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Industry Pundits Clash Over MSP-Agent, IT-Telecom Convergence
CHANNEL PARTNERS VIRTUAL — The jury’s still out on convergence between MSP and telecom agent channels.
The worlds are coming together if you ask Andrew Pryfogle, Pax8‘s chief market development officer. Pryfogle said Pax8 is seeing agents enter into managed services while MSP partners introduce telecom services.
But not all of Pryfogle’s peers are buying his outlook.
Pax8’s Andrew Pryfogle
“Convergence means you’re bringing something to the table that we don’t have,” said Rob Rae, Datto‘s senior vice president of business development, in reference to agents. “But you’re not bringing anything.”
Rae, Pryfogle, Bill Power and Jared Martin debated the topic at the Channel Partners Virtual event on Tuesday.
Pryfogle said MSPs stand to lose customers, particularly SMB customers, to agents that sell telecom-related technologies that the MSP portfolio doesn’t contain. Agents can get a foot in the door with a UCaaS, fiber or SD-WAN conversation and steal the client, Pryfogle said.
Datto’s Rob Rae
But Rae said the biggest danger exists for agents, who are realizing that their traditional business model is dying. In the meantime, Datto and its MSP partners continue to chart positive sales forecasts, even during a pandemic.
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“The MSP channel is actually flourishing, which is part of the reason why I can understand why you would want to converge with this space,” Rae said.
No one is denying that agents need to increase their recurring revenue.
TPx’s Jared Martin
“The agents have seen a shift in the market. They’re looking for ways to stay relevant when it’s no longer just about bandwidth and transaction. The future really is managed services,” said Jared Martin, vice president of MSx managed services for TPx Communications.
Case in Point
Both sides of the debate pointed to TPx as evidence for their case. The long-time CLEC rebranded three years ago to focus more on managed services than connectivity. Martin said his company converged, because at the end of the day, the market demanded it.
“For us, it was all about reading the tea leaves, that managed services component was the future,” Martin said.
While Martin and Pryfogle used TPx as a positive example of convergence, Rae viewed the company as an an outlier.
“That [transition] took a significant lift. It took a lot of investment and time, resources and money. And people just don’t have it. They don’t have the will to do it,” Rae said.
Agent Alliance CEO Bill Power, who works in the telco industry but sided with Rae, pointed to the skills aspect. Although Power believes that a slow, infant-stage convergence is occurring, most agents won’t be able to bridge the managed services skills gap. He said the legacy telco agent channel has relied on its subject matter expertise.
The Alliance’s Bill Power
“To me, being an expert means I know this much more about what you know about whatever the subject matter is. To talk to somebody about voice circuits or telephony or data circuits or wide area networks, it’s pretty easy to know this much more than the office administrator or the office manager in a customer opportunity,” Power said. “Now we’re talking about technology and solutions that are infinitely more complicated, and I don’t know this much more than the CIO about security or some of the virtualized services these guys are selling.”
The Outcome
JS Group’s Janet Schijns
Although a majority of online attendees voted in favor of the “Yes” team, both sides seemed to be getting at the truth. JS Group CEO Janet Schijns, who moderated the debate, gave a nuanced conclusion.
“I do think we’re seeing a little bit of convergence, but I don’t think it’s a total convergence,” Schijns said.
A similar debate took place last year at Channel Partners Evolution. Rae and Pryfogle debated each other, joined by Peter Radizeski and Michael Bremmer, respectively.
That there should be such debate over convergence seems odd to me. The extreme effort to “bridge the skills gap” requires far more than skilling. Ultimately, it requires agents to literally BECOME MSPs themselves, thus converging the two channels within their own company.
The problem is that it makes no sense to do so, to suddenly add an entire business to your business when the channels learned long ago the value of partnering.
Look at the difference between agents and MSPs this way: Agents have long been in the business of selling carrier and related services which are delivered by the carriers and related companies. MSPs have long been in the business of designing, developing, deploying, and supporting technology-based services. Two completely different business models.
But look how well they fit together. The agents sell services. The MSPs deliver services. My friend Rob Rae may feel that neither brings anything to the table that the other doesn’t already have, but I’ll respectfully disagree. Today agents are challenged to find more innovative services to sell to their customers to create incremental revenue, and MSPs are busily creating those to increase MRR and replace product sales lost to margin-erosion and cloud. At the same time, I’ve heard scores of MSPs complain how they cannot find great sales talent.
It would seem an ideal marriage, wouldn’t it?