The Cloud Managed Services Market is Growing – and That’s Good for MSPs

Lately, we have been talking to quite a few providers of cloud managed services that play in both the private and public cloud spaces. These conversations have centered around how cloud management needs are evolving as enterprises’ hybrid and multi-cloud needs have accelerated.

Most refer to this market as cloud managed services (for once, no acronym associated), and many of these managed service providers (MSPs) also sell migration services to bring customers from private to public cloud, and cloud services between Amazon Web Services (AWS), Microsoft Azure, and Google Compute Platform (GCP). So these MSPs can help you move your applications to the cloud, sell you the cloud services you’re using, and manage and optimize your cloud services. It’s a rapidly growing market with a lot of M&A activity as MSPs race to provide differentiated cloud managed services that enable them to help enterprises get to market faster, better, and cheaper.

The global cloud managed services market size is expected to reach USD 82.51 billion by 2025, according to a study conducted by Grand View Research, Inc. Enterprises are focusing on their primary business operations, which results in higher cloud managed services adoption. Business services, security services, network services, data center services, and mobility services are major categories in the cloud managed services market. Implementation of these services will help enterprises reduce IT and operations costs and will also enhance productivity of those enterprises.

Taking a step back, I had a look at Wikipedia to make sure we were all aligned on what managed services provider are and cloud management is (cloud managed services):

  • A managed services provider is most often an information technology (IT) services provider that manages and assumes responsibility for providing a defined set of services to its clients either proactively or as the MSP (not the client) determines that services are needed.
  • Cloud management means the software and technologies designed for operating and monitoring applications, data and services residing in the cloud. Cloud management tools help ensure cloud computing-based resources are working optimally and properly interacting with users and other services.

Cloud managed services enable organizations to augment competencies that they lack, or to replace functions or processes that incurred huge recurring costs. These services optimize recurring in-house IT costs, transform IT systems and automate business processes allowing enterprises to achieve their business objectives.

The “net net” is that MSPs providing managed cloud services enable enterprises to adopt and manage their cloud services more efficiently.

In March 2018 Gartner published a Magic Quadrant for Public Cloud Infrastructure Managed Service Providers if your interested to see who they rank as the best of the best in when implementing and operating solutions on AWS, Azure and GCP (note this includes multi-cloud but not hybrid cloud). Several large SI’s are on the list like Accenture, Capgemini, and Deloitte, along with newer born in the cloud pure play MSPs like 2ndWatch, Cloudreach and REANcloud.

What’s interesting to us about this list is the recent M&A activity we have seen with many of these companies, here’s a few we were able to remember over a beer (shout out to Crooked Run Brewery in Sterling, VA):

As you can see, there is a clear bias towards buying “born in the cloud”, public cloud focused MSPs, as that’s where the lack of enterprise expertise lies, and of course the hyper growth is occurring as companies migrate from private to public cloud. Many of these providers started off supporting just AWS, and now need to or have begun supporting Azure and Google as well to support The “big 3” cloud service providers in this new, and emerging multi-cloud world.

MSPs that want to get into the cloud managed services game need to realize the pains are different in the public cloud, and that their focus needs to be on helping enterprises with security and governance, managing cloud spending, the lack of resources/expertise, and the ability to manage multi-cloud.


About Jay Chapel

Jay Chapel is the CEO and co-founder of ParkMyCloud. After spending several years in the cloud management space, Jay saw that there was no simple solution to the problem of wasted cloud spend - which led him to start ParkMyCloud in 2015. Before that, he spent 10+ years with Micromuse and IBM Tivoli, a provider of business infrastructure management software. After an acquisition by IBM, he led the successful sales integration and subsequent growth of the IBM Tivoli/Netcool business in Europe. He also held several regional and worldwide sales roles in Switzerland, the UK and the US. Jay earned both a BA in Finance and an MBA from West Virginia. Those few hours a month that Jay’s not busy with ParkMyCloud’s growth and success, you can find him on the ski slopes, on the soccer field, or on the golf course often accompanied by his three kids.

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