Managed service providers and consultants play a crucial role in providing infrastructure, networks, and interconnectivity needed by organizations to drive their value proposition.



These providers have expanded their roles in aiding organizations during cloud migration and offering strategic insights. Service providers remain equipped with cutting-edge technologies that enable them to deliver exceptional services.

The COVID-19 pandemic has hastened digital transformation trends, and cloud infrastructure is predicted to continue to be the prevailing deployment model. Third-party service providers will continue to play a pivotal role in enriching its offerings. It is crucial for vendors to navigate this complex ecosystem to connect with end-users.

The shifts towards outsourced infrastructure services has disrupted traditional direct sales models, changing the IT landscape. Service providers are now the primary purchasers of gear and software, reducing direct procurement by end-users. The following are ripple effects of hyperscale public clouds on the market:

- Reselling and management: Service providers assist end-users in cloud adoption and offer infrastructure management services, driving value beyond the infrastructure layer.

- Shuttering XSP-operated clouds: Hyperscale public clouds have replaced most multi-tenant public clouds operated by infrastructure service providers. Providers are exiting traditional services to focus on the public cloud value chain due to economies of scale and increased innovation.

- Colocation shift: As compute and storage move to the public cloud, colocation providers are shifting their focus to hyperscale colocation, offering convenient and performant connectivity.

- Asset-light model: The shift to reselling and managing public cloud has resulted in fewer physical resources and data center capacity requirements. This enables providers to shift infrastructure requirements to an OpEx-based model, freeing up resources for innovation and service development.

- Increased specialization: Service providers are specializing in areas such as bare metal and private cloud. Value-add is being found in security, compliance, and industry-specific services like healthcare and financial services.

- Value of interconnection: Interconnection becomes more valuable as seamless connectivity to the cloud from various locations becomes crucial. Service providers that offer strong interconnection capabilities will have a competitive advantage.

- Blurring of MSPs and Managed Infrastructure Providers: The distinction between managed service providers (MSPs) and managed infrastructure providers is fading. With the rise of the public cloud, both types of providers are aligning their interests and offering similar services.

- Enabling the Edge: Service providers are addressing the challenge of decentralization by extending their infrastructure to the edge. New concepts and infrastructure are being tested to support the growing demand for edge computing.

To maintain their market share and continue growing in an evolving ecosystem, vendors must adapt and sell to service providers. Failure to do so limits their potential for growth.

The IT landscape is shifting, with a significant portion of servers now being deployed in outsourced infrastructure environments. This trend highlights the increasing role of infrastructure service providers in managing and housing IT infrastructure. The rise of public cloud adoption and the expansion of outsourced infrastructure services emphasize this paradigm shift.

Selling to service providers provides vendors with numerous advantages. Service providers have a large customer base, offering immediate access to potential customers. Partnering with service providers enables vendors to productize their technology and reach a broad audience quickly, resulting in lower subscriber acquisition costs. Service providers also offer greater growth potential, can expand aggressively, and embrace copycat behavior, leading to built-in marketing opportunities. Collaborating with service providers allows young technology vendors to gain traction quickly, while operational efficiency is improved through streamlined billing, support, and management.

However, there are also challenges in selling to service providers, including a highly fragmented market, difficulty locating and connecting with service providers, unclear decision-making processes, reluctance to disrupt operations, heavy reliance on open-source solutions, and limited adoption of third-party technology.

The shift towards outsourced infrastructure environments is anticipated to accelerate, with the on-premise installed base expected to decline, further impacting the global IT landscape.

Hosting service provider partnerships offer several advantages for vendors. Here are some key benefits:

1. Enhanced Service Offerings: By partnering with a hosting service provider, vendors can enhance their service offerings to customers. They can provide additional solutions, such as cloud hosting, managed services, dedicated servers, and more. This allows vendors to better meet the evolving needs of their customers.

2. Scalability and Flexibility: Hosting service providers often have robust infrastructure and resources in place to handle scalability and flexibility requirements. Vendors can benefit from this by easily scaling up or down their hosting resources based on customer demand. This ensures that vendors' services remain reliable and available, even during peak usage periods.

3. Reduced Infrastructure Costs: Partnering with a hosting service provider eliminates the need for vendors to invest heavily in building and maintaining their own hosting infrastructure. This significantly reduces upfront costs, as vendors can leverage the hosting provider's existing infrastructure and resources. It also saves ongoing maintenance and upgrade expenses.

4. Expertise and Support: Hosting service providers typically have highly skilled technical teams who specialize in managing and supporting hosting environments. Vendors can tap into this expertise to ensure optimal performance, security, and uptime for their services. This allows vendors to focus on their core competencies and leave the hosting management to the experts.

5. Improved Security and Compliance: Hosting service providers invest in advanced security measures and compliance frameworks to protect their infrastructure and customers' data. By partnering with these providers, vendors can leverage the strong security protocols and regulatory compliance frameworks in place. This helps vendors meet industry-specific security regulations and build trust with their customers.

6. Business Continuity: Hosting service providers often have robust disaster recovery and backup solutions in place. Vendors can take advantage of these features to ensure business continuity in the event of any unforeseen events or disasters. This minimizes downtime and data loss, which is crucial for maintaining customer satisfaction and trust.

7. Global Reach: Hosting service providers typically have multiple data centers in different geographic locations. This allows vendors to expand their reach and provide services to customers worldwide. With global delivery capabilities, vendors can effectively serve customers in different regions without setting up their own infrastructure in each location.

8. Improved Performance: Hosting service providers often have high-performance infrastructure and networks that can deliver faster and more reliable service to vendors and their customers. This improved performance can lead to better user experiences, reduced latency, and faster page load times, resulting in higher customer satisfaction and engagement.

9. 24/7 Monitoring and Support: Hosting service providers typically offer round-the-clock monitoring and support services. This ensures that any issues or outages can be quickly identified and resolved, minimizing downtime and ensuring uninterrupted service for vendors and their customers.

10. Cost Predictability: Partnering with a hosting service provider allows vendors to have predictable monthly costs, as they pay for the hosting services based on predetermined packages or usage levels. This helps vendors better manage their budget and avoid unexpected expenses related to infrastructure maintenance and upgrades.

11. Time Savings: By relying on a hosting service provider, vendors can save time that would otherwise be spent on infrastructure management, monitoring, and maintenance. This time can be redirected towards focusing on core business activities, innovation, and serving customers, ultimately leading to increased productivity and growth.

12. Access to Advanced Technology: Hosting service providers often invest in the latest technology and hardware to offer cutting-edge hosting solutions. By partnering with them, vendors can leverage these advancements without having to make hefty investments themselves. This ensures that vendors can stay competitive and provide state-of-the-art services to their customers.

13. Vendor-Specific Features: Some hosting service providers offer vendor-specific features or integrations that cater to the unique needs of certain industries or niches. By partnering with these providers, vendors can tap into these specialized features and gain a competitive edge in their target market.

14. Business Growth Opportunities: Hosting service provider partnerships can open doors to collaborative business opportunities, such as joint marketing initiatives, referrals, or co-selling arrangements. These collaborations can help vendors expand their customer base, increase brand visibility, and drive revenue growth.

15. Reduced Risk: Partnering with a reputable hosting service provider can help mitigate risks associated with infrastructure management. The hosting provider takes on the responsibility of maintaining hardware, network security, backups, and disaster recovery plans. This reduces the risk of data loss, downtime, and potential disruptions to the vendor's services.

16. Improved Compliance: Hosting service providers often have extensive experience and knowledge in various compliance requirements, such as GDPR, HIPAA, PCI-DSS, and others. By partnering with these providers, vendors can benefit from their expertise and ensure that their hosting environment meets the necessary compliance standards.

17. Resource Optimization: Hosting service providers have optimized systems and processes in place to efficiently allocate resources based on demand. Vendors can leverage this resource optimization to ensure that they are utilizing their hosting resources efficiently, reducing costs, and maximizing performance.

18. Competitive Advantage: A strong partnership with a reliable hosting service provider can give vendors a competitive advantage in the market. They can confidently promote their hosting capabilities, reliability, and security features to attract new customers and differentiate themselves from competitors.

19. Seamless Integration: Hosting service providers often offer seamless integration options with popular software applications, content management systems, e-commerce platforms, and other tools. This makes it easier for vendors to integrate their existing systems or migrate their services to the hosting provider's platform, streamlining operations and reducing implementation time.

20. Focus on Innovation: By offloading hosting and infrastructure management responsibilities to a reliable partner, vendors can free up valuable time and resources to focus on innovation and developing new products or services. This can lead to faster go-to-market strategies and increased competitiveness in the industry.

21. Partner Ecosystem: Some hosting service providers have established partner ecosystems that vendors can tap into. These ecosystems can provide access to complementary services, strategic alliances, and collaborative opportunities with other vendors, opening up new avenues for growth and business development.

22. Network Redundancy: Hosting service providers often have multiple data centers located in different geographic regions. This network redundancy ensures that if one data center experiences an outage or disruption, the services can be seamlessly switched to another data center, minimizing downtime and ensuring continuous availability for vendors and their customers.

23. Improved Performance Optimization: Hosting service providers typically optimize their infrastructure for performance, utilizing technologies such as content delivery networks (CDNs) and load balancing. This helps vendors deliver their services faster and more efficiently, resulting in improved user experiences and customer satisfaction.

24. Enhanced Data Security: Hosting service providers invest in robust security measures to protect their infrastructure and customers' data. They use firewalls, intrusion detection systems, encryption, and other security practices to safeguard against cyber threats. By partnering with a reliable hosting service provider, vendors can ensure that their data is securely stored and protected.

25. Disaster Recovery and Backup Services: Hosting service providers usually have comprehensive disaster recovery and backup services in place. These include regular data backups, redundant systems, and recovery plans to minimize the impact of potential disasters or data loss incidents. This gives vendors peace of mind knowing that their data is safe and recoverable.

26. Vendor Support and Training: Hosting service providers often offer vendor-specific support and training programs to help vendors make the most of their hosting services. This can include technical assistance, guidance on platform usage, and education on best practices. Vendors can leverage this support to optimize their hosting environment and maximize the value they provide to their customers.

27. Service-Level Agreements (SLAs): Hosting service providers typically offer SLAs that outline the level of service and uptime guarantees. These agreements give vendors assurance that their services will be consistently available and meet their customers' expectations. SLAs provide a clear framework for accountability and ensure that the hosting service provider is committed to delivering a reliable hosting environment.

28. Scalable Pricing Models: Hosting service providers often offer flexible and scalable pricing models that allow vendors to align their hosting costs with their business growth. They can easily adjust their hosting resources and pay for only what they need as their customer base expands or contracts. This provides cost savings and cost predictability for vendors.

29. Regulatory Compliance Assistance: Hosting service providers with expertise in specific industries or regions can assist vendors in meeting industry-specific regulatory requirements. They can provide guidance on compliance standards, security audits, and help vendors navigate complex regulatory landscapes, reducing the burden and ensuring adherence to necessary regulations.

The dominance of MSPs is reshaping the market, yet many vendors fail to recognize the urgency of adapting their offerings. Ignoring the shift towards outsourced infrastructure means missing out on significant growth opportunities. The reluctance to embrace the cloud's potential and the overreliance on traditional methods are hindering progress.