3 ways to innovate and differentiate managed and cloud services

 In 2010, managed and cloud service providers will need to continue to innovate in this pre-chasm market with the development of new features and business models as they strive to differentiate themselves in a market that is already commoditizing.

With ongoing pressure to find new revenue streams, defend against competitors and develop deep and wide relationships with their end customers, the MSP Product Manager certainly will have a difficult equation to solve. And, unfortunately, the MSP is often selling to a market that continues to be very price conscious and expects the cloud promise of "compute for less". As a result, developing the "Cadillac" of cloud offerings, whilst perhaps commanding a premium price, will have a limited market and MSP Product Managers will need to look to others ways to innovate to differentiate.

1. Product Strategy: One approach that I am starting to see providers have success with is in developing offerings that adopt the principal of  “Mass Customization”. Mass Customization sees an offering enhanced with a plethora of configuration options (dials and switches as it called) so that vertical markets and horizontal segments can be pursued with an offering that appears tailored to that market’s need. Within that framework, the end customer has the option to further customize the offering specific to their needs – further enhancing to the “built just for me” perception.

2. Service Delivery: However developing offerings bristling with dials and switches is not sufficient to “solve the equation” alone. Provisioning and delivery must be codified and industrialized through a combination of Service Orchestration, Service Provisioning and Service Management technologies on the back end. Then any combination of settings on the "dials and switches" can be fulfilled in a routinized manner and the service should be designed to achieve similar economies of scale to a “one size fits all” offering.

3. Go To Market: Furthermore these highly configurable services must be complimented by well thought out Go To Market (GTM) strategies: target verticals will often need to be approached via a channel they already trust and this evolution of offerings will inevitably see partnerships between scalable MSPs and vertical focused VARs, Sis and niche MSPs equipped with vertically resonate value propositions.

As the cloud services market continued to mature other innovation options will present themselves and become viable and appropriate - for now, however, the pressure is going to be on the product manager to innovate at a product feature level.