In the past five years, due to the progress and development of cloud computing technology, great changes have taken place in the field of IT services, and there will be more changes in the next five years. For small and medium-sized enterprises, IT services are outsourced to a certain extent, and even for large enterprises, they are usually outsourced. However, as cloud computing technology has changed the needs of service providers, Micronet has found that the nature of IT service outsourcing is also changing rapidly, and the traditional IT service industry structure is also constantly updating and iterating.
Micronet found that, to some extent, the popularity of cloud computing services accelerated the bankruptcy of some traditional IT support service companies, and the promotion also accelerated the transformation of the industry. Others are committed to getting out of trouble. Companies that have become pure "hosting service providers" have transformed themselves into operators. The challenge for IT service providers in today's rapidly changing environment is how to rebuild value for customers.
The following describes what happens in the market:
1. Most small and medium-sized enterprises will no longer operate data centers. Their servers are migrating to cloud computing based infrastructure, greatly reducing the need to build and maintain data centers. That is to say, its investment and operating costs have been greatly reduced. Ten years ago, many IT service providers also benefited from the operation of the data center. However, migrating servers to the cloud platform also means that their work in data center maintenance and support is greatly reduced.
2. Microsoft seems to monopolize the email service market based on cloud computing through Office365, thus eliminating the biggest demand for technical support from IT service companies (i.e. Exchange Server running on the site), which serve small enterprises. Today, for IT service companies, the main source of critical maintenance work has disappeared.
3. Hosting service has become a daily commodity because it is now in the cloud and has been transferred from servers like Exchange server to remote desktop management. The ancillary services obtained from phone calls and emails rarely require customer support, thus interrupting contact with customers and further challenging the business of supporting relevance and differentiation. For those large network operation centers (NOCs) and helpdesk service providers, their economies of scale serve thousands of hosting service providers, just like franchisees. But these hosting service providers are usually easy to change, which makes them more and more sensitive to price. Only those hosting service providers that have established their own network operation center (NOC) and helpdesk services are likely to gain more advantages than the dealers of hosting service providers.
4. Network equipment, especially WiFi, firewall, router and switch, is still very important. As prices continue to fall, network cabling and global Internet connectivity are becoming increasingly important, and the value of speed and redundancy is increasing. But at the same time, because cloud computing technology allows users to work anywhere, the shift to work farther away is also taking place. Like servers, the demand for network equipment has begun to decline.
5. Now, security has become very important, but it is not just building a strong firewall in the enterprise data center. A company or its IT service provider must now consider and manage multiple aspects of security. Cloud, employees' home network, SaaS applications used by everyone, and any application software owned by the company are all the entrances to the data warehouse where malware or data may be stolen. For general IT service providers, this is a difficult problem to solve. When credentials are transferred across multiple cloud platforms, this problem becomes a software integration problem. For typical IT service providers who do not have software capabilities, they cannot keep up with developments and do not have the expertise to manage applications. In PCI, it is difficult to prevent real attacks.
Therefore, comprehensive IT management is a key factor for the hosting service provider itself and for customers. For the IT management problems in the next few years, the IT service enterprises with broad technical vision will surely succeed. A provider focused on hosting services (MSP) will continue to commercialize itself. Some private equity companies have acquired these companies and merged with them, which will be a development trend. Therefore, the future development of these IT companies is very limited.
And the real winners will be those service providers who know the overall situation and extensive technical knowledge. For customers, these IT service companies still have value.
In terms of finance, since cloud computing turns capital expenditure into operational expenditure, enterprises must consider its impact on tax revenue. Many small and medium-sized enterprises that decide to use cloud computing do not take this fact into account. Most SMEs do not consider the relationship between cloud computing costs and traditional data center costs, nor do they realize that the cost of regular payment is higher than one-time investment and annual support costs. However, moving to a cloud platform is not just a financial decision.
Cloud technology has changed the economic environment of enterprises and IT service providers, so it must face reality. Many enterprises change capital expenditure into operating expenditure. Information technology service companies convert one-time resale income and margin trading into a continuous monthly income stream. For many small IT service companies, this transition is tricky.
For SMEs, all these actually mean that they face greater competitive pressure and are able to obtain multiple choices of the same service at a lower cost. However, the premise is that SMEs choose to use a franchised hosting service provider (MSP), which provides commodity services. The general type of hosting service provider (MSP) actually provides lower value to reduce costs. For more mature IT service providers, in addition to focusing on the services of hosting service providers (MSPs), they can also get returns from providing better technical advice and better technical partners for enterprises.
Micronet believes that although it is difficult for us to predict the market development in the next 5 or 10 years, we do not deny that the hosting service market is still likely to be integrated. The final winners are those who adjust themselves and find ways to Users create service Value enterprises.
