As the IT channel continues to evolve into a service-focused enterprise, in 2017 managed service provider (MSPs) will feel increased pressure to provide more advanced offerings. That pressure will come from several market forces such as competition from non-traditional channel players and the growing influence of the “as-a-service” marketplace.
In its IT Industry Outlook 2017 report, trade association CompTIA argues that new faces and models in the channel will test existing go-to-market approaches and force MSPs to reassess their roles in the overall apparatus of the IT industry.
“The SaaS ecosystem alone is reinventing what it means to be ‘in the channel,’ with a new take on vendor relationships, selling strategies and compensation demands.” As an example, the report cites Amazon Web Services’ (AWS) recent entry into the managed services market with offerings for enterprise customers.
Warning that Amazon eventually may set its sights on the SMB market dominated by the IT channel, CompTIA urges IT service providers to “retool their businesses beyond the basics to more advanced services offerings.” If Amazon targets SMBs, it will offer attractive pricing for basic services. Competing on price with this giant would be a fool’s errand.
The channel’s profile is changing, CompTIA says. Change in the channel is nothing new, but how the change is manifesting itself bears consideration. Competition from a behemoth such as Amazon, or even the managed services offerings of telecom carriers and ISPs, comes as no surprise. But MSPs also must contend with non-traditional players.
Businesses such as digital agencies, accountants, and marketing firms are selling or recommending IT solutions, and transforming the competitive landscape in the process. These players have hovered for years on the perimeter of the channel and are now in a position to act as competitors.
However, there is a healthier way to view these new channel entrants. Rather than treat them as competitors, MSPs should consider forging mutually beneficial partnerships to address customer needs.
A digital or marketing agency could be a great source of customer leads for new MSP customers, while you could throw them some business by recommending them to your own clients. Or you could forge alliances to serve customers together by each providing services in your area of expertise.
CompTIA notes in its report that channel companies have often played a cleanup role when things go wrong between end customers and cloud vendors. A SaaS application may not work as expected or provide patchy uptime. In some instances, prompting businesses to seek out a service provider to solve the problem.
But while this provides a way for MSPs to add value, it’s tough to build a sustainable business around the cleanup role. MSPs must be more proactive, and that means getting in early on new technologies when they can meet customer needs. IoT, “as-a-service”, and cloud models look set to be the major disruptors in the channel this year and beyond. MSPs must prepare for this and learn to spot other upcoming opportunities so they can keep their businesses viable far into the future.
Pedro Pereira is a Massachusetts-based writer who has covered the IT channel for two decades. Recognized as one of the first journalists to cover managed services, Pedro continues to track, analyze and report on the IT channel and the growing MSP partner community.