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 not an 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 lack the necessary resources, flexibility, and expertise. With the current economic conditions, OPEX (operating expenses) is prioritized, and there is little appetite or capital expenditure for large 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 demands on VARs. It is clear that channel businesses are struggling to deliver what their customers want, whether it be on-premises or in the cloud. VARs need to assess 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 prefer partnering with MSPs (Managed Service Providers) who possess the expertise to effectively utilize utility-based models, execute promptly, have industry experts, and offer tailored services for vendors, customers, and end-users.
More businesses are expected to adopt the utility-based model offered by MSPs for cloud-based data management. This model lightens the workload for teams, reduces risk, and ensures uptime and business continuity in the face of disasters, data breaches, or ransomware attacks. Additionally, companies are willing to pay for services upfront to lock in costs for extended periods, protecting themselves against inflation. This approach makes financial sense, especially for cash-rich businesses looking to safeguard their data in the long term amidst market volatility.
Overall, businesses are becoming more cost-conscious as prices for cloud and SaaS services continue to rise with inflation. Consequently, many have shifted to an OPEX model, paying for core capabilities such as disaster recovery and backup on a consumption basis through monthly installments. This allows them to reduce capital expenditure, optimize data center resources, and focus on their core business priorities.