The good news is that all of this creates immense opportunity for our reseller and partner base. We have already seen how many partners have reinvented themselves by building managed services business, and we expect demand will continue to fuel growth in 2022.
Gartner estimates that XaaS will grow 4x in value from $93.8 billion in 2018 to $244.3 billion by 2024
Managed services are rapidly displacing traditional resale as the way partners profit in the channel. End users want to automate or outsource more of their non-core functions so they can direct precious internal resources to focus on the parts of their businesses that generate the most value. This, coupled with increasing software dominance and the Opex-over-Capex approach to funding digital transformation initiatives, is the key driver behind this change.
This reality opens up an abundance of revenue growth opportunities for channel partners. As an example, operating a managed service model provides invaluable telematics data which partners can leverage, not just to provide higher quality service to existing customers, but to gain valuable customer and usage insights which can be used to develop new revenue opportunities in other parts of the market.
It’s important to recognise, however, that transitioning from a traditional reseller to a managed service provider is not like flicking a switch. It’s a significant decision which, over time, will require the business to rethink its approach and realign its structure, financing, procurement, compensation, vendor partnerships and transaction and billing capabilities to reflect the new model.
Managed services continue to be the fastest growing business model, rapidly displacing traditional resale as the way channel partners profit in the channel
This isn’t to say that every channel partner needs to immediately scrap their business plan and rapidly shift to an MSP model overnight. There will be demand for traditional resale business but the balance is undeniably shifting in favour of as-a-Service offerings.
It is important for every channel partner to plan to address the shifting landscape and to build fundamental capabilities that deliver both products as services to their customers in a way that reflects their preference for how they procure and consume technology.
This trend is well under way and, although it won’t mature fully in the next 12 or 24 months, now is a good time for traditional resellers to lay the groundwork and prepare themselves for the high-growth opportunities ahead. Those who are prepared to capitalise on managed services will have their day in the sun in the years ahead.