The Doyle Report: Best Time to Be in the Channel? Consider Take Two

Is this the best time to be in the channel? That’s a question I posed just the other day. My reason for doing so was prompted by an interview with SiriusDecisions thought leader Maria Chien. When asked when the channel was at its peak, Chien said unequivocally, “This is the best time in my career to be in channels.”

After reading the article, Forrester analyst and Channel Partners keynote speaker Jay McBain, reached out to offer his perspective. Yes, McBain agrees, this might be the best time to be in the channel — but not for the reasons most people believe. Despite their current clout and influence, McBain believes that classic MSPs that aren’t thinking beyond the next 24 months might find themselves in a world of hurt. His reasoning? Basic MSP services are moving to the cloud and will become the domain of a handful of large organizations that operate at scale.

To make his point, McBain points to some startling predictions recently made by Oracle CEO Mark Hurd. In a recent presentation, Hurd said the following will occur by 2025:

• The number of corporate-owned data centers will decline by 80 percent.
• Eighty percent of IT budgets will be spent on innovation instead of maintenance.
• Fifty percent of enterprise data will be managed autonomously.
• Eighty percent of IT budgets will be spent on cloud services.

If you operate a traditional MSP business, these predictions might be unsettling. But dismiss them at your own peril, McBain says. He likens channel-change doubters to climate-change deniers.

Jay McBain

“[Channel evolution] isn’t some linear change that gets a little bit worse every year,” says McBain. “At some point, change starts to go off at some exponential rate and starts repeating itself and accelerating much faster. I think that’s the point we are just getting to now.”

Rather than worry, McBain says there are reasons to celebrate the change.

“This is the best time to be in the channel, depending on who you are. The channel itself is going to grow by at least five to 10 times. We have potentially millions of new technology companies that are being formed or being transformed. We also have a transformation with millennials that is happening now. Seventy-five percent of the channel will be millennials in six years. But they are not going to do traditional things,” McBain says.

Among the things they likely won’t focus on, he adds, is a list of things that traditional solution providers offer, including managed services, hardware reselling and break/fix repair. In a mere few years, he says, charging $100 per device or person to manage is going to become a thing of the past. This won’t happen overnight, but gradually over time instead. Between now and then, there could be as much as $1 trillion spent on traditional MSP-like services. Business owners with less than six years left in their careers will likely be unfazed by emerging trends. But the market for those that remain will run dry eventually, McBain says.

So where does a regional MSP go to thrive beyond the next mere few years? McBain says the answer might not be IoT or AI or line-of-business SaaS applications; instead, it might be horizontal infrastructure, albeit delivered in a new, cloud-enabled way. Think security, he says.

“Rather than going to learn to sell SaaS into an ambulatory care clinic in upstate New York, or dancing in front of 178,000 millennials assembled at Dreamforce who want to sell marketing solutions, there is an ‘adults-in-the-room’ business you can run as a smaller player,” says McBain.

This model emphasizes technology delivered as a service, profits driven by customer outcomes and security baked into every deliverable.

If you want to enjoy the best of times, in other words, get ready to embrace some new market realities.