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 based on usage. 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 development and integration of new technology and go-to-market strategies take too long and are too costly 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 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. To address this issue, VARs need to clearly understand what they can provide themselves and what they should outsource. Outsourcing or white labeling is an effective way to offer customers a diverse and high-quality portfolio.
In 2024, VARs will likely turn to MSPs that have the expertise to effectively utilize utility-based models. These MSPs can quickly execute projects, possess industry experts, and deliver tailored services for vendors, customers, and end-users. They 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 approach reduces the burden on teams, mitigates risks, 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 financially prudent decision is especially beneficial for cash-rich companies looking to safeguard their data in the long term amidst market volatility. This trend is likely to become the norm in the coming year and beyond.
As prices for cloud and SaaS services continue to rise with inflation, businesses are becoming more cost-conscious. Many have shifted to an OPEX model that covers essential capabilities, such as disaster recovery and backup, based on a consumption-based payment structure. This approach allows them to reduce CAPEX, optimize data center resources by paying per terabyte, and focus on their core business priorities.