Study: Economy Fueling MSP Interest Among Vendors

As business spending on equipment and software slows, some of the biggest IT vendors are setting their sights on subscription-based revenue sources to help buoy them through the economic slump.

A new study by Amazon Consulting and Channel Insider reveals that managed services, for which clients pay MSPs (managed services providers) utility-like fixed fees, are getting a lot of attention from vendors. Nearly half of the vendors participating in the study say they expect sales through MSPs to account for at least 25 percent of their business.

Considering that big-name IT vendors have taken some criticism in recent years for not moving fast enough to develop MSP-focused channel programs, the study’s results indicate that at least some of those vendors are working to change that.

And that shift appears to be a reaction to the ongoing economic slump that since last fall has taken hold around the globe. Forty-one percent of study participants said they are seeing increased demand from channel partners for their managed services programs as a result of the global economic crisis, while 20 percent said they have seen no change as a result of the crisis, and 28 percent said they don’t know yet. A small group, 8 percent, said the economy has driven down demand.

“Times like this are a great opportunity to change and reinvent an organization,” says Oli Thordarson, CEO of MSP Alvaka Networks. “Recessions, while they’re painful, are also healthy in the long run.”

Keith Bradley, president of the Americas for distributor Ingram Micro, says the recession is acting as an accelerator for managed services. Though inclined to put off buying new equipment, businesses still need the services delivered through the managed services model to continue operating.

Because managed services and other fixed-fee models, such software as a service (SAAS) allow businesses the flexibility to pay for only the technology they consume on a fixed fee basis, he says, these delivery service models are becoming more attractive.

Bob Winter, senior consultant at Amazon Consulting, says the study shows vendors are serious about managed services in light of strong demand from partners, and they are putting in place aggressive targets to grow the business.

Thirteen percent of participating vendors are shooting for 75 percent to 100 percent of their sales through managed services models this year, 21 percent of vendors are aiming for at least half of their overall sales through MSP programs, 13 percent are shooting for at least a quarter, and 25 percent for at least 10 percent.