Partners: New AWS Managed Services Raises A Channel Conflict Red Flag - 'They Eat Into Your Business As They Grow'

Amazon Web Services (AWS) partners say the cloud services behemoth's new managed services offering for its largest multinational customers lays the groundwork for channel conflict and muddies the waters on where they should focus their AWS consulting practices.

"I think the fact they're getting into this business is not a positive thing for partners, whichever way you put it," said one partner, who wished to remain anonymous. "Working with AWS you should know by now as a partner, especially on the technology side, that they eat into your business as they grow."

Amazon has many times in the past launched products that directly competed with those from ISVs, essentially gutting their businesses. For those technology partners, the name of the game is trying to stay ahead of AWS, the partner said.

[Related: 6 Key Things To Know About Amazon Web Services' 'Sentinel' Managed Services Offering]

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"None of that has affected us on the consulting partner piece until now," the partner said. "Am I surprised? No. Am I a little peeved? Yes. But it's business."

AWS Managed Services, which was launched last week, delivers a toolkit that enterprises can use to manage their AWS infrastructures, as well as some services — monitoring and incident investigation — provided directly by Amazon's internal engineers.

The product is geared for Amazon's largest customers: multinational corporations that, by all accounts, are looking to avoid contracting with MSPs and have been clamoring for a product to free them from doing so.

AWS did not provide pricing on the new AWS Managed Services and did not return repeated phone calls and emails for comment.

The "service is designed to accelerate cloud adoption," wrote Jeff Barr, Amazon's chief evangelist, in the AWS blog. "It simplifies deployment, migration, and management using automation and machine learning, backed up by a dedicated team of Amazon employees."

Barr, in the AWS blog, said, "AWS Managed Services was designed with partners in mind."

To that end, Amazon has established two new training programs — AWS MS Business Essentials and AWS MS Technical Essentials — to educate partners on building practices around AWS Managed Services.

"I expect partners to help their customers connect their existing IT service management (ITSM) systems, processes, and tools to AWS MS, assist with the on-boarding process, and manage the migration of applications. There are also opportunities for partners to use AWS MS to provide even better levels of support and service to customers," Barr said.

One partner, who did not want to be identified, said partners need more details from AWS on how the company ultimately sees partners building out their own offerings in the wake of the AWS Managed Services launch.

While a number of self-management tools are already on the market from Amazon's third-party technology partners, the monitoring piece that directly engages Amazon's engineers is a new factor that has the most potential to step on partners' toes, said the partner.

At the same time, the Amazon MS product is expensive, and it's undeniable that there is a real trend in the large enterprise toward in-sourcing management, the partner said.

In addition to monitoring and incident resolution, the service introduces features for implementing change control, provisioning of predefined stacks, patch management, security and access management, backup and restoration, and reporting.

Partners have been talking among themselves since AWS Managed Services was made available last Monday, and sentiment in Amazon's channel is divided, said Jamie Begin, CEO of RightBrain Networks, an AWS MSP partner based in Ann Arbor, Mich.

The impression "varies from doom-and-gloom, to frustration, to optimism for opportunity," Begin said, adding that he's mostly in the optimistic camp.

RightBrain Networks was a launch partner for the AWS MSP program two years ago, Begin said, but the solution provider has always steadfastly rejected the notion of maintaining a network operations center.

"We recognized that the traditional MSP business model was mainly predicated on customers' desires to outsource pain onto a vendor. With public cloud, a lot of that pain is gone. It was inevitable that MSPs operating on AWS had to evolve or die," Begin said.

Begin told CRN that partners shouldn’t rely on driving business from those services anyway.

"There isn't a lot of value in providing patch management or incident escalation services in the cloud world, where all this stuff can, and should, be automated," Begin said.

Jarrod Levitan, chief cloud officer at TriNimbus, one of Amazon's largest Canadian partners, told CRN that the way MSPs can avoid business disruption is to focus on applications, not just infrastructure.

"We manage a lot of the applications for our customers on top of the operating system," Levitan told CRN. "If you want to stay relevant, you have to worry about what's on top of AWS."

CRN first reported in April on development and beta-testing of the toolkit for automating tasks that are traditionally included in the catalogs of managed services partners. The project, at the time code-named AWS Sentinel, came in response to some of Amazon's largest customers expressing interest in managing workloads in a self-service fashion, said many sources.

Cirrity, a 100 percent channel focused cloud services provider, is actively recruiting disgruntled AWS partners, said Gerry Baron, chief marketing officer and channel chief for the Atlanta-headquartered company. He said the new AWS Managed Services offering is a direct attack on the most profitable piece of the business.

"Partners don't make a lot of margin with Amazon cloud services, and now that they've announced Managed Services, they are going to head-to-head with [partners]. That's where the real stickiness was and that real lucrative part that is now being cut out of the equation," he said.

AWS Managed Services has, in essence, turned Amazon into a direct competitor to the channel, said Barron. The new managed services offering effectively "pushes partners aside," he said.

Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, said partners selling the AWS offering are "feeding the competition" by "supporting and selling" a cloud services offering that undercuts their own profitability. "We went down the AWS path and met with them a while ago and it is definitely not a partner-friendly environment or a partner-friendly offering," he said. "It wasn’t built for that."

Venero, whose company is focused on large enterprises, said he sees the AWS offering as a "risky endeavor" for large companies. "If there is an outage, you lose connectivity to your business applications that run on the AWS platform. They are simply not available - versus an internal hybrid cloud approach which is much more effective and robust for large corporate enterprises," he said.

Gina Narcisi and Steven Burke contributed reporting to this story.