The service provider (SP) industry is at an inflection point. During the past couple of years, SPs have dealt with the economic downturn by focusing the majority of their attention on cutting costs -- to the point where there’s very little left to cut. Despite continued economic uncertainty, there is a shift underway to revitalize revenue growth. SPs are eager to identify and execute on new sources of revenue growth -- however, there is also clear recognition that revenue growth cannot come at the expense of profitability. Growth under such conditions means taking advantage of market transitions as they are happening, creating new platforms for growth.
One key opportunity for SPs lies in providing a more expansive set of services to small and medium sized businesses (SMBs)—particularly leveraging cloud-based capabilities. Based on our estimates, the SMB communications and IT infrastructure market collectively represents more than $120 billion in spend for 2010. SPs currently address 60 percent of this spend. By extending into cloud services, much of the remaining 40 percent becomes addressable.
Cisco IBSG Service Provider Director, Tine Christensen, addresses this opportunity in this video:
You have questions, we have answers. We gathered up questions we’ve been hearing from partners around the topic of managed services, cloud, and white label and sat down with one of the foremost experts on the topic: Todd Roth, Director of the Managed Services Channel Program at Cisco. In this Q&A, he addresses partner concerns around new consumption models, partner-to-partner collaboration, and highlights some new developments in the managed services realm.
And with new cloud service designations within the Managed Services Channel Program (MSCP) that were just announced, this is a good time to explain those as well.
Channels blog: Hi, Todd. Thanks for joining us. What does “cloud service designation within MSCP” mean?
Todd Roth: It’s the beginning of a new class of service designations that enables partners to align and brand their cloud-based offerings with Cisco. Offerings that are built on a Cisco-validated architecture.
CB: What are the designations and who can take advantage?
Work with your service provider to simplify the technology experience within your business
“Cloud Services” is a broad term you hear tossed all over the place, and there are enough subcategories to confuse you for days; Infrastructure as a Service, Software as a Service, and Platform as a Service to name a few. But let’s face the facts here; you really don’t care how a service is classified, you just care what it can do for you. In an earlier article I went through the basics of cloud computing. Now I want to take your knowledge to a deeper level that can impact the operations of your small business by introducing you to “Managed Services.”
Small businesses can’t be an expert in everything; sometimes you need to call in a service provider
I like to think of myself as a handy man, considering I can change a tire, paint a room, install towel rods, and even wire my speaker system. But I do recognize my limitations. I don’t trust myself to knock down walls or deal with plumbing, for example. Even if I could do it, where would I find the time?So, I swallow my pride and call a professional for the toughest tasks. And when my car or house ends up looking new again, I have the peace of mind to know it was done right, along with the satisfaction that I was able to spend my time doing more important things.
According to a recent market study, the total global managed services opportunity will have reached $217 billion by 2014 -- with managed cloud services becoming a significant component of growth. Some service providers are still studying the revenue upside, while the most forward-looking ones have already taken decisive action.
We know that innovative service providers are looking for better ways to unify data center and network assets, as they seek to find a profitable path to cloud service delivery.
However, for SPs to succeed they must meet the stringent SLA demands of enterprise customers. In the legacy data center model, that can be a big challenge. Unfortunately, many of today’s applications are provisioned out of data center service silos.
In contrast, a cloud solution that can unify pools of resources within each data center — use a common unified fabric, implement advanced peering to interconnect provider data centers to one another and then join them to an IP NGN — can put service providers on a pathway to profitable cloud service delivery. This is precisely how Cisco’s Unified Service Delivery offers providers a way to change the rules of the game in their favor.