This decade finds the MSP business model in the midst of a significant end-client transition to the Cloud.

Historically, MSPs derived a substantial portion of their business from managing client IT needs on-premises, offering soup-to-nuts solutions such as managed laptops, desktops, servers, telephony and networking. Given the demographics of typical end clients (< 100 employees, lacking budgets for in-house IT staff, wanting to focus on their core business instead of IT) such managed offerings were a natural fit for client needs.

Today, with the rise of cloud-based alternatives to traditional on-premise deployments, those very same clients are cottoning on the Cloud’s benefits, which include Cap-Ex and Op-Ex savings, not to mention ease-of-use. Examples of this transition include customers opting for Google Apps or Microsoft Office 365 in lieu of traditional on-premises Microsoft Small Business Server deployments. This emerging trend leaves MSPs facing the loss of client business.

In response, MSPs are rolling out their own hosted cloud offerings – such as hosted email and calendaring to cloud-based desktops, to name just a few. Their pitch to customers:

“When you lose a critical email and need to recover it, good luck getting help from the big guys. If, on the other hand, you stay with us, you get all the benefits of the cloud plus the high-touch support experience that you’ve known all along.”

The technological trend making this economically viable for MSPs is the increasing availability of cookie-cutter datacenter-in-a-box solutions such as FlexPod ® from the likes of Cisco, NetApp and VMware. Such multi-tenancy ready products make it possible for MSPs to host applications for several clients in a cost-effective way in their own Private Clouds.

Whether the convergence of technological enablers and a compelling value proposition will find resonance with clients remains to be seen. But it’s clear these are early days for a trend that shows no sign of slowing down.

Next time, we’ll talk about how MSPs aim to offer backup-and-recovery as value added Cloud Services to their clients.

Venkatesh Iyer is a Senior Product Manager at Axcient. When not thinking up the next cool product idea, he spends unreal amounts of time devouring comic books graphic novels and binge-watching “Downton Abbey” episodes (Go Carson!)