After a recent cloud event, a local reseller of Intel servers requested a meeting with me to discuss his business strategy. Over lunch, he shared his concerns about the transformational changes in IT that keep him awake at night. Customers no longer want on-premise servers, and some of his existing clients were looking for companies willing to house and manage their entire data centers.

The data centers of these mid-market customers often consisted of just a few dozen servers, so it was easy to relocate them. But that means this reseller’s future of selling and installing on-premise servers is under siege. He knew he had to transform his small company of 10 employees to providing end-to-end services, not just selling boxes with a declining services component.

This was just the first of several interactions I had with traditional IT resellers forced to change into soup-to-nuts Managed Service Providers (MSPs). But how do you evolve into a soup-to-nuts MSP? That’s a concern many resellers are grappling with and one of the reasons IBM is holding an MSP Summit at their upcoming IBM Edge conference in June.

While everyone talks about cloud computing as a disruptive trend, attention is more often paid to the manner in which end-users adopt the technology. But cloud computing is not just about technology adoption but also about fundamental changes in the ways a business buys IT services. Today, customers increasingly prefer to acquire IT services on a pay-as-you-go model.

As a result, Independent Software Vendors (ISVs) and Systems Integrators (SIs) can adapt by changing their business models to meet changing customer expectations through a MSP model. Along with those changes, MSPs are expanding their portfolios by partnering with technology vendors who provide differentiating core capabilities to compete in the new MSP/cloud marketplace. These partnerships can assist current and new MSPs to meet or exceed their customers’ expectations with innovative offerings.

MSPs also face the challenge to provide reliable services as well as to expand their portfolios to grow revenues. With the automation that accompanies IT cloud delivery, all this must be accomplished with services making up a smaller proportion of the transaction value. MSPs providing a narrow set of capabilities can use that foothold to cross-sell solutions that are now possible through emerging cloud technologies. For example, providers with backup and disaster recovery capabilities can add security to their portfolios and vice-versa.

Growing demand for cloud services requires MSPs to evaluate their existing customers, employees’ skills and current portfolio before moving forward. Some important questions MSPs need to ask when crafting strategies are:

• How do I change my business model to sell managed services?

• With whom should I partner?

• What skills are needed to build a managed services organization?

These questions must be addressed with urgency by MSPs as the rapidly changing market allows first-movers to take a big lead. I will address some of these questions in an upcoming blog post.

IBM is one of the technology vendors addressing the needs of their business partners to adapt to the new IT environment. I will be speaking at the IBM MSP Summit held in conjunction with their Edge event on June 11 and look forward to hearing your feedback on the role of MSPs in this new ecosystem.