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Why Managed Cloud Services Demand Accelerated

As more enterprise CIOs and CTOs transition to the cloud, the opportunities for managed service providers (MSPs) expanded. At the same time, the managed cloud services market has become more complex as organizations increasingly look to their service providers for superior solutions and business technology leadership.

A worldwide survey by International Data Corporation (IDC) examined the service and business requirements that MSPs and their ecosystem partners need to optimize their growth opportunities and drive competitive advantage in the market for managed cloud services.

Managed Cloud Services Market Development

Due in part to the COVID-19 pandemic, leaders utilize public cloud capabilities (IaaS, PaaS, SaaS), innovative technologies and processes (IoT, edge computing, blockchain), and multi-cloud management platforms for their growth strategies and to ensure business resiliency.

While very few organizations have shifted all of their IT applications and infrastructure to the cloud, many firms will accelerate this shift over the coming years with the rate of transition varying by country and industry. The overall expected cost savings from managed cloud services in 2021 is 40 percent -- that's up from 37 percent in 2019.

Enterprise buyers are using managed cloud services to create more agile IT, drive new revenues, and improve employee and customer experience, but there are still concerns over ensuring service level agreements (SLAs), the performance of IT for critical applications, and security.

However, IDC reports that organizations now indicate that they plan to increase spending on these services significantly over the next 12-24 months.

The majority of firms prefer to work directly with an MSP to manage their public cloud provider and any assets that are hosted on the public cloud provider's platform to ensure better communications and that SLAs are met.

At the same time, most organizations prefer using the management tools of each public cloud provider.

About 40 percent of firms are already using no-code or low-code capabilities as part of their managed cloud services with another 30-35 percent planning to do so within the next two years

In utilizing artificial intelligence (AI) as part of managed cloud services, enterprises are focused on more efficient IT operations and aligning consumption of IT with individual role-based needs.

Enterprises utilizing managed cloud services consider a center of excellence (CoE) as most critical to ensure operational performance, although centralized command centers and business units for public cloud providers are equally important.

Furthermore, most organizations want public cloud providers to help them reduce carbon emissions from their data centers.

While some prefer to re-architect their existing IT assets into private clouds over buying pre-built private clouds, they also prefer to utilize public cloud services to meet an array of needs -- such as increased productivity, return on investment (ROI), and improved IT resource utilization.

According to the IDC assessment, the role of the public cloud as part of a hybrid cloud strategy is to provide access to public IaaS cloud capabilities not available in private clouds and to meet the need for surges in user demand.

Outlook for MSP Cloud Service Applications Growth

"Ensuring success in the managed cloud services market will require that MSPs provide a means of adapting their talent, technologies, processes, and organizational structures to meet client needs; integrate professional services into managed cloud services; emphasize customer centricity, and work with cloud service provider partners to optimize matrix position and market opportunities," said David Tapper, vice president at IDC.

In addition, they will need to invest in sustainable offerings for the socially conscious customer, create a business operations center, incorporate an intelligent, unified multi-cloud management platform, implement a robust governance model, and build centers of excellence and labs for cloud platforms.

Therefore, I anticipate that MSP leadership will continue to align with IT vendors who are able to deliver solutions for industry-specific use cases that require a comprehensive understanding of customer needs for cloud-native offerings -- to enable them to achieve their desired business outcomes.

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