Why MSPs Shouldn’t Fear the Cloud

The cloud remains a vexing challenge for MSPs. You’d think that as more and more IT solutions become cloud-enabled, MSPs would be tripping over themselves to market them.

Instead, many of you worry. According to CompTIA’s “Fifth Annual Trends in Managed Services” report, the cloud is the No. 1 issue that keeps MSPs up at night. Sixty-two percent of participants in theCompTIA study cited cloud as their primary source of worry, followed by customer demand (57 percent), margin erosion (53 percent) and customer acquisition costs (52 percent).

Looking back 10 years, as the cloud started to gain traction, you might have predicted MSPs would happily embrace cloud services, seeing them as a rich new source of business opportunity. Cloud services, after all, should be a natural extension of the managed services model.

But as so often has happened in the IT channel, providers look at potential new opportunities with suspicion. There’s always concern that customers won’t need providers anymore if they can just procure the services themselves. This likely explains why MSPs’ second biggest fear is customer demand; the two go hand in hand.

Trepidation over being excluded from the supply chain has always been a concern for channel partners. It was common during the PC era. In fairness, these fears often were justifiable, considering vendors occasionally would attempt direct-selling strategies that didn’t always work out.

Even when the managed services model itself was introduced, some feared RMM vendors might bypass the channel and deal directly with the customer. And while some direct managed services relationships exist, what we’ve seen is more often than not managed services vendors recognize the value of working with partners to attain better coverage.

Vendors Need You

It has always been the case that vendors cannot do it all. Vendors are good at developing product and creating brand awareness, but their ability to reach thousands of customers of all shapes and sizes is limited. That’s why MSPs exist, and that’s why the channel remains vibrant.

Vendors especially struggle to reach the smallest of customers, which explains why the largest demographic in the MSP community consists of companies with less than $1 million in revenue. These MSPs tend to focus on SMB customers and individual departments inside large companies.

It’s true that remote capabilities make it easier for vendors to reach even small customers, but a vendor would need massive marketing resources to attract enough customers to its product. That’s something Google, Amazon and Microsoft can pull off, but not most vendors. It still comes down to a channel partner to bring business to a vendor, which is why smart vendors focus on recruiting and retaining partners rather than put all their marketing efforts into reaching end customers.

The cloud doesn’t change that. Sure, a few vendors inevitably will continue to make direct plays, and some will succeed. As an MSP, forget about those vendors. Work with the ones that recognize your value and realize the surest path to growth is through the channel. Going forward, the cloud is likely the biggest source of opportunity for MSPS.