Truth Be Told: Small VARs, MSPs Already Living In the Cloud
Time for a cloud computing reality check within the IT channel. Sure, some VARs and MSPs (managed services providers) fear potential competition from cloud computing giants. But if you slow down and take a closer look at the market, you’ll discover that most leading VARs and MSPs already use cloud platforms within their own businesses, and they’ve already rolled out SaaS and cloud services to their end customers.
Skeptical? Let’s look at the managed services sector, plus early data from the fourth annual MSPmentor 100 survey (which concludes December 17, 2010).
How VARs and MSPs Run Their Businesses
Within the managed services market, I think it’s safe to say roughly 10,000 VARs and MSPs run PSA (professional services automation) software — a type of CRM, marketing and financial system purpose-built for solutions providers. The total PSA user base within the channel is roughly 100,000 to 130,000 unique users (again, my best guess).
Of the three best-known PSA providers (Autotask, ConnectWise and Tigerpaw Software), Autotask is a SaaS-only solution, ConnectWise has both an on-premise and hosted version, and Tigerpaw focuses purely on premise. Thousands of MSPs certainly prefer on-premise PSA, but thousands also have embraced the SaaS approach to PSA.
Meanwhile, thousands of MSPs have embraced remote monitoring and management (RMM) software. Generally speaking, most early RMM software involved on-premise deployments. But in the past two or three years, nearly all of the RMM software providers have launched SaaS and cloud alternatives. And some of the latest RMM providers focus purely on SaaS.
Extending the Cloud to Customers
Now let’s take a look at some preliminary research from TalkinCloud’s sister site, MSPmentor. The fourth-annual MSPmentor 100 global survey, which concludes December 17, reveals the following cloud-centric results so far:
- 76% of top MSPs offer hosted email/SaaS email to their customers
- 53% offer storage as a service
- 41% offer security as a service
- 40% offer hosted SharePoint
- 28% offer hosted VoIP
- 21% offer CRM via SaaS
- 20% offer hosted Unified Communications
Are all of those services true cloud services? Not necessarily. Hosted solutions may involve dedicated services that don’t offer the cloud’s scalability and flexibility. However, the overall themes and trends are clear: The best MSPs have introduced a range of hosted and cloud services that don’t run on-premise.
Meanwhile, we’re gathering more cloud-centric data from VARs and MSPs as part of our ongoing Talkin’ Cloud 50 global survey.
Big Challenges Remain
To be clear: TalkinCloud isn’t predicting cloud euphoria for VARs and MSPs. We realize big question marks and big concerns remain. Chief among them:
- How to develop, price, brand and market more SaaS and cloud services
- How to potentially compete — or cooperate — with major cloud platforms like Google Apps and Microsoft Office 365 (the forthcoming successor to Business Productivity Online Suite, BPOS)
- How to adjust sales compensation plans, bonuses, commissions and other staff incentives as you mix on-premise IT sales with recurring SaaS and cloud relationships.
- How to compute your costs and target profit margins in the cloud — especially as Amazon and other giants continually cut prices and/or add freemium options.
That’s only a partial list of challenges. Alas, I believe the cloud will destroy some VARs, resellers, integrators… and even MSPs. But it’s time to end the myth that VARs and MSPs have yet to embrace the cloud. The MSPmentor 100 preliminary survey results prove most of the best MSPs have some SaaS services in place — with more to come.
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