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The managed services model will become increasingly attractive to traditional VARs in 2024, especially with more and more businesses looking to buy cloud and IT services on a usage basis. But making the transition from a traditional VAR to a provider of managed services is easier said than done. It’s not that VARs aren’t capable of diversifying, far from it, it’s just that the switch requires a fundamental shift in the way VARs do business and that isn’t something you can just change overnight. These large organisations are not built for this new world model. The in-house build and integration of new technology and go-to-market models takes too long and is too expensive to implement. VARs simply don't have the people, the flexibility or the know-how. With the economic headwinds as they are, OPEX is king, and no-one has the CAPEX or the appetite for big in-house builds.
VARs use MSPs technical know how
It is becoming increasingly difficult for VARs to provide a large portfolio of products and services to the standards that customer’s demand. The speed the market moves, the reliance on data, all add to greater demands from customers. It is evident channel businesses are struggling to deliver what their customers want, whether it be on-premises or in the cloud. It is a common topic and one I believe means VARs need to clearly understand what they can deliver themselves, and what they need to outsource. Outsourcing or white labelling is a great way to deliver a high quality and diverse portfolio to customers.
MSPs that have the know-how to use utility-based models effectively, that can execute immediately, have experts in the space and deliver services tailored for the vendor, customer, end user will be the partners of choice for VARs in 2024.
Customers pay for services upfront
We expect more businesses to adopt the utility-based model that MSPs offer for cloud-based data management. It lightens the load on teams, while reducing risk and guaranteeing uptime and business continuity in the event of a disaster, data breach or ransomware attack. Another byproduct of this trend we’ve experienced is companies prepared to pay for services upfront, locking costs in for up to 6-12 months, or longer, to protect themselves against inflation. This makes financial sense, especially if you're cash rich now and want to ensure your data is protected over the long term when market volatility can affect prices elsewhere. We expect this to become the norm next year and in the foreseeable future.
OPEX wins on price and performance
Overall, businesses are becoming more cost conscious as prices for cloud and SaaS services keep rising in line with inflation. Which is why so many have switched to an OPEX model that covers core capabilities, including DR and backup, based on a consumption model that is paid for in monthly installments. It has allowed them to cut CAPEX, operate on a per TB model as opposed to wasting valuable data centre resources, and focus their efforts on business priorities.