Do Big Software Companies Understand Small MSPs?
The VAR Guy sees a disconnect in today’s IT channel. Sure, more than 80,000 VARs continue to do business across North America. But a critical subset of those VARs — perhaps 10,000 to 15,000 of them — also have emerging or thriving managed services business practices. Now, big software companies like Microsoft and Symantec are adjusting their licensing models to embrace those small MSPs. But do the software giants really understand the emerging MSP industry? Really?
To understand the gaping channel disconnect you need to rewind to November 2009 and focus on Orlando, Florida.
In one end of town, a couple hundred VARs gathered at Symantec Partner Engage. At the other end of town during the same week, more than 1,000 VARs and MSPs were gathered at ConnectWise Partner Summit (renamed ConnectWise IT Nation for 2010).
The messaging at each conference was strikingly different:
- At ConnectWise Partner Summit, ConnectWise CEO Arnie Bellini told channel partners that they needed to defend the last mile of IT from cloud initiatives and vendor-driven direct sales. Bellini predicted that many small business applications would shift to the cloud, and he described how MSPs could leverage their recurring revenue models into the cloud — instead of fearing the cloud.
- At Symantec Partner Engage, Symantec CEO Enrique Salem downplayed cloud computing and indicated that about 15 percent of Symantec’s sales would involve SaaS over the long haul. Much of the Symantec content focused on selling the entire Symantec product portfolio…
Was Bellini correct to evangelize the cloud? Was Salem wrong to downplay SaaS? It’s too soon to provide the answer. But one thing is clear: Small software companies seem to be leading the cloud, SaaS and MSP channel revolutions.
Generally speaking, ConnectWise and other small software companies — mostly PSA (professional services automation) and RMM (remote monitoring and management) developers — have spent considerable time and energy helping VARs and MSPs to develop recurring revenue models.
Most of those MSP-savvy software companies are growing and generate about $10 million to $30 million in annual revenues, with only a handful generating $50 million or more, The VAR Guy estimates.
The Software Giants Wake Up
In stark contrast, most big software companies — the $1 billion and beyond players — are just getting started with MSP and SaaS channel programs.
The VAR Guy has seen a flood of new MSP-centric partner programs from big software players in recent weeks. Recent moves have involved CA Technologies, NetApp (balancing hardware and software), Sophos (a midsize but growing player) and Symantec, just to name a few.
The VAR Guy certainly welcomes those MSP-centric pricing models. But back to the question at hand: Do big software companies truly understand small MSPs?
Before you answer spend some time at MSP-centric conferences. Then, visit MSP-centric peer groups. You may be surprised to see which software vendors participate in full force… and which software companies skip the events and MSP gatherings entirely.
You Can’t Fake MSP Knowledge…
Ultimately, many big software companies should steal a page from a hardware pundit: Lenovo Director of SMB Jay McBain.
Throughout most of 2009, McBain quietly attended dozens of MSP conferences. Instead of sitting on lots of panels, McBain sat in the audience. He took notes. He asked questions. He gathered insights to help formulate Lenovo’s managed services strategy.
The VAR Guy suspects big software companies will spend more time at MSP events in 2010 and 2011. But will the big software providers be talking… or listening?