Study: Economy Fueling MSP Interest Among Vendors - Strong and Steady
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Sixty-seven percent of vendors participating in the Amazon Consulting/Channel Insider study said demand from partners for managed services programs is at least strong and steady, a further indication that channel companies are seeing a growing opportunity in the managed services space.
Thirty percent of participants in the Amazon Consulting/Channel Insider study said demand from partners for managed services offerings is very strong and growing, while another 30 percent qualified demand as strong and steady. Twenty-six percent of respondents said they are experiencing little or no managed services demand.
The study supports anecdotal evidence from numerous MSPs and managed services vendors who say their businesses continue to grow even through the hard times
“Right now we’re busier than ever,” says Ken Sponsler, vice president of engineering services at MSP Connecting Point of Greeley, Colo., adding the company was in the process of hiring two help desk technicians.
Sponsler says there is a compelling case to be made to businesses that trying to control their IT costs that managed services delivers reliable IT service at a predictable cost.
Vendors also reported they are adding MSP partners at a steady pace, either by converting existing partners whose models are still focused on break/fix work and product sales or by recruiting new partners. Twenty percent of the vendors said they are adding MSP partners through conversions, while 28 percent said they are adding new partners, and 39 percent said they are doing both.
Of course, adding MSP partners poses its share of challenges. Even though the MSP model has been around for at least five years, some channel companies still haven’t gotten their arms around the business model. According to the study, that remains a recruitment challenge for 43 percent of vendors.
Just as big a challenge, according to the study, is qualifying potential partners, followed by longer ROI for services vs. product sales, training their channel sales staffs, resistance from their sales representatives, and product-centric compensation plans.
Partner suspicions also play a role. Twenty percent of vendors said they have trouble recruiting partners for managed services offerings because solution providers suspect a “Trojan Horse.” That means potential partners fear vendors will make contact with end customers through managed services programs only to steal them later and take the business direct.
This, of course, is not a new fear. A Channel Insider survey last summer found that competitive threats MSPs fear most include Microsoft, IBM, Dell and Google.
Data on who took the survey is proprietary, but Amazon Consulting reveals that 20 percent of participants were companies with at least $5 billion in revenue, 3 percent were vendors with at least $1 billion in revenue, and the rest had revenue of less than $1 billion.
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