SaaS Competition: Pushing MSPs Up to Mid-Market?

Azaleos, which specializes in managed services for Exchange, is gaining momentum with mid-market customers and in some cases connecting with Fortune 100-type accounts. There's also an interesting twist to the Azaleos mid-market momentum: The company has less and less interest in the small business market where competition from SaaS and cloud companies seems to be intensifying. Here are the details.

During an extended phone call today, Azaleos VP of Product Management and Marketing Scott Gode described how the company was targeting five managed services opportunities including:

  • Exchange Server;
  • SharePoint;
  • Office Communications Server;
  • Active Directory; and
  • BlackBerry Enterprise Server.
Among the most recent Azaleos business victory: Scoring a managed Exchange win with the United States Center for Disease Control and Prevention (CDC) in Atlanta. Also, Azaleos is connecting the dots between managed Exchange and SharePoint environments, with tools like AttachIT.

Gode sounds upbeat about the mid-market opportunities that involve 500 or more seats. But he doesn't sugar coat the competitive storm brewing in the very small business market. "We’ve kind of shed the small business focus," says Gode. "In some ways there’s less money in it. More importantly, as the pure public cloud vendors become stronger, the simple price value equation means it will become even more difficult to compete."

Some SMB Managed Services Will Never Won't Die

Generally speaking, I realize the hosted Exchange market involves intense price competition. And plenty of MSPs are worried about small business customers shifting their applications to big cloud vendors (i.e., Google Apps and Microsoft Business Productivity Online Suite).

Still, I've been on soap box in recent days echoing thoughts from ConnectWise CEO Arnie Bellini. I'm not out to endorse ConnectWise's software, but I see eye-to-eye with Bellini when he talks about IT anchors that will keep you firmly entrenched in your customers' small business operations.

Azaleos gave me a healthy reality check today. The public cloud vendors have started encroaching on MSPs' small business turf. You can fight back using tactics outlined by Bellini. Or you can head to higher ground by emulating companies like Azaleos. Either way you need to make a decision. Now.

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