How to Choose a Managed Cloud Service Provider

Cloud computing has become a key enabler of businesses worldwide. As technologies continuously evolve, an enterprise may not have all the capabilities in-house for successful cloud implementation and management. According to the HashiCorp 2024 State of Cloud Strategy Survey, 64% of organizations are experiencing a shortage of skilled staff, lacking the expertise necessary to support their cloud infrastructure strategy. As a result, enterprises have been augmenting their internal cloud resources with external expertise to realize the benefits of the cloud. Outsourcing cloud expertise can help optimize costs and improve return on investment, which is crucial since 91% of organizations are still wasting money on the cloud.

Even as many enterprises plan to increase their spending on cloud talent to boost internal capabilities, they still must rely on managed cloud service providers to support their in-house teams.

What is a managed cloud service?

Managed cloud services refer to outsourcing enterprise cloud computing to a third-party service provider with defined performance levels. The managed cloud service provider (MCSP) is responsible for tasks like migration, management, maintenance, configuration, optimization and security, tailored to the specific needs of the industry and business. The selection of MCSP requires broad-based evaluation criteria to holistically assess the providers and identify the best fit for the organization.

Benefits of Managed Cloud Services

Collaboration with MCSPs can help enterprises achieve various technology and business objectives.

• Ensure service level agreement (SLA)- based performance guarantees
  SLA-based services ensure better control over service levels and business continuity. The SLA outlines a pre-agreed set of criteria and metrics. MCSPs use these metrics as benchmarks to monitor performance. With this approach, businesses get better control over their desired service levels and consistently support their business continuity goals.

• Cost optimization
  Many MCSPs offer tiered subscription pricing to cater to various enterprise needs. The flexible pricing model helps ensure organizations’ cloud expenses are within budget and tailored to their requirements. Additionally, by working with MCSPs, enterprises save on costs by maintaining only essential cloud resources on their internal teams.

• Integrating cloud services
  The hybrid cloud environment allows enterprises to select the best IT infrastructure for each business application. Therefore, they often prefer this deployment model. MCSP integration support becomes crucial in a hybrid cloud environment, which can be a mix of on-premises IT infrastructure, private and third-party public cloud services. The integration support also enables enterprises to combine cloud platforms from multiple vendors.

• Support and maintenance
  MCSPs help navigate the complexities of cloud technology with 24/7 management and support. They align network operations with enterprise goals and proactively monitor for security and patch requirements. They advise on best practices, troubleshoot issues and aim to ensure optimal cloud performance and drive business success.

• Disaster recovery and business continuity
  To ensure quick recovery of cloud services and applications in the event of a disaster, MCSPs implement robust disaster recovery and backup strategies. For example, by maintaining redundant and highly available cloud infrastructure across different geographical locations, they can quickly replicate critical systems and data. This ensures business operations continue with minimal disruption.

• System upgrades
  Cloud computing is constantly evolving, and enterprises risk having an outdated network if it is not updated and upgraded on time. MCSPs keep abreast of the latest cloud technologies, ensuring businesses don’t need to worry about updating their network and other cloud infrastructure.

• Security and compliance
  Network security is crucial when using cloud services, but enterprises may struggle to recruit and retain skilled security experts. MCSPs have dedicated security teams and implement advanced technologies and protocols to ensure the highest level of protection. These include regular security audits and ensuring compliance with relevant regulations.

Common Challenges with Managed Cloud Service Providers

Collaborating with MCSPs can bring significant value, but it’s crucial to identify potential hurdles to ensure a successful partnership with the service provider. Enterprises should consider some of the most common challenges when collaborating with MCSPs.

• Lack of transparency
  Enterprises must stress transparency with their service providers. They need to establish clear communication channels and insist on regular reporting, which should create visibility in MCSP activities. Regular audits, reviews and penalties for non-compliance ensure accountability and transparency in the partnership.

• Discrepancies in invoices and services delivered
  One of the critical benefits of MCSPs is cost optimization and predictable cloud spending. However, there may be a mismatch between expectations and monthly billing. While consumption variations across different periods in a billing cycle may account for some fluctuations, other factors can also contribute to billing discrepancies. These may include add-on services not accounted for or communicated by the providers at the time of contracting.

• Security
  Lapses in MCSP security and compliance may result in data breaches. A lack of robust data security and compliance measures may make the enterprise vulnerable to hackers and cyber threats.

• Technology upgrade and automation challenges
  Some MCSPs may be unable to keep pace with the constantly changing cloud technology, which can prevent enterprises from realizing the benefits and full potential of the latest innovations within the cloud computing space.

How to Evaluate and Choose a Managed Cloud Service Provider

Evaluating managed cloud service providers involves assessing their cloud expertise, costs, customer support, security and other key factors. Consider the following critical factors while evaluating managed cloud service providers.

• Technology expertise and experience
  Evaluate the provider’s experience working in a multi-vendor, multi-cloud environment. Assess their capabilities in cloud platforms that align with your current environment and objectives. Cloud infrastructure management is crucial for ensuring optimal performance and efficient operation of cloud environments. It involves establishing processes and utilizing the right tools to effectively allocate and deliver vital cloud resources. To evaluate a MCSP’s expertise, you can check their certifications and experience in managing cloud infrastructure.

• Security and compliance
  Evaluate the provider’s security measures to ensure data protection and network security. Assess their data encryption practices, network security protocols and disaster recovery plans. Go through their track records of regulatory compliance and different certifications.

• Cloud migration and integration
  Cloud migration needs to be carefully orchestrated to ensure a successful implementation. Inefficiencies in orchestrating cloud migrations limit an enterprise’s ability to realize the full value of the cloud. Assess the provider’s migration capabilities and integration options. You should carefully evaluate their expertise in managing complex migrations and the support offered during migration.

• SLAs and contracts
  Service level agreements outline client expectations — such as uptime guarantees, issues resolution timelines, services credits or penalties for service disruptions — from the vendor. Organizations should carefully review SLAs and have them vetted by the legal team before agreeing to the contract terms.

• Vendor lock in
  Enterprises must assess if the provider has minimal use of proprietary technology or technology components that may restrict transition to other providers if needed. They must evaluate the provider’s data modernization capabilities, standardization of APIs and other relevant factors to avoid the risk of vendor lock-in.

• Customer support
  As cloud computing reliance increases, business disruption costs can be significant and vary by industry and business segment. Examine the provider’s customer support channels and response time. You must ensure the provider offers round-the-cloud support for all issues, including critical incidents.

• Reliability and performance
  Assess the provider’s track record in delivering high-performance and reliable cloud services. You can analyze the provider’s performance against the SLA over the past 12 to 18 months. Observability and monitoring have become critical aspects of the modern cloud computing environment. You should confirm that the provider has robust observability and monitoring capabilities to ensure your applications and networks run uninterruptedly. Evaluate if the provider’s monitoring and reporting tools can integrate into your management and reporting systems.

• Cost and pricing models
  Review the provider’s base pricing models and additional costs like data transfer costs, storage fees and potential hidden charges. You must evaluate provider cost management and optimization tools and practices that will enable you to keep your cloud spending within your budget.

• Cloud consulting capabilities
  MCSPs should be capable of assisting you in assessing applications and preparing a business case for the cloud. You should analyze their ability to create a migration roadmap and operation plan post-migration for managing and maintaining cloud services.

Additionally, since the cloud landscape is constantly evolving, the providers should be able to navigate the latest shifts and guide you in selecting the most appropriate technologies and solutions.

Start your Cloud Enabled Business Transformation with Material

Material’s technology and domain expertise can help guide your organization to a successful cloud implementation. Our consulting approach and technical expertise can enhance and expand your internal capabilities. Our expert teams prepare cloud business cases, develop implementation roadmaps and successfully and efficiently execute the transition to the cloud.

To learn more about how we can help your organization navigate its cloud journey, get in touch today.