Evolution of Service Providers(MSPs):
Back in 80s and 90s, channel meant a set of resellers & box pushers who sold technology to customers for a profit margin- simple. Then the resellers felt the need to make more money and hence they started offering troubleshooting & break-fix services to generate more revenue – better. However the revenue generated through break fix services was not consistent and hence the need to invent a new model where revenue can be consistent and hence the new business model of Managed Service Providers – Great. But hold on. Now the problem is cloud and SaaS are replacing the need to manage IT and hence businesses are signing up directly with the cloud vendor rather than taking the help from MSPs. Service Providers do not actually own the product or service; they only resell the services rebranded with their name in order to strengthen their relationship with the customers. Now this model is crumbling due to easy discovery of cloud services by businesses and it’s time for MSPs to evolve again. The next logical step is to be a Hybrid VAR and generate revenue through value added services.
Where the Rough Meets the Smooth:
As years progressed, the evolution of cloud technology along with it accompanying reduction of costs incurred for deploying a data center, made it the go-to-market of choice. Most of the products available in cloud are in Ready-To-Deploy mode! Managed Service Providers will no longer be able to shadow the Technology Vendors who can avail this delivery mechanism through the cloud. It is very transparent to businesses on who actually developed the product.
Previously, MSPs gained profit margins by overshadowing the Vendors’ pricing basis. However with the advent of cloud, pricing is transparent to all end users. With the rapid adaptation of mostly free social media & internet, technology vendors effectively use them to publicize their offers. More importantly, certain technology vendors own IP rights/patents filed for the technology they have proposed, designed and developed. As matter of reciprocating it, Service Providers have either failed to understand or least cared about it or they are not aware of it. On a lighter note, Would anyone compromise their existence in the Industry for the petty amount of value, service provider dole out to them? Definitely not !
So, What Now?
If Service Providers need to make their presence felt, it is high time for them to understand that they should align themselves with the Vendor. This alignment and balancing between Providers, Vendors and end users will help them to connect the dots. From a broad perspective, if we look at this arrangement, we can ascertain the VARs are going to dominate technology space down the line. MSPs are going to be faced with the choice of how best to serve community – continue the worn down path and perish or join the mainstream VARs and prosper.
Well, we’ve put all the positives, threats and turnoffs to the Service Provider in a detailed document which is available here. If you’d like to heat up this discussion, you are welcome to comment below!
Should you need more personal consulting on this topic, catch up with our Channel Account Manager at 844-640-1499!
