Australian managed services revenue delivered by partners is expected to grow 14 per cent YoY between 2023 and 2025, according to a Cisco-commissioned Canalys survey.
The growth is projected to surpass the increase in overall IT spending, fuelled by a rising demand for cybersecurity services and expertise.
Globally, managed services revenue is projected to grow by 12.7 per cent in 2023.
Cisco’s ANZ channel chief Rodney Hamill said that managed services growth is expected despite a challenging economy.
“What's expected in top partner trends in 2023...growth is expected. There is a big expectation of growth," Hamill said.
"We're seeing this not just in this [survey], but also others done by Gartner,” Hamill said.
“This is despite some economic headwinds. We're all seeing the economy really has been the challenge; inflation is really becoming a bit of an issue globally and right now…interest rates going up.”
“So we’re seeing and expecting growth against economic headwinds, which I think is good for our industry,” he added.
The survey also highlighted that collaboration between managed services providers has increased.
Hamill said that this was driven by the need to service niche customer demands.
“It's really the customers that are dictating what sort of managed services they want, because we're now seeing customers slice up parts of their IT environment and say: 'hey, I need a managed services provider just on wireless, who knows my wireless network and is a wireless expert and just manages a slice of it,'” Hamill said.
“We're seeing this trend toward a lot more divvying up of the IT footprint inside accounts of different managed service providers, which is driving things we haven't particularly seen in the past, in some of the...partner to partner operations, where you might have somebody who's a guru in security domain service needing someone to come to a wireless domain service.”
Hamill said that the growth opportunity is not limited to service providers.
“It's not just SPs anymore. We're seeing a big footprint of our traditional partners really look at what their managed service opportunities [are], it's not just the telcos who are driving it, it's evolved to be a lot broader in terms of just a telco who's providing it,” Hamill said.
Helping to drive revenue growth are the Cisco products that the company has productised for managed services providers.
“We’re seeing things like [Cisco] Umbrella really be productised as a managed service offering,” Hamill said.
“Security is a big one...as a managed service offering."
"Even things like [Cisco] DNA Centre...we're seeing a lot of those traditional sort of product offerings be adopted as managed services.”
“We've recently made some investments regionally around security as an example, where we’ve built out a team to help focus on [Cisco] XDR and really productising that as a managed service with our partners.”
“That is a big focus for us. We believe we've got quite a unique XDR story in market."
"We'll take it out aggressively in market fairly broadly, but we see a big opportunity to work with our MSPs and SPs around XDR managed services.”
Cisco’s pathway to managed services
Brisbane-based networking firm and Cisco partner IPTel Solutions has transitioned to become a Cisco managed services provider in the last six months.
IPTel’s director Mark McSherry explained how it has made the transition via the Cisco Powered Services specialisation program.
“As a partner, we've been around for a while, but what we've been doing is work out specialisations,” McSherry said.
“In those specialisations, Cisco has this golden concept of Cisco Powered Services.”
“On our road to become a gold partner, we've had to pass some of these Cisco Powered Services and each of them in turn is another mini specialisation."
"So for us we passed through a number of Meraki one's, Cisco Secure Access and [Cisco] Full-Stack Observability.”
“We deliver a lot of professional services in all kinds of areas, mostly in the Cisco portfolio space, but developing managed services is quite different.”
“Cisco’s got a guideline booklet, basically, that makes it quite easy to understand what you need to deliver and that [provides] I think a methodical approach to actually developing the practice, but it does take a little while.”
McSherry described how IPTel’s specialisations have helped it compete with more established managed service providers.
“How does a smaller partner compete with very large gold partners?"
"You do it by getting better at certain niches. Wi-Fi has been that niche for us."
"We've added things like [Cisco] SDA Fabric and some other complex technologies along the way.”
“Wi-Fi gives you a unique selling point and so when you layer on something like managed services, you've got a customer base, who trust what you do, and we tend to sell into customers who rely on Wi-Fi, so there's an automatic approach there to your selling cycle.”
McSherry described how IPTel has moved to offer proactive support to Cisco customers.
“We've been offering support up to 24/7 to our customers for quite a few years, but that's quite different to offering a proactive monitoring service,” McSherry said.
“We bought a product called Logic Monitor that we use on the front end to actually manage and monitor customers networks.”
“The difference between some reactive support where a customer signs you up and you log in and check something, to being proactive where we're actually monitoring it, automatically raising tickets and actually telling them about stuff that’s happened is quite a big shift.”
“We also retrained a lot of people...to be ready to be proactive, all the customers already have a lot of process and procedure in place.”
“It’s a pretty substantial shift in business model."
"The main thing for us is it gets us deeper and longer connections with customers.”
Hamill said that Cisco Powered Services provides the assurance customers need to commit to a managed services provider.
“The Cisco Powered designation that we have in our partner ecosystem is one…where we're asking our customers to take a leap of faith or trust in this way into a partner managed service,” said Hamill.
“What Cisco does in helping to build out...that service, it gives customers a little bit of [assurance] around...there's some level of inspection about the service I'm buying from a partner; I know it's been validated, I know it's been audited, there's a process behind it, it's tied back into Cisco and supported and it really helps from a partner's perspective to get that little bit of extra confidence a customer needs to make that buying decision.”
