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 Channel Futures

Sales & Marketing


Managed Services: How Much Market Upside Remains?

  • Written by Joe Panettieri 1
  • April 13, 2011
Sometimes I worry about the managed services market. Worldwide, I suspect roughly 1,500 MSPs are really executing well. Perhaps another 15,000 are moving right along -- doing well but not exactly firing on all cylinders. And in North America alone, there are 70,000-plus VARs and resellers that are evaluating a range of options -- managed services, cloud, IT project work, and so on. My key question: Is there still upside in the managed services market?

Sometimes I worry about the managed services market. Worldwide, I suspect roughly 1,500 MSPs are really executing well. Perhaps another 15,000 are moving right along — doing well but not exactly firing on all cylinders. And in North America alone, there are 70,000-plus VARs and resellers that are evaluating a range of options — managed services, cloud, IT project work, and so on. My key question: Is there still upside in the managed services market? Are more resellers still coming in? I found the answer earlier this week at the Synnex Varnex conference in Boston, Mass.

During an MSP-centric workshop on April 10, Synnex rolled out a freemium managed services strategy that involves close working relationships with Level Platforms, Axcient, Intronis, Reflexion and Symantec. Roughly 30 Synnex Varnex channel partners attended the workshop. Some were seasoned MSPs looking to fine-tune their business strategies. Others were box resellers asking basic questions:

  • What’s a NOC (network operations center)?
  • How do I price managed services?
  • How will I interact with Synnex and go to market with my managed services?

During the workshop, Synnex shared some interesting math. Using Level Platforms’ remote monitoring tools, Synnex estimates that roughly 45 percent of customers’ PCs and notebooks are four or five years old — or perhaps even older. So the massive PC refresh trend will continue. But as part of that trend, Synnex is calling on channel partners to promote lifecycle management services. In other words: Cradle to grave PC managed services.

In some ways I found the workshop reassuring. Plenty of resellers are still gearing up to catch multiple managed services waves — PC and server management, digital signage, video as a service, unified communications, hosted PBX services… and the list goes on.

But on the flip side I don’t want to paint managed services as a silver bullet that solves all reseller problems. As I often say: If you’re a bad reseller why on earth would expect to become a top MSP?

Bottom line: I think there’s more upside in this market. And I think plenty more resellers will thrive as MSPs. But let’s all steer clear of the hype. Managed services ain’t easy. And the challenges will only intensify as big vendors offer direct-to-customer options.

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Tags: Cloud Service Providers Digital Service Providers MSPs VARs/SIs MSP 501 Sales & Marketing Strategy

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4 comments

  1. Avatar harry brelsford April 14, 2011 @ 5:11 pm
    Reply

    great analysis – love it. I think your macro economic numbers are a bit light…I’d correlate to the MSFT Partner Program enrollment, Spiceworks registrations, etc.

    Just a thought

  2. Avatar Joe Panettieri April 14, 2011 @ 7:15 pm
    Reply

    Harry,

    I hope all is well. Perhaps my macro #s are a bit light but generally speaking I think market researchers and vendors over-state the size of the partner ecosystem. Also, Spiceworks’ user based continues to grow rapidly but I think a hefty # of users are IT managers outside of the IT channel.
    -jp

  3. Avatar Alistair Forbes April 18, 2011 @ 5:41 am
    Reply

    Hi Joe,

    There’s no doubt that MSPs will have to continue to work hard to grow their businesses but I think that at the moment the general economic climate presents opportunity as well as threat. For SMBs the continued cost pressures means that many are foregoing their own IT person and looking to outsource their IT without losing the single point of accountability and defined levels of service that an in-house IT Manager would give them. This is exactly the proposition for managed services.

    That’s not to say that there aren’t also companies that will look to cut back on the costs of their IT service providers but I think he challenge remains to get the discussion onto the value of e service being provided rather than just the cost. I think in particular that showing how having IT running well can help them make money rather than selling on the basis of what might go wrong if you don’t have a managed services contract is the more likely approach to succeed.

    Regards,
    Alistair.

  4. Avatar Joe Panettieri April 18, 2011 @ 8:10 pm
    Reply

    Alistair: I agree on value vs. cost discussion. When we moved our sites from a dedicated server to a cloud solution we didn’t discuss cost until the end of the discovery process. The vendor spoke value, and our ears listened closely to understand how the cloud approach would better serve us vs. the dedicated server approach. We were happy to sign on the dotted line because of the value discussion…
    -jp

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