North American SMBs managed services spend to rise

NEW YORK, US: With increasing demand from small and medium businesses (SMBs) as well as increasing supply, remote managed services have emerged as a rare growth area in this tough economy.

As a result, annual spending on remote managed IT services by North American SMBs is expected to increase 3.3 times in the next five years, representing a compounded annual growth rate of 28 per cent, according to a new report, by AMI-Partners.

Anil Miglani, SVP of IT Infrastructure and Managed Services at AMI said, “While SMBs have been steadily increasing their reliance on IT over the last several years, they have always been challenged in managing their growing IT infrastructures. The severe economic conditions of the last one year have forced SMBs to look for more cost effective ways to manage their IT.”

He added that remote managed services offered by 3rd parties provide 24/7 availability of critical IT infrastructure without increasing the need for internal IT staff.

Some SMBs use remote IT services selectively for critical areas like security and storage, while others are now extending the use of remote services to manage PCs, servers, networks, communications equipment and devices, etc. Yet, according to the report the industry is still in its initial stages.

“Of the total installed base of 60 million PCs and 8 million servers in North America, only a tiny fraction is currently managed remotely, offering tremendous growth opportunities for managed service providers,” said Miglani.

At the same time, local channel partners are increasingly offering remote managed services to better serve their customers with fewer resources. While some partners deliver remote services from their own infrastructures, others have started relying on cloud-based infrastructure including remote management software that has dramatically reduced their barriers to entry.

“By using automated software to remotely monitor and manage their customers’ infrastructures, channel partners have increased their productivity while also improving their service levels,” according to Melissa Chong, senior research analyst at AMI and chief architect of the study.

However, with increasing reliance on automated software to deliver the services, these channel partners need to shift their focus from technical staff to sales & marketing staff in order to get new customers and manage their customer relationships.

The potential growth of this market is also attracting several new types of providers like telecom companies, IT vendors, distributors, retailers and online resellers in the SMB IT services market currently dominated by local channel partners.

Given the diverse and fragmented nature of the SMB market, channel partners would continue to play and critical role in serving these customers. Therefore, most of these new providers will need to understand the local channel partner ecosystem to capitalize on their close relationships with SMBs, concluded the report.