(London, 16 September 2011) The managed services business is accelerating, particularly in the SMB sector. At this weeks' Managed Services Summit, held in London, the questions were not so much about the scale of the market (already revised upward this year by IDC), but on how suppliers and channels will need to change themselves, and find successful partners to work with.

The reasons why managed services appeal so much to smaller firms in Europe is obvious - in effect a start-up company does not need to buy very much IT– it can do it all as a service. This is why the SMB adoption rate for managed services is very high already, attendees were told.

But there is the problem of companies buying individual services from a number of suppliers as apps or hosted packages, but finding a need to move data between them.  Fujitsu's Mark Owen held out a bright prospect for traditional VARs who make the move: “As the services evolve we need the integration aspect to help the data created in one delivered service move across to another. The VARs will move up the food chain and become more valuable, becoming System Integrators, and becoming even more deeply entrenched with the customers. The VARs have the required inherent skills already.”

It is also a good area to be in if you are in software: John Chapman from IT Europa advised that ISVs (independent software vendors) who seek a valuation for their businesses will find them worth up to six times as much if they have a SaaS delivery model rather than on-premise packages.

In the channel, distribution may have the biggest challenge, since clients moving away from capital investment means suppliers channels need less product in stock. The credit businesses which distributors run change as well, as services are purchased in advance or on-demand. But don't write off distribution, argued Jason Beal from Ingram Micro. The channel is still in a very strong position with its customer relationships to see off the “cloud upstarts”. Alan Murphy, Brocade put the customer relationship for a service supplier as “being a trusted advisor”.

It is clear that selecting winners to work with in these markets will be a pressing need for most channel players. Every organisation at the event, be they a VAR, vendor, distributor, or ISV, is developing a managed service capability and that means a change in the customer conversation. Ray Barber from Kaseya told the audience what he was seeing within their customer base and that in the SMB arena the demand for managed services was coming from the customer. “They are looking for companies that can differentiate themselves. We used to talk about technology, but our most successful service providers hardly every talk about technology; they learn what their customers' businesses are about. They talk a lot more about sales and marketing.”

Andy Dancer, Trend Micro was clear that from a technology perspective, “this is an evolution, not a revolution.” The big shift is in the business model in terms of delivery, pricing and management. The challenge is to make money with that, he said. Security is sometimes given as the big reason why people don't do cloud, but we have to show that there is a way. We will see the SMB use SaaS – the technology beats anything available for them before.”

David Foy, from data centre specialist EBRC advised that the “biggest problem we have at present is the maturity of the end-user who doesn't know what they want as a service. We could be selling them something that isn't adapted to what they need. Do we understand the end-client well enough to adapt the services to give them what they want? We can make it all into a mould for the SMB; but there are IT industrialisation problems - customers still want different things.” Hence the increasing demand for integration skills.

Hendrik Wacker from HDS pointed out how the cloud clearly separates information, applications and infrastructure. “Customers don't care about infrastructure, only the application.” But the majority of customers still own their own IT, so the transformation to the next step is the problem, he said.

The issue of business transformation and supporting customers in their migration to service-based IT infrastructures is one that will be returned to at the next UK Managed Services Summit in 2012 and at other IT Europa and Angel Business Communications events.

The UK Managed Services Summit 2011 took place at IET London, Savoy Place on 13 September 2011. The Summit sponsors included: Brocade, Fujitsu, Kaseya, Trend Micro, Autotask, CA Technologies, Cisco, EBRC, Equinix, Hitachi Data Systems, IBM, Ingram Micro, Zenith Infotech, Alvea Services, Huawei Symantec and QLogic.