The need to upgrade outdated infrastructure will be the biggest driver of IT budget increases in 2019, according to Spiceworks' 2019 State of IT report.
Parallel to this, hardware budget allocations are set to shrink, while managed service budget allocations will get larger. This is down to more companies recognizing the cost benefits, scalability and flexibility that migrating to one or more cloud platforms can bring to their business.
"The combination of low-cost infrastructure plus high-value development services will firmly establish cloud as the new enterprise digital application platform - and will drive up spending on cloud even faster than we predicted only a few years ago," notes Dave Bartoletti, VP, principal analyst at Forrester in a blog post of 2019 predictions.
End-of-life and upgrade options
The Spiceworks research shows that technology end-of-life, upgrade or refresh cycles, and additional needs resulting from business growth, will be the top drivers of new IT purchases in 2019.
Organizations are also more likely to boost their IT budgets due to changes in data privacy regulations, as well as to counter the increasingly complex cyber security threat landscape, and support digital transformation initiatives.
But one of the biggest drivers of cloud services in 2019 will stem from Microsoft's decision to end support for two of its most popular legacy products, Windows Server 2008 and SQL Server 2008.
Extended support for SQL Server 2008 and 2008 R2 will end on 9 July, 2019, while extended support for Windows Server 2008 and 2008 R2 will end on 14 January, 2020. This means users will no longer receive security updates and patches for those systems, and they will be incompatible with future technology.
As such, IT departments are looking at their migration paths now, with one option being to upgrade to Microsoft Azure, Microsoft's cloud platform that enables customers to build, deploy and manage applications through its global network of datacenters, via a consumption-based model.
"Microsoft says this represents a $75 billion partner opportunity, and Azure offers three years of additional EOS support at no cost," Shawn Jordan, senior partner champion - Microsoft CSP, at Insight Enterprises, tells CPI.
Jordan also notes that MSPs who are comfortable with Linux "have a unique opportunity because Linux is being deployed at a faster rate than any other operating system, including Windows".
On top of that, Azure can help organizations meet industry regulations and compliance requirements by complying to a set of international and industry-specific compliance standards, such as GDPR, ISO 27001, HIPAA, FedRAMP, SOC 1 and SOC 2.
"There is quite a rush towards Azure, independent of the customer's business size. Nowadays, almost everyone we talk to has at least heard about the Microsoft offering," Jean-Philippe Poulin, presales technical specialist - sales, at specialist cloud distributor Sherweb, tells CPI.
However, Poulin notes that while a certain number of customers are already knowledgeable in Azure, most people "are overwhelmed by what Azure has to offer and seek help in figuring all of it".
"I would say that education is still a big challenge, but it also represents a great opportunity for people that want to help on this front," he says.
The MSP opportunity
451 Research puts the cloud managed services market at $43 billion, growing at a rate 60 percent faster than the growth in infrastructure-only services.
The reason for this growth, says Jordan, is that "IT professionals are investing in managed services primarily because they need additional help to handle the complexity of their IT processes", which he notes is the case for nearly half of organizations investing in managed services, according to Insight's 2018 Intelligent Technology Index.
"Thus, the managed service provider model combines the Azure cloud offering with the added expertise to unlock its potential and deploy it efficiently with little to no disruption to the business," he says.
Further, Jordan points out that with more customers migrating to Azure Infrastructure-as-a-Service, MSPs have an opportunity to tap into longer-term engagements and additional revenue by integrating third-party offerings as part of an entire cloud solution, including security and other ISV products.
"As businesses move to Azure, MSPs need to supplement or replace traditional on-premises managed service offerings with those that are cloud-based. Moreover, [MSPs] have additional opportunities for application development, including rebuilding, refactoring or architecting of legacy applications," he says.
At Microsoft Inspire in July this year, the company announced a new program, the Azure Expert Managed Service Provider, designed to help MSPs assess, migrate, build, deploy, optimize and manage business solutions on Azure for their customers.
Jason Zander, VP of Microsoft's Azure business also highlighted the flexibility of its CSP program in allowing partners to set the price, terms and direct billing relationship with the customer, as well as provisioning, owning and managing subscriptions, meaning "there is nothing between you and your customer".
But as a first step, Insight's Jordan says MSPs need to determine what they want to bring to market. For example, "disaster recovery, backup and storage are typically easy entry points that offer tremendous value for partners and their customers alike", he notes.
He says MSPs should "put processes in place to learn, understand and maximize rebates that can lead to 30 percent savings or more".
In addition, MSPs should take advantage of the Azure free learning opportunities Microsoft has made available for Azure Administrators, Azure for AWS Professionals and Azure Solution Architects.
"Don't wait," advises Jordan. "Now is a great time to incrementally add to your portfolio."
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