Public cloud is one of the technology industry’s outstanding recent success stories. In a little over 20 years, it has gone from an emerging tech trend to a global phenomenon, with the likes of AWS, Azure and Google Cloud helping to build a market expected to reach three-quarters of a trillion dollars in value this year.

Given another boost by the huge level of investment going into generative artificial intelligence (GenAI) applications, Gartner predicts the market will continue growing by more than 20% next year. As explained in their recent market analysis: “We expect public cloud end-user spending to eclipse the one trillion-dollar mark before the end of this decade.”

At the heart of this infrastructure ecosystem sit Managed Service Providers (MSPs), whose partnerships with the public cloud providers are key growth drivers. According to research published by the Department for Science, Innovation and Technology (DSIT) earlier this year, 56% of MSPs partner with Microsoft (Azure and O365), followed by 43% with AWS. This contributes significantly to a vibrant MSP sector that generated over £52 billion in combined annual revenue in 2022.

Public cloud concerns

Clearly, public cloud offers a wide range of compelling advantages compared to other infrastructure options. This is reflected in recent research carried out among the MSP community, which revealed that scalability (61%), flexible capacity (51%), high levels of resilience (43%) and superior IT architecture (42%) are seen as its most important benefits for users of hyperscale services.

For non-hyperscale public cloud users, there are other plus points, with customer support (35%) and access to a flexible on-demand business model (32%) seen as the biggest advantages. Whichever way you look at it, public cloud is meeting a very clear set of needs – under 4% of survey respondents across the board said there were no benefits of working with hyperscale providers.

Despite this very healthy position and market outlook, however, public cloud does bring some significant challenges that are increasingly reflected in the experiences of MSPs. In particular, many are reporting efficiency and cost control issues that have a knock-on effect on their own service provision.

Top of the list of concerns are public cloud spending levels, with 54% of MSPs saying that they have gone over budget on hyperscale cloud services in the last 12 months, with 34% saying cost levels were currently their top challenge when working with hyperscalers. These issues are seen as more important than concerns about limited customisation and control capabilities (31%) or lack of customer service (29%).

MSPs also have other concerns borne out of their experience of working with hyperscale public cloud providers. For example, nearly 30% cite vendor lock-in and complex pricing structures as a key issue, while 54% say their hyperscale partners don’t provide a dedicated account manager (or they don’t know if they do). Put this all together, and just under a third of MSPs participating in the survey said these issues have had a negative impact on their ability to service their customers.

Looking more broadly at other issues influencing the public cloud market, cloud repatriation – where organisations move workloads away from public clouds to their own data centres – is being considered by more than 70% of organisations, according to IDC. A key takeaway from this insight is that while public cloud adoption remains on a firm upward trajectory, there are a range of important issues that are having a tangible impact on MSPs. Unless hyperscalers use their leadership position to make changes, these challenges will remain part of the public cloud ecosystem in the years ahead.

A better balance

Despite these frustrations and challenges, there are steps MSP can take to mitigate the various shortcomings of the existing public cloud model. At the heart of the matter is how MSPs procure these services in the first place because there are infrastructure and service providers out there who can deliver a more equitable balance across price, performance, service and flexibility.

While it might be tempting to focus on what the dominant public cloud providers have to offer, the market is now mature enough to feature niche players geared towards what MSPs specifically need. Whether they are focused on all-in public cloud adoption, hybrid and multi-cloud strategies or need to help customers with cloud repatriation, an intelligent buying strategy can deliver the balance they need.

In an ideal world, an MSP should be able to set out their specifications, such as compute power, storage and network capabilities, and have the public cloud provider respond with a solution that meets those requirements. Instead of modifying their approach to fit the available architectures, MSPs should be offered services that can adapt to their needs. Armed with this level of customisation and control, it becomes much more practical for MSPs to build the agile solutions their customers need in a way that only the cloud can deliver.

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