De-globalisation: Does regionalisation renew the use-case for MSP’s?

ABBRIEVIATIONS

MSP-SR-CIT - Managed Service Provider – Solution Reseller – Consulting Technology or IT Firm

AI-LCA-DTI-AU-EU - Artificial Intelligence, Low-Code-Appplicaitons, Data Transformation Insights and Analytics, IOT and Automation

Today, technology is increasingly indispensable for organisations pursuing their goals. Thus, while the reliance on technology varies, numerous organisations, regardless of size, rely heavily on Managed Service Providers, Solution Resellers and Consulting/IT firms – major and minor [now abbreviated as MSP-SR-CITs] - for seamless functioning. Indeed, on the face of it, life could arguably never be so good for the MSP-SR-CIT.

Indeed - A US cloud adoption research exercise (technical in focus), 2023 and post-COVID suggests, a staggering 92% of businesses now have a cloud or multi-cloud strategy in response with 61% of businesses (2021) migrating workloads to Cloud.

67% of companies outsource at least some part of their IT to MSPs

Approximately 75% of SMEs outsource their IT management to MSPs.

However, evidence of real organisational transformation is hard to find.

Indeed - the tech-sector market, equating to approximately $ 7bn per annum of NZ GDP among a rising global spend on digital of $ 2.8 trillion (by 2025), is undergoing a seismic shift.

Calcified on long-term contracts, license-models and resource-allocation billing, inflationary pressures to raise pricing is resulting in client-org. scrutiny and questions raised on the value and sustainability of contracts and engagements.

Labour-market transformations coupled with AI, low-code app, integration and power-automation developments are dynamics playing an increasingly threat or compromise to recurring services, hosted-services &\or implementation revenues.

The advantages for organisations with the highly accessible, affordable, consumable and high digital impact of these developments are compelling in context of largely failed, high cost, hard-to-exit, enterprise systems contracts or that of the elusive value of the typical MSP-SR-CIT portfolio.

The effects of this, on tech-world circumstance worldwide and in New Zealand, are occurring in lockstep to the accelerating effects of de-globalisation; intensifying regional renewal (or demise) across many sectors. Indeed, key to the fade of revenue consumption for major and dominant MSP-SR-CIT players and rise and emergence of smaller Boutique or Niche-players are new organisational digital-demands to meet and fulfil their own shifting B2B and B2C needs. Vexed by policy fueled cost pressures commercially, cost of living pressures, socially, are a factor in Hybrid working which adds to complex operational-digital dynamics.

However, decades of problematic tech-world transformation statistics detailing ongoing difficulties organisations face achieving even some digital success bear relevance to pursuit dilemmas for MSP-SR-CIT’s. BCG to cite “‘alarmingly’, 70% of [organisational] digital transformation initiatives fail to achieve their intended goals” [BCG]. Forbes echo saying only 1 in 8 digital transformation endeaveours succeed due to a complete lack of attention to the real human challenges involved in the process. McKinsey sing similar tunes - “just 16% of organisations considering themselves digitally mature”

“adoption barriers and automation challenges, such as process fragmentation; a lack of a clear vision, critical infrastructure and IT readiness, is stopping the scaling of intelligent automation (IA). MSP’s can do more in helping their clients reach a stage of end-to-end automation by navigating them through these said-challenges” - AlMultiple.

The invoicing-factory era of recurring license-based contracts is over. Survival and renewal means departing from the break fix, managed support &\or TSP models. These, once lucrative, now lack any real cut through, even creating business risk for MSP-SR-CIT’s themselves as much as they do for client-organisations.

Given the disconnected nature of the account-managed model, the intensification of talent-wars, to seek deep-engagement practitioners to present credible alternatives to the waning stickiness of the prevailing MSP-SR-CIT proposition; amplifies the complexity, security and technical challenge for MSP-SR-CIT’s to even meet existing needs.

Given the proposition and use-cases for AI-LCA-DTI-AU-ET extends far beyond just routine, process and non-thinking tasks, each class of the these technologies differs from the failures of past digital-eras. Resultantly, organisations are, finally, able to self-serve, self-develop and enable themselves to adopt, adjust and evolve with digital.

Accordingly, both regional-isation and real transformation in organisations relies inverting prevailing MSP-SR-CIT technology-proposition to a human-centred model; new EaaS providers will dominate here. Consumption-for-everything models will invoke a multi-dimensional paradigm shift - essential if New Zealand seeks to resolve rapidly deteriorating economic and social circumstances with success towards increased regionalisation - built upon empowered organisations for new forms of economic growth and job creation to innovation and talent development.

Read much more in the article and full downloadable white paper.