M&A: The Deal That May Redefine the MSP Industry

We all know the MSP and cloud services worlds are converging. MSPs are buying each other to find cloud talent. But how often do you read about an MSP buying a software company that develops SaaS-based cloud management tools? The key example all MSPs better watch: Avanade's decision to buy Opstera -- marrying a top MSP with an emerging SaaS-based cloud management platform. It's a defining moment. An inflection point. And a wake-up call for all MSPs. Here's why.

In my mind, all MSPs are seated at a high-stakes poker table. It's time to decide whether you want to ante up in a big way. Too many MSPs continue to lament the death of Windows Small Business Server. Others complain about traditional IT sales falling. Meanwhile, MSPs like TekLinks are "killing it" with selected cloud services. Which cloud services? David Powell, VP of managed and cloud services, will share details during our MSPmentor 100 unveiling webcast on Feb. 14.

Defining Move

Meanwhile, many MSPs are leaning on their software suppliers for cloud computing advice. Avanade is making a far more dramatic move. The MSP is actually buying a software company -- Opstera -- to offer end-to-end management of public, private and hybrid clouds.

As news of the deal surfaced, I was chatting with Boundary CEO Gary Read, who previously led Nimsoft. He certainly sees potential upside from the business combination. But he also pointed out that few MSPs can afford to fund software R&D. He also noted that software businesses and MSP businesses have different sales models. So a move like this isn't for all MSPs. I certainly agree.

Still, I think the Avanade-Opstera deal is a defining moment for all MSPs. At the least it will trigger some soul searching; many MSPs must ask themselves, "What do I want my business to be when it grows up?"

Keeping It In Perspective

Don't misunderstand me. There will always be room for lifestyle MSPs. Small business owners will always prefer the local support of a local MSP. But if you're trying to shift from a lifestyle business to a hyper-growth business with assets, then you're going to need to figure out what makes you unique in the cloud market.

Avanade may have found its answer. Have you?
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