have the in-house expertise to perform the work. Meeting these challenges will require retraining existing staff and recruiting new talent.
As MSPs look into the future, some inevitably will conclude the only way forward is by selling the company or buying a competitor. Mergers and acquisitions help fill gaps in resources and skills. But some providers may opt for the partnership route.
There will be partnerships between, say, MSPs and companies specializing in AI, SD-WAN, and other emerging technologies. But new types of partnerships will also emerge as technology permeates human endeavors with smart systems that run HVAC and lighting, and connect automobiles and appliances.
Confronted with technology they don’t know how to run, electricians, HVAC companies, and car dealerships may want to partner with IT service providers to address their customers’ needs. For instance, MSPs and HVAC contractors could team up to service IoT-connected heating systems.
While partnerships will help MSPs prepare for the future, you will still need to update your skills, learn new technologies, and figure out how to adjust business models for the changes that are coming. As 2018 gets under way, the challenges may look substantial, but the IT channel has weathered change before. With the right mindset and prep work, this time will be no different.
Pedro Pereira is a Massachusetts-based writer who has covered the IT channel for two decades. Recognized as one of the first journalists to cover managed services, Pedro continues to track, analyze and report on the IT channel and the growing MSP partner community.
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