The once-robust IT channel, teeming with diverse vendors and self-hosted solutions, is facing a reckoning. Economic pressures – inflation, recessionary fears, and global supply chain disruptions – are forcing businesses to re-evaluate their IT infrastructure.
This shift will likely lead to a significant increase in consolidation, with enterprises seeking cost-effective, streamlined solutions through hosted services. In 2021, Gartner predicted that 85% of organizations will be cloud-first and it looks like we could be on track.
Rising costs for hardware, software licenses, and IT staff salaries are putting a strain on business budgets. Every dollar spent on maintaining a fragmented, self-hosted infrastructure translates to less capital available for core operations and growth initiatives. Consolidation offers a path forward, allowing businesses to optimize their IT spend by reducing the number of vendors, licenses, and internal resources needed to manage disparate systems.
Economic uncertainty breeds caution. Businesses are hesitant to invest in large-scale IT projects, particularly those with upfront costs like hardware purchases and software deployments. Hosted solutions, often delivered through a subscription model, offer a more attractive proposition. They require minimal upfront investment, minimizing financial risk and allowing businesses to scale their spending as needed.
The global supply chain continues to experience disruptions, leading to extended lead times and component shortages. This poses a significant challenge for businesses seeking to deploy new hardware for on-premises IT infrastructure. Hosted solutions, on the other hand, leverage the provider's infrastructure, eliminating the reliance on a volatile supply chain for business continuity.
The rise of hosted solutions
Cloud-based solutions are no longer a novelty. They offer a multitude of benefits for businesses seeking to optimize their IT environment. Hosted solutions are:
- Cost-effective: Reduced infrastructure management overhead translates to cost savings
- Scalable: Businesses can easily adjust their service level based on changing needs
- Secure: Leading cloud providers invest heavily in data security
- Reliable: Guaranteed uptime and redundancy ensure business continuity
- Accessible: Cloud-based solutions offer anywhere, anytime access to applications and data
Consolidation in action: The multi-CMS conundrum
A prime example of this consolidation trend can be seen in the Content Management System (CMS) landscape. Many businesses find themselves juggling multiple CMS platforms for different departments or regions. The new Storyblok report, The State of CMS 2024, reveals that 81% businesses use more than one CMS and almost half (47%) of those surveyed admit to using 2-3 CMSs within their organization - a rise from the 11% reported in the 2023 survey. This fragmented approach leads to duplicated efforts, increased licensing costs, and complex maintenance requirements.
However, consolidating these disparate CMS systems into a single, robust, hosted solution unlocks a wealth of benefits. Enterprises can streamline content creation and management processes, eliminate redundant licenses, and free up internal IT resources for more strategic initiatives. Additionally, hosted CMS solutions often offer pre-built integrations with other popular business applications, further enhancing operational efficiency.
The State of CMS 2024 survey reveals that 99% of those who switched to a headless CMS report improvements that come from managing content in one central location on a modern tech stack. The most common benefits are increased ROI (61%) and productivity improvements (58%).
The new IT channel landscape - the future is hosted
As economic pressures mount, we can expect to see increased collaboration between established IT vendors and cloud providers. Traditional resellers may transition to offering managed services for hosted solutions, leveraging their existing customer relationships and expertise. This shift will create a more streamlined IT channel, where businesses can access a wider range of hosted solutions from trusted partners.
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While consolidation presents challenges, particularly for businesses reliant on legacy systems and internal IT expertise, the long-term benefits outweigh the short-term disruptions. Enterprises that embrace hosted solutions will find themselves better positioned to weather economic uncertainties and be better prepared for future technological innovations. They will benefit from agility, scalability, and cost-effectiveness, ultimately allowing them to focus on core business objectives.
This shift towards hosted solutions will not spell the end of the IT channel. Instead, it will usher in a new era of collaboration and innovation. As businesses prioritize cost optimization and agility, the IT channel must adapt by offering a wider range of hosted solutions with robust managed services. This new landscape will incentivise partnerships between traditional resellers and cloud providers, fostering a more streamlined and efficient ecosystem for businesses seeking to optimize their IT infrastructure in an era of economic uncertainty.
