Cloud Report: 12-15% Of Channel Companies Will Wash Out

Cloud Report: 12-15% Of Channel Companies Will Wash Out

A new report by Forrester Research projects that over the next five years, between 12 percent to 15 percent of all companies that operate within the IT channel will wash out of the market completely. How can you avoid that fate? Easy: get into cloud services now, and build a solid offering. Here's a high-level overview.

A blog entry by Forrester Analyst Tim Harmon gives some perspective: a survey of executives from service providers and value-added resellers (VARs) revealed that their top desires from vendors when it came to the cloud included things like a guarantee of territory protected from other partners and a subsidizing of infrastructure costs.

In other words, the channel isn't waiting for the tech vendors to tell them what to do in the cloud but are still looking for support from that sector while they look for ways to make SaaS profitable. And that kind of trial and error is what will lead the wash-out rate I mentioned. Harmon suggests that the tech vendors who can make the cloud profitable for partners are the ones who will lead the pack in the world that's coming.

Moreover, the full report suggests that M&A in the MSP space will dramatically increase along with this failure rate, with acquisition price multiples sharply dropping, which only makes sense.

Still, MSPmentor is upbeat on a number of fronts. During the recent ConnectWise IT Nation conference, roughly 1,100 solutions providers and MSPs were busy planning for 2011 and growth opportunities rather than worrying about the economy and disruptive technologies. More thoughts on the topics of SaaS and the channel in the days to come.

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