US Financial Crisis Impacts Managed Service Providers

It's time to end the denial. Despite all the media propaganda suggesting managed service providers are immune to the US economic crisis, that message just isn't true. Here's why.

During meetings with high-level MSP industry executives this week, I've heard a consistent theme: Since about mid-September, pockets of the US managed services industry have experienced slowing growth.

And two North American MSP software executives tell me their fast-growing international programs -- particularly in the United Kingdom and Australia -- are helping to offset slowing US sales growth.

Time for US managed service providers to panic? No. Time to deal with reality? Absolutely.

Real Opportunities, Real Challenges

On the upside, managed service providers are better positioned than traditional VARs during these uncertain economic times. And roughly two-thirds of the MSPs at the N-able Partner Summit here in Dallas indicate that they are in hiring mode and seeking more employees.

However:
  • The credit and lending crisis (see the reader comments) has started to impact day-to-day business for MSPs and their customers
  • Sales cycles are getting longer, according to several MSPs I met at the CompTIA Managed Services Summit this week.
  • Even the most mature service providers -- power utilities -- are having trouble collecting fees from their customers. If a growing number of small businesses and consumers aren't paying their utility bills, you can bet those same folks won't be paying their MSPs.
  • Small managed service providers, particularly two- and three-person shops, are beginning to see a more challenging business environment, according to Kaseya CEO Gerald Blackie.
  • The SaaS 20 Stock Index, which measures the stock performance of software as a service and managed services firms, is down roughly 40 percent this year.
  • Top MSPs such as masterIT and Everon Technology Services are providing real world guidance to their staff members, telling them about the challenges -- and the opportunities -- ahead.
Again, MSPmentor isn't pressing the panic button. Overall, the MSP industry is holding up pretty well. And managed service providers are carrying the IT channel forward.

But we will work overtime to cover the MSP industry -- the opportunities, the challenges and the economic realities -- responsibly.

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TAGS: Financing
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