It’s a new chapter in an old story. First, some resellers became VARs. Then some VARs became managed services providers (MSPs). Now, a group of consulting firms and software companies (players like ChannelCloud, Level Cloud, PointClickWork and OS33) are striving to help MSPs become cloud services providers (CSPs) and cloud integrators. The trend was front-and-center at IT Nation, a conference hosted by ConnectWise last week in Orlando, Fla.
But is the MSP-to-CSP transformation real? Admittedly, thousands of VARs and MSPs are trying to figure out if they should:
- (A) build their own home-grown cloud services,
- (B) partner up to reseller third-party cloud services
- (C) or perhaps do both A and B.
Generally speaking, I think MSPs are in reasonably good position to succeed as CSPs because the underlying business model — recurring revenues with associated sales compensation plans — are quite similar to one another. But I doubt all MSPs will take on the “CSP” moniker. Instead, many MSPs seem to be adding cloud services to their broader portfolio of services.
Still, the cloud industry can be overwhelming. Nearly every software company now pitches a cloud strategy to channel partners. I’m particular interested in the upstart players because they have no legacy to protect. Instead, some upstarts are building platforms from scratch that are designed for the cloud from Day One.
OS33
OS33, which makes a Webtop platform, is a particularly interesting company. Some MSPs are leveraging OS33 directly, as a means to provision SaaS applications and VDI (virtual desktop infrastructure) for customers. In other cases, MSPs are partnering up to gain access to OS33′s software. For instance, I believe both Level Cloud and PointClickWork have been building out their cloud offerings for MSPs, leveraging OS33 as the underlying platform.
I saw an OS33 demo about a month ago at the company’s headquarters in Brooklyn, N.Y. All of the SaaS applications, including complete Widows desktop suites, appeared to be running locally but the software was actually running in a Texas data center. Impressive — though I realize demos are designed to be impressive.
ChannelCloud
Meanwhile, ChannelCloud continued to generate a buzz at IT Nation. CEO Kent Ericson is a familiar name in MSP circles. The ChannelCloud team has previously built Pointivity, a successful MSP. For more than a year now, ChannelCloud has been calling on MSPs to become cloud integrators. Ericson and I played email and phone tag last week but didn’t connect.
I’m still hoping to catch up with the ChannelCloud team. I’m very curious to learn how many MSPs they’ve onboarded so far, especially since ChannelCloud seemed to be so far ahead of the cloud curve when the company first started briefing me about a year or two ago.
Beyond the Basics
Yes, fast-moving MSPs have already partnered up to offer cloud storage, cloud security and other widely available services to end-customers. But when we cover OS33 and ChannelCloud, the conversation shifts quite a bit to more sophisticated cloud tasks like end-user provisioning for all major SaaS applications.
This story, it seems, has just started.
The 
Joe can you describe OS33 in a bit more detail? Do they host their service for MSPs to build on? Is there additional room for MSPs to differentiate with OS33 if peer MSPs already run the platform? What costs are involved? In other words is this an offering for small MSPs or larger MSPs that have their own data centers? Thank you.
Eric: I will reach out to OS33 to see if they can weigh in with deeper insights. Thanks for reading Talkin’ Cloud.
-jp
Eric: Great questions- please allow me to answer in short form. OS33 is an IT-as-a-Service delivery platform that enables MSPs to shift their service catalog from complex, traditional on-site IT, to a scalable, fully cloud-based managed services model. OS33 removes the barriers for MSPs in building, implementing and supporting a complex hosting solution, by partnering with our technology. There is no requirement for an MSP to have their own data center. OS33 has the flexibility for an MSP to mix and match infrastructure from their own virtual capacity, public Cloud providers and OS33 Cloud IaaS. OS33 then allows the MSP to leverage multi-tenancy of virtual resources down to the VM resource. This minimizes the MSPs Cloud environment and reduces complexity/overhead through fewer VM’s serving many clients. Delivery of all IT resources out to an end-client is done via the OS33 Webtop which integrates components such as applications, files, tools and more into a simple to use, customizable portal that is branded by the MSP. Aligned with OS33 technology, there is ample opportunity for MSPs to differentiate themselves through vertical expertise, custom solutions, supplemental offerings and other organizational strengths. The immediate value for MSPs is to demonstrate leadership & competence in Cloud solutions as many IT components that used to generate profit in traditional Managed Services model quickly become commoditized. We welcome the opportunity to engage any qualified service provider that recognizes the strategic value of a scalable, agile Cloud platform in today’s quickly evolving, mobility-driven, market.
Aron Derstine, OS33 Director of Sales
Joe,
Great article. I believe that MSPs are in the IDEAL role to provide cloud services, but I would hesitate (for the time being) to coin the term Cloud Services Provider since I think it is limiting into the scope of what a true MSP does.
Coming from the MSP segment, I feel is is not only important but imperative for MSPs to incorporate cloud services as an overall part of their offering, but there is still quite a bit of technology and direction to manage,and the MSPs that impart themselves into the actual “business” of their client and not just the technology will also be the ones that stand to gain the most from offering cloud services in their portfolio.
I’m certainly looking forward to the changes and challenges the next few years will bring and how we can help MSPs with this transformation.
Brett Jaffe
PointClickWork
Brett,
Thanks for the note. Please update us as PointClickWork makes more moves. I believe the MSP and CSP communities will have some overlap, but there will also be some clear differences between the two camps. Generally speaking, I think most MSPs, especially those serving small businesses, will leverage third-party cloud services. CSPs, generally speaking, will launch their own cloud services. Just my two cents.
-jp
An MSP that tries to stick to a monthly recurring revenue model is going to get eaten alive as cloud services proliferate. The key is adopting a paradigm shift where what you sell is a business process based client solution. Clients don’t give a damn about apps….they care about solutions for their process. No one is going to get rich selling Google Apps at $10/seat annual margin. However, they can generate significant and substantial consulting revenue picking applications from the Marketplace to tailor the platform for specific customer use and configure.
This holds as well in the GAPS market space just as well as it does in the salesforce app exchange space.