Convergence in the Channel: Is It Happening, and What Does This Mean for MSPs?

Let’s talk about convergence in the channel. Managed service providers selling services that are traditionally the realm of agents has been one of the most discussed topics and the subject of much debate in recent years. Depending on whom you talk to, it’s either picking up speed, or is barely even a blip.

So, is this already happening? Is the convergence of the two real? Do they speak the same language at all as part of the overall partner community? Where is the actual needle on this thing?

Reese Ormand, CEO of Techvera, shared his hot take on the subject. 

Is the Telecom/Connectivity Model Obsolete?

Techvera’s Reese Ormand

“Modern MSPs have an edge as these services and the providers behind them blur,” said Ormand. “Mature MSPs have been providing connectivity and unified communication to their clients for years now. It’s an uphill battle for a managed print shop to get the IT services, or for the ISP to cross sell into VoIP services. As your client’s trusted adviser, it’s much easier for the MSP to bring up conversations around these topics and drive results. The client already is expecting you to have awareness of these services and to provide meaningful recommendations.”

According to Ormand, the telecom/connectivity model is obsolete and has been for years. 

“These industries are matured, commoditized and prime for automation,” Ormand continues. “It’s understandable that they are trying to adapt. They should ping the managed print shops and ask them how that crossover into managed services is going.”

Offering that Seamless Experience

Brian Mauch, CEO of BMC Networks, believes that internet service provider (ISP) and unified communications (UC) services could eventually converge with the MSP business model for two reasons. First, BMC customers expect their MSP to manage all aspects of technology, and this includes ISP/UC. 

BMC Networks’ Brian Mauch

“As trusted advisers, MSPs are in a position to recommend ISP/UC vendors,” said Mauch. “If an MSP offers that service themselves, it enables them to provide a seamless experience for their customer instead of having to manage another vendor.” 

Second, providing ISP/UC can be an opportunity to gain entry into a new customer, and eventually sell them MSP services.  

“This opportunity is a double-edged sword, as a converged competitor could be a threat to an incumbent MSP,” Mauch continues. “The challenge for MSPs with this convergence opportunity is the investment to provide ISP/UC services, which can be lessened by reselling channel offerings.

Unification, Not Integration

According to Chris Rumpf of Flyght, convergence is all about unification. The difference between unification and integration is an important distinction.

“Integration is a dirty word,” said Rumpf. “To me, an integration is always a ‘square peg into round hole’ situation, which says to me that you’ve got to shave off the corners of the peg to make things work. That just doesn’t cut it today. Companies that can unify the technology platforms of their customers are the ones who will win the day.”

Having ‘Stickiness’

Convergence of traditionally telco (such as connectivity), and MSP offerings is a fait accompli. According to Joshua Liberman, president, Net Sciences, VoIP and SD-WAN are good examples, but not the only ones. There is probably nothing more important to MSPs (in the long run) than “stickiness” and being “burned into” the processes of a client business is golden.

Net Sciences’ Joshua Liberman

“Two things really stand out in the new landscape of IT security in the time of “work from anywhere” mobility,” says Liberman. “The first is the demise of traditional networking boundaries; what does the ‘perimeter’ mean today? The second is the concept of treating Azure (and Microsoft 365) as the new ‘endpoints,’ as that is the focus of so many attacks today and into the future.”

Adapting Solutions for Clients’ Needs

Times continue to change in the technology landscape. From the day when technology hardware was a niche market with sustainable margins to the …

… modern evolution when it became “consumerized”; from early big-box electronic stores to the oversaturated online markets with easy access to products and online reviews abounding. According to David Baker, director of IT engineering, cloudIT, the same direct and immediate consumer access to VoIP telephony, unified communication, conferencing, security and multimedia technology will impact the modern MSP if they have not adapted solutions for their clients’ needs or built key partnerships with vendors to work together to deliver modern solutions.

cloudIT’s David Baker

“The technology space has not only converged, in many places the offerings have collided, bringing various once independent channel providers into conflict over offerings,” says Baker. “There was a day when you had a telephone, print and IT vendor who rarely crossed paths; today businesses are consolidating these solutions into cohesive technology solutions. Over the past year, who has not had that client who has added a solution to their business operations stack from a hosted solution or business application through a direct inquiry with a vendor? This leaves the traditional MSP to discover it has been acquired and then has to scramble to regain alignment with the client. This is a missed opportunity for the modern MSP.”

Baker further explains that through a partnership with your clients, helping them select a technology stack that not only meets their immediate need but also aligns technology solutions for compatibility, security, optimized spending, delivery and support, is important for those relationships.

Lack of Time and Resources

Tim Conkle, CEO, The 20, says that small and medium businesses (SMBs), especially MSPs, don’t have the time or resources to learn every technology they might support. This also applies to how to make them play nice, and then actually manage each and every one of them. The easier a technology is to access, the more likely it is to be adopted — and the cheaper it can function at scale. Consolidation and growth toward channel convergence started as a matter of convenience. Since then, it has become essential for businesses of all levels to succeed with the proliferation of technology solutions on the market.

The 20’s Tim Conkle

“Many businesses and MSPs want as close to a one-stop shop as possible to make the most of their time, effort and money,” said Conkle. “This is most apparent with ecosystems such as Kaseya or ConnectWise acquiring more and more tangential offerings to flesh out what your buy-in gets you (for a little bit more). Bundled pricing can make getting five services cost less than two services à la carte.

“An offering which requires little overhead or management (from a business perspective) that integrates into what you already have may more than make up for [some] technical shortcomings. It is still possible to piecemeal a solution. But, as you grow, it becomes untenable to continue doing so with every solution. The administrative demands can outstrip the advantage of an individual, technically better solution, especially if the individual technologies you use don’t play nice with one another.”

Conkle doesn’t think we’re going to see the “singularity” for a while, but we will see more and more convergence across multiple industries. 

“There are just too many business requirements which are unique and different enough to necessitate multiple platforms,” Conkle concludes. “The philosophy behind platforms like ConnectWise and Kaseya are too different to necessarily choose one or the other at present. There will continue to be consolidation, but we still have a long way to go for a complete convergence of the channel.”