AWS Cloud Enterprise Strategy Blog

The Future of Managed Services in the Cloud

“You can’t do today’s job with yesterday’s methods and be in business tomorrow” -George W Bush

In February, I began a discussion around the evolving role the partner ecosystem plays in helping enterprises transform their business using the cloud. As my post explained, the ecosystem around the cloud is growing and changing rapidly, and most of the executives I speak to are (re)considering who they partner with and what they partner for to accelerate the value technology brings to their organizations.

IT Managed Services is an area that has seen substantial changes in the last few years, thanks to the growing popularity of cloud services. This area is served by what the industry calls MSPs (Managed Service Providers), and this group’s role and business model is rapidly evolving. This post explores a few things your enterprise may want to consider in light of this shift.

“Your Mess for Less” Isn’t Enough

Traditionally, MSPs are attractive alternatives for enterprises wanting to outsource steady-state IT operations to someone who can do it cheaper. “Your mess for less” can still be valuable for organizations looking to cut costs, but you should look to your MSPs to do this in a way that is consistent with both your enterprise-IT strategy and where the market is headed.

MSPs are attracted to the cloud for the same reason your enterprise is: the cloud gives MSPs the ability to devote more of their resources to their customers (you), rather than on the undifferentiated heavy lifting typically associated with managing data centers and ubiquitous IT services. MSPs who realize this — Logicworks, Cloudreach, Accenture, 2nd Watch, REAN Cloud, Cascadeo, Mobiquity, to name a few — are able to streamline their operations, focus more on value-added services, and optimize their own cost structure. This results in a combination of better margins for the next-generation MSP and lower costs for you.

I’m also seeing a new trend of MSPs combining their cloud migration expertise with the “as-a-service” model that enterprises who benefit from the cloud have become accustomed to.

In this new type of arrangement, the MSP agrees to migrate an enterprise’s existing system(s) to the cloud, takes full ownership of the systems management, and sells the business function back to you (the customer) as-a-service. Imagine being able to keep the business processes around your ERP system without having to manage the infrastructure and have a predictable cost model for business process changes. This new model eliminates the need to establish elaborate ITSM (IT Service Management) processes for change management and the (sometimes astonishing) rate cards that go with these processes. I’ve certainly felt nickel-and-dimed by MSPs in the past, and I recently spoke to an executive who told me that their MSP tried to charge them $10,000 to create a VPC in their AWS environment — a process which takes minutes and costs almost nothing. I’ve spent some time determining how to deliver this new value proposition through the AWS and Accenture partnership team, and you can expect to hear more about this in the coming months.

The Role of DevOps for an MSP

My last post made the point that many enterprises are looking for partners to help them evolve their culture. I also wrote a DevOps series that elaborates on why enterprises are becoming increasingly drawn to DevOps and how to navigate organizational change to embrace it. Several MSPs have combined all of this thinking together and are helping enterprises manage their steady state operations while also helping them leverage DevOps and develop a culture of experimentation.

AWS has established an AWS Managed Services Program that gives MSPs a set of best practices for large-scale cloud operations and periodically uses an independent third-party audit firm to audit MSPs who claim to implement them. Looking for partners who’ve passed the AWS Managed Services Program audit can give you the confidence that you’re engaging with partners that have appropriate cloud expertise and can help you develop your own cloud operating model.

Just as with the AWS Managed Services Program, working with partners who have achieved the AWS DevOps Competency can give you the confidence that you’re working with a partner who understands how to implement continuous integration, automation, and other DevOps-centric tools offered by AWS.

If the combination of these competencies is attractive to your organization, here’s the list of organizations that have achieved both: 2nd Watch, Cascadeo, Cloudreach, REAN Cloud, Smartronix, Rackspace, and Logicworks.

If you’re working with partners who don’t have both of these competencies but you think that they should, urge them to consider these programs, then tell me about it. I’d also love to hear your expectations and thoughts for how the MSP landscape has and will continue to evolve in the coming years.

Keep building,

Note: Engaging partners is the fourth of seven best practices I’m writing about in my new Enterprise Cloud Journey series. The remaining six are: provide executive supporteducate staff, create a culture of experimentationcreate a center of excellence, implement a hybrid architecture, and implement a cloud-first policy. Stay tuned for more on each of these.

Stephen Orban

Stephen Orban

Stephen is the GM (General Manager) of a new AWS service under development, and author of the book “Ahead in the Cloud: Best Practices for Navigating the Future of Enterprise IT” Stephen spent his first three-and-a-half years with Amazon as the Global Head of Enterprise Strategy, where he oversaw AWS’s enterprise go-to-market strategy, invented and built AWS’s Migration Acceleration Program (MAP), and helped executives from hundreds of the world’s largest companies envision, develop, and mature their IT operating model using the cloud. Stephen authored Ahead in the Cloud so customers might benefit from many of the best practices Stephen observed working with customers in this role. Prior to joining AWS, Stephen was the CIO of Dow Jones, where he introduced modern software development methodologies and reduced costs while implementing a cloud-first strategy. These transformational changes accelerated product development cycles and increased productivity across all lines of business, including The Wall Street Journal,, Dow Jones Newswires, and Factiva. Stephen also spent 11 years at Bloomberg LP, holding a variety of leadership positions across their equity and messaging platforms, before founding Bloomberg Sports in 2008, where he served as CTO. Stephen earned his bachelor’s degree in computer science from State University of New York College at Fredonia.