Since ChannelPro-SMB launched eight years ago, much has happened in the IT industry. Technologies have come and gone, as have business models and high-profile vendor executives. To commemorate our 100th issue—an estimable feat given the turmoil in magazine publishing—we asked IT industry experts to recap the most significant developments affecting the channel and offer their predictions for what the channel can expect in the next eight years.
It may be hard to grasp today, but managed services was a relatively new and unproven concept eight years ago. “The learning curve was very steep for solution providers and their clients and prospects alike,” recalls Erick Simpson, co-founder, senior vice president, and CIO at SPC International Online, an Irvine, Calif.-based firm that offers training and business improvement services to the channel community.
With managed services, everything a channel partner did—marketing, sales, pricing, and service delivery—required a different approach than what worked in the traditional break-fix world, and many channel partners essentially made up strategies as they went. “Getting up to speed with managed services required a lot of training and an increase in acumen from the service provider perspective,” Simpson says. “Another challenge: Providers needed to educate the market.” In effect, IT pros had to get out of the reactive/firefighting mindset and take on a more strategic, advisory role.
One way channel partners shifted mindset was by networking with peers—particularly HTG Peer Groups and the MSPAlliance. “We shared our practices within the first HTG peer group,” Simpson says. “It was tough to gain the trust of IT business owners, so when vendors offered to help partners become a managed service provider, the partners were leery. The peer groups cropped up to provide a venue where solution providers could talk to others who were building successful managed services businesses.”
While there are more than enough break-fix IT providers to go around, the managed services model is both popular and profitable for many SMB channel partners today. One indication of the health of the MSP model: The proliferation of vendors offering business disaster recovery (BDR), and to a lesser extent security as a managed service, that are competing for MSPs’ attention—and dollars. “The number of BDR vendors and solutions is staggering,” Simpson says.
Another new and disruptive development that met with initial resistance is cloud computing. “Cloud computing [was] a new approach to delivering hardware and software functionality, which led to fears among channel partners of being commoditized and disintermediated,” says Jeff Kaplan, managing director of THINKStrategies Inc., a cloud consulting company in Wellesley, Mass. With the cloud’s low-cost model requiring little or no up-front capital investment, margins plummeted for many channel partners, driving those who could not adapt out of business.
However, Kaplan asserts that the channel, for the most part, has adapted well to the cloud, albeit not without some initial hand-wringing. “It is now apparent that cloud vendors still need the channel, and there is plenty of opportunity—maybe even more than ever before—for channel partners to be successful,” Kaplan says. Among SMBs, there is still confusion surrounding the cloud, and channel partners are in a good position to advise their clients about the best cloud options. In addition, channel partners can help cloud vendors by providing customized cloud applications and cloud management services. “To extend their reach in a cost-effective fashion,” Kaplan says, “cloud vendors need help bringing vanilla offerings to specific segments of the market.”