Opposite Day: Should MSPs Abandon Applications?

In recent months, I've blogged quite a bit about MSPs moving up the stack from from managed infrastructure to managed applications. In fact, I've advocated an increased applications focus. But a recent move by NaviSite, Inc. has me rethinking the managed applications market. Here's why.

First, a tip of the hat. A key industry executive told me to take a closer look at NaviSite's move, which involved selling off the Lawson- and Kronos-hosting business to Velocity Technology Solutions Inc. I'm not sure if the executive wants to be named publicly... but I was intrigued by his thought process. Here are some general thoughts...

  • The Application Upside: Some pundits say managed infrastructure is now a commodity game, and MSPs need to start developing vertical market application specialties. During the recent Parallels Summit in Orlando, I spotted numerous MSPs who were sorting out strategies to either host applications on their own or start offering white label SaaS services. And at this week's SAP Partner Summit in Las Vegas, there were numerous solutions providers moving into the Hosted SAP world.
  • The Application Downside: Many hosted applications are becoming commodity markets. MSPs and VARs are striving to move beyond basic Hosted Exchange offerings because SaaS email prices continue to fall. Plus, NaviSite's move to exit the Lawson-hosted business may signal more challenges for MSPs that want to somehow profit from certain SaaS applications.
I'm still a true believer in SaaS applications. And I think VARs and MSPs need clear SaaS strategies -- though I think most smaller MSPs should partner up rather than trying to build something on their own.

In the case of Navisite, I think the decision to exit the hosted Lawson business has more to do with Lawson Software's status as a niche software company, rather than an inherent problem with the managed applications market. After all, NaviSite continues to offer a range of managed application services for numerous application stacks.
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