Spending on Remote Managed IT Services to Increase, Report Says

A report from AMI Partners suggests cost-conscious businesses will turn to managed IT services as they struggle to manage their IT needs and costs.

With increasing demand from small and midsize businesses as well as increasing supply, remote managed services have emerged as a rare growth area in an economy still struggling to right itself, according to a report from analyst firm AMI Partners.

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 percent, according to the report, "The Emerging SMB Managed IT Services Market Opportunity in North America."

The report found that 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, which 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," said Melissa Chong, senior research analyst at AMI and the 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 and marketing staff in order to get new customers and manage their customer relationships."

The potential growth of this market is attracting several new types of providers-such as telecom companies, IT vendors, distributors, retailers and online resellers-to the SMB IT services market currently dominated by local channel partners. Chong said given the diverse and fragmented nature of the SMB market, channel partners will continue to play a 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 midmarket businesses.

Anil Miglani, senior vice president of IT infrastructure and managed services at AMI, noted that 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, and the severe economic conditions of the last year have forced SMBs to look for more cost-effective ways to manage their IT.

"Remote managed services offered by third 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, and so on," Miglani said. "Yet, 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."