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Managed services and
automation software vendors believe the current economic slowdown is
opening new SMB opportunities to services providers.

“If you don’t look at this as an opportunity, you’re looking through
the wrong end of the telescope,” says Frank Coker, president and CEO of
CoreConnex, a business automation software vendor.

But there is work involved, vendors say. MSPs must fine-tune their message within the context of an economic downturn.

IT systems are essential to business operations, regardless of their
size. Companies need their IT systems running uninterrupted, even if
they have to put off IT replacement or upgrade projects. To keep those
systems humming, companies will need MSPs more than ever during
economic hard times because using services helps control IT operating
and staffing costs.

“This is our time to shine,” says Kaseya CEO Gerald Blackie. Barring
what Blackie called a “complete meltdown,” managed services providers
and vendors should do quite well through the current economic crisis
because customers will cut staff budgets in favor of outsourcing parts,
if not all, of their IT environments.

MSPs use remote monitoring and management tools by Kaseya, N-able
Technologies and Level Platforms to maintain, troubleshoot and update
their clients’ IT systems. Some vendors such as Zenith InfoTech and
Ingram Micro’s Seismic program offer hosted infrastructure services
that solution providers can private-label.  

“This environment is an accelerator for the managed services provider,” says N-able CEO Gavin Garbutt.

The added pressures on SMB companies to cut budgets and run more
efficiently will only increase their interest in managed services, he
says. Those businesses are turning to IT service providers and asking,
“Do more for us,” Garbutt adds. “SMBs completely realize they’re
relying on IT to operate their businesses.”

Mark Jagger, president of solution provider Cyberstreams in
Bellevue, Wash., says his customers are definitely under pressure to
tighten their budgets. But while they are cutting how much they spend
on some portions of the business, they are leaving IT budgets alone, he
says. They are counting on IT investments to help them control costs in
other areas of the business.

“That may change, but right now that’s what we’re seeing,” Jagger says.

SMB owners, he says, are evaluating how to increase their value to
customers and to improve their own cash flow. In so doing, Garbutt
says, they are giving MSPs the opportunity to reinforce their own value
message to those businesses.

That message, says Garbutt, should revolve around increasing IT
predictability for customers at a cost that’s lower than running
systems with in-house staff. There is also predictability for the MSP
as a result of the monthly or quarterly fees providers charge to
maintain end users’ IT environments.

CoreConnex’s Coker says the best times to sell IT are when the
economy is expanding or contracting. The message from the services
providers, however, has to be delivered in context, he says.

During the current hard times, Coker says, the message should center
on maintaining quality of service while keeping costs down and boosting
efficiency. In times of economic growth, he says, the message centers
on the need for investment to take advantage of expansion

READ: CoreConnex Takes the Guessing Out of Financial Management

Be the times good or bad, communication is crucial. And so is the
MSP’s understanding of its role within the customer’s organization,
says Kaseya’s Blackie. That role, he says, increasingly is as the
client’s CIO or IT department, which requires having a solid
understanding of the customer’s business and having a strategic outlook
on the customer’s business goals.

Strategic thinking and close integration with the customer are the
pillars of a successful MSP business, say managed services experts. The
managed services model requires a shift from anchoring the business on
the next sale or the next project.

For channel companies still hanging to that model, or use a
time-based model to charge for services as opposed to charging
recurring fees under contract, the economic downturn will prove more
painful, says N-able’s Garbutt. When customers put off purchases or
projects, it affects those providers.

And those providers that have dabbled in managed services without
fully embracing the model also are at risk. They will be tempted, says
Garbutt, to fall back on the old way of doing business because they see
safety in it as opposed to forging ahead with the new model. 

“When the economy starts contracting, and SMBs start contracting
their spending, the traditional service provider or VAR will retract to
what they do best,” Garbutt says.