As market spending rises, businesses are no longer bargain shopping, with customers finding new ways to maximise managed service providers (MSPs).
Consequently, end-users in Australia are resisting the urge to align with the lowest-cost provider, instead favouring partners that understand deeper business requirements.
Therefore, as outsourcing continues to evolve, MSPs must evolve alongside, providing advanced services beyond basic operations to differentiate.
Because the modern day, well- informed customer is under pressure to capitalise on new and emerging technologies flooding the market, creating increased demand for next- generation managed services.
“Customers are starting to see increased pressure from within the business, especially during the past 12 months,” AC3 head of service integration and management Claudia Couzi observed.
“The market is filled with new technologies such as cloud, digital transformation, business agility and cyber security, which means IT has become a central part of doing business.
“Customers are facing lots of pressures in those areas because they are not specialised across those key domains.
“Therefore, they are relying on service providers to offer expertise, knowledge and guidance to keep pace in the market.”
Whether it be artificial intelligence, the Internet of Things (IoT) or machine learning, relentless waves of technological innovation are crashing down on Australian shores, resulting in seemingly endless options and technologies available for companies.
Consequently, and through the guidance of MSPs, end-users must develop a pace that can be sustained irrespective of what the future holds.
“Such pressures are combining to drive a willingness to adopt managed services,” VMtech national sales manager James Ormesher said.
“Technology today is playing a greater role in the go-to-market strategies of businesses and if that can be outsourced to an external provider, it allows organisations to free up resources and internal staff to generate new business.”
Across Australia, organisations are seeking to execute on new technological initiatives in a bid to drive disruption and recruit new customers, placing faith in service providers to augment skills, develop strategies and deliver business value while reducing risk and addressing critical security issues.
“We’re seeing customers adopt managed services across large and small contracts, and demand across Australia is increasing,” F5 Networks territory account manager Itzik Swissa added. “We are the Swiss Army Knife of the application services space which means we wear so many different hats across our different technology pillars.
“Because of this we’re enabling our partner community to consume F5 in an easy way through our back- end integration and technology, which reflects the market’s push into managed services.”
Spanning Australia, and the wider global market, customer demand for IT and business services continues to accelerate as businesses increase deployment of digital and cloud solutions specifically.
According to IDC research, worldwide revenues for IT services and business services totalled US$475 billion in the first half of 2017, representing an increase of four per cent year-over-year.
Within the next 12 months, the analyst firm expects worldwide services revenues to surpass US$1 trillion in 2018.
But while IT services spending delivered more than two thirds of overall services revenue during the first six months of the year, investment on business services grew faster than the overall market at six per cent year-over-year.
“A strong transformation from traditional resell to managed services is underway,” Trend Micro global solutions marketing manager Ryan Delany said. “A few years ago, MSPs were unknown and only the most mature partners were operating in this space.
“Today however, more partners are heading in that direction to the point that the market is beginning to mature across the channel.
“As a vendor, we’re not the cheapest or most expensive option in the market but we win a lot of business away from the cheaper vendors because we don’t compete on price, rather value.”
But for Delany, less mature partners are more price conscious, favouring dollar savings over delivering strategic outcomes for the end-user.
“Less mature providers are still focused on the cheapest offering available,” he acknowledged.
From a channel standpoint, IT services revenues during the past 12 months were largely driven by spending on technology outsourcing and project-oriented services, such as application development and systems and network implementation, while business services spending was led by business process outsourcing and business consulting services.
As outlined by IDC, the largest market segment of end-user spending and vendor revenue came from business process outsourcing with first half revenues of US$92.9 billion.
Delving deeper, systems integration was the second largest foundation market at US$62.1 billion, while business consulting was third, followed by IT outsourcing and software deployment and support services.
In addition, the fastest growing markets were hosting infrastructure services (9.8 per cent growth) and business consulting (8.2 per cent growth), with IT outsourcing the only market to experience declining revenues.
“Partners today are selecting one or two technologies, such as cloud and security, and are entering the market through providing managed services around those technologies,” Dicker Data cloud lead Tony Lam added.
Read more on the next page...