In 2024, traditional VARs are finding the managed services model increasingly appealing, especially as more businesses seek cloud and IT services on a usage basis. However, transitioning from a traditional VAR to a managed services provider is not an easy task. It requires a fundamental shift in the way VARs do business, which cannot be achieved overnight. These large organizations are not built for this new model, as the in-house build and integration of new technology and go-to-market models take too long and are too expensive to implement. VARs lack the necessary resources, flexibility, and expertise. In today’s economic climate, OPEX is king, and there is little appetite or capital for large in-house projects.
VARs rely on MSPs for technical expertise
VARs are finding it increasingly challenging to meet customer demands for a wide range of products and services. The fast-paced market and reliance on data place greater pressure on VARs to deliver. It is clear that channel businesses are struggling to meet customer expectations, whether it is for on-premises or cloud solutions. VARs need to understand what they can deliver in-house and what they should outsource. Outsourcing or white labeling is an effective way to provide customers with a diverse and high-quality portfolio.
In 2024, VARs will prefer partnering with MSPs who have the expertise to effectively use utility-based models, execute quickly, have industry experts, and offer tailored services for vendors, customers, and end users.
Customers opt for upfront payment for services
We anticipate more businesses adopting the utility-based model offered by MSPs for cloud-based data management. This model reduces the burden on teams, mitigates risks, and ensures uptime and business continuity in the face of disasters, data breaches, or ransomware attacks. Another trend we have observed is companies willing to pay for services upfront, locking in costs for extended periods to protect against inflation. This approach makes financial sense, particularly for cash-rich businesses that want long-term data protection in the face of market volatility affecting prices elsewhere. We expect this to become the standard practice in the coming year and beyond.
OPEX prevails for price and performance
Overall, businesses are becoming more cost-conscious as prices for cloud and SaaS services continue to rise with inflation. This is why many have shifted to an OPEX model that covers core capabilities, such as disaster recovery and backup, based on a consumption model paid in monthly installments. This approach allows businesses to reduce CAPEX, optimize data center resources by operating on a per TB model, and focus on their core priorities.