The managed services model is set to become increasingly appealing to traditional VARs in 2024, as more businesses seek to purchase cloud and IT services on a usage basis. However, transitioning from a traditional VAR to a managed services provider is no easy task. It requires a fundamental shift in the way VARs do business, which cannot be accomplished 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 simply lack the necessary resources, flexibility, and expertise. In today’s economic climate, OPEX is king, and there is little appetite or financial capacity for big in-house projects.
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 what their customers want, whether it be on-premises or in the cloud. To address this issue, VARs need to clearly understand what they can deliver themselves 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 likely turn to MSPs that possess the technical know-how to effectively utilize utility-based models. MSPs that can execute quickly, have experts in the field, and offer tailored services for vendors, customers, and end users will be the preferred partners for VARs.
More businesses are expected to adopt the utility-based model offered by MSPs for cloud-based data management. This model lightens the workload on teams, reduces risk, and ensures uptime and business continuity in the face of disasters, data breaches, or ransomware attacks. As a result of this trend, companies are willing to pay for services upfront, locking in costs for extended periods to safeguard against inflation. This approach makes financial sense, particularly for cash-rich companies looking to protect their data in the long term amidst market volatility.
In general, 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 for in monthly installments. This approach allows them to reduce CAPEX, optimize data center resources, and focus on their business priorities.