The Latest Managed Services Inflection Point Arrives

Freemium software efforts, promoted by such companies as N-able. In the months ahead, we’ll hear more freemium news from such players as Doyenz, the grapevine says.

Consolidation, including dozens of merger and acquisition deals. Just last week, CoreConnex CEO Frank Coker mentioned to me in passing that he expects the M&A activity to accelerate dramatically over the next few months.

Entrepreneurial Fatigue: I can’t recall who shared that term with me; perhaps Michael Drake from Master IT? The term Entrepreneurial Fatigue describes MSPs who launched their businesses about five years ago and figured they’d be rich by now. But they’re not. So some of those MSPs may ultimately punt on the market in the next few months.

The Cloud: I know, we’re all tired of cloud talk. But you ain’t heard nothing yet. During the N-able Partner Summit, ETG CEO Mike Jones was the one guy in the room who had the nerve to ask Microsoft’s cloud channel chief why MSPs should trust the software giant with customer names and contact information. When the session was over, several MSPs privately told me they had the same question on their minds.

Coopetition: Maturing software markets always generate so-called coopetition — cooperation and competition between industry leaders. Examples include IBM, Microsoft, Oracle and SAP, which cooperate on some fronts but compete on others. That trend, as expected, is repeating itself in the MSP software market. Examples include the ConnectWise cooperating with a range of RMM (remote monitoring and management) software companies, even as ConnectWise Capital invests in RMM provider Labtech Software.

Sometimes, Monitoring Isn’t Enough: Plenty of RMM tools can now managed cloud services. That’s good news. But remote monitoring certainly didn’t help much when Microsoft’s BPOS cloud went dark multiple times in recent weeks. Simply put, remote monitoring isn’t enough of a value add when the MSP has no real power to keep a vendor’s cloud online.

Free (With Time Limits): Already, several MSP software providers apparently are looking to partner up and offer customers free subscriptions that fully function but expire after a certain time period. The offer will require one piece of paid software, and one piece of free subscription software. Anyone willing to go on the record? I’m all ears…

MSPs Choose Sides: As Microsoft transforms BPOS into Office 365, MSPs will choose sides. Some folks truly are sold on BPOS. But some MSPs say Microsoft’s BPOS and Office 365 billing strategy remains a non-starter for them. Sometimes I wonder if the media is sensationalizing the situation. But when I listened to MSPs’ BPOS billing concerns at N-able Partner Summit, I realize the fears are real. And I sense that hosted Microsoft partners like Intermedia and Rackspace may pick up thousands of Microsoft partners. Already, Intermedia claims to have the largest third-party installed base of Hosted Exchange licenses, and Rackpace claims to have 2 million paying SaaS email users.

The Best MSPs Will Succeed: Perhaps I’m guilty of drinking the managed services Kool-Aid. But I sincerely believe the best MSPs will succeed in the cloud age, because MSPs already understand recurring revenue business models. And a few vertical market MSPs will pull far, far ahead of the pack. Potential examples include HEIT (financial services) and ETG (health care).

Giants Engage MSPs: Microsoft is preparing Windows Intune (a SaaS-based remote management platform for Windows PCs); I hear Cisco is preparing an SMB management platform for unified communications; Hewlett-Packard Channel Chief Stephen DiFranco is mulling some managed services efforts; and Rackspace Channel Chief Robert Fuller is hanging out at MSP conferences. The giants are coming, the giants are coming.

Pricing Models: Small MSPs seem to be embracing per-user pricing models in order to have blanket prices for users who leverage multiple devices (PCs, notebooks, netbooks, smart phones, iPads). Large MSPs, however, seem to be embracing per-device pricing within data centers and other infrastructure-heavy settings. I’m over-simplifying the situation (but that’s what I do every day…).

MSPs Look Back to Get Ahead: During N-able Partner Summit, several MSPs mentioned that they’re starting to sell VoIP desktop phones and multi-function printers. The reason: IP phones and MFP printers deliver product revenues while setting the stage for recurring revenues like hosted VoIP and managed print services.