Score one for the channel

Now I don't usually mention companies by name but since this is already in the public record I don't think there is anything wrong with it. An Orange County, CA Superior Court judge recently chastised Cisco for its channel contracts and its practice of grabbing clients from channel partners. If you want to read the story here it is.

In all honesty, I cannot single out Cisco in all this because this is behavior exhibited by many vendors in the IT channel. At the heart of this issue (contract law is what is being discussed in the legal case) is how vendors and MSPs (i.e., the IT channel) interact with one another and how we are going to behave moving forward. What is very apparent to me is that the system, as we know it today, is broken and needs to be fixed.

Can it be fixed? Yes, I believe it can. I think that one of the biggest problems is the issue of field sales representatives who are pressured from their management to produce sales. This pressure almost always brings out the worst in people. I have heard first hand reports from MSPs who have had their clients "poached" by a vendor sales rep when the MSP was responsible for bringing the vendor into the relationship in the first place.

Vendor upper management must be solely responsible for the behavior of their sales reps. If sales people are pressured to produce direct sales (and the vendor is also trying to sell to the channel) this will produce an adverse result. As long as channel vendors have a direct sales approach that rewards those direct sales over the indirect we will have these types of problems.

Now, the Cisco issue brings up a question of equality. Do vendors view the channel as a bunch of stupid companies that don't know how to protect themselves? Probably. Do channel companies (i.e., MSPs) need to be more vocal when it comes to vendor abuses? Yes. This does not mean lawsuits should start increasing. Instead, I would like to see a more open and honest discussion about these issues so that future legal fights like this one can be prevented.

Keep this in mind. If the IT channel is fixed and channel vendors and MSPs can work in harmony, I do believe there is a lot more money to be made than by fighting one another.

No respect for the channel

I was contacted yet again today by a hardware vendor who wants me to buy managed services from them. Aside from the fact that they are calling me out of the blue and asking me to hand over the MSPAlliance IT infrastructure to them, I am incredulous that even after I told them we had a relationship with a MSP they are still persisting.

This is a perfect example of a company who does not respect the channel nor should be trusted with any form of IT management. My patience is wearing thin!

Lessons Learned from London

Last Friday's Managed Services Summit in London was a great event and I think the beginning of a very strong movement into Europe and abroad. One of the things that struck me was the universality of the managed services professional community.

Many of the members were from the UK (with a few from France, Ireland, and other regions). Despite this diversity of background, many of the views expressed by the MSPs were nearly identical to those in the United States and Canada. Many of the MSPs talked about the same difficulties in dealing with clients that their North American counterparts do. One of the similarities that I was particularly happy to hear was the overall optimism the UK and European members felt about managed services, even in the wake of our current economic problems. Despite the softening of product and large project revenue projections, most of the MSPs stated that their managed services led revenues were in fact increasing. This methodology of leading first with managed services, not surprisingly, has the tendency to increase the chance of other hardware and project services. Yet again, another trend that has been proven as true in other parts of the globe.

Legitimacy was another concern of the MSPs at the event. While the notion of managed services has already taken hold throughout the IT channel here, the end-user is still in need of education and reassurance when it comes to handing over their IT management to a MSP. At the conference we announced the first ever MSP from Ireland to pass the MSAP exam. This continued growth of the MSAP exam throughout the world will help spread the legitimacy of the managed services profession.

One of the happiest moments for me was having a new MSP say how thankful he was that the MSPAlliance held an event where he and his peers could exchange ideas and strengthen bonds between colleagues. To the UK and European MSPs I say, continue the great work you have begun!

More Good News for MSPs

I'm not going to stop writing this stuff folks so you'd just as well get used to it. Some people may say this is wishful thinking but if you examine the facts and observe what really is going on out there, I think you will come to the same conclusions I have. 

I was sent an email recently from one of our members claiming that while jobs are being lost in certain sectors of the market, the IT services sector is actually growing. This is very good news for MSPs. As businesses continue to worry about the economy and what the next election is going to bring, their natural tendency is to conserve resources and outsource non-core functions. This is managed services 101 here. 

The point is, I have heard some people in the IT services industry grumble about what is happening out there and while it is not good, it could be a lot worse. Keep your focus on the recurring managed services offerings (if you don't have any, you'd better start building some) and this economy will eventually turn around. 

They almost said managed services

This article is somewhat optimistic even if they never quite get around to saying the words "managed services". The point is, in a down economy, the more predictability and value you to your clients the more indispensable you will become.

Take hope!

Staples in the Managed Services Biz?

We've been expecting this for a while so nobody can be really surprised at this news but I would be interested in what all of you think about this.

Turns out that Staples, the office supply chain, will be getting into the IT services business. Now, at first glance, it looks like most of the services being offered are more of the low value services that are easy to deliver but not very high value or high profit. Even more curious, they are going to be offering 'on-site' tech services to the SMB market.

Now, at some point I would assume a lot of you will be saying, 'so what? We've been offering thes same servces for years.' I would agree with anyone who feels like this. However, it is worth considering how a company like Staples will help build the brand of managed services for the SMB market.

So, my question to you is what do you think of Staples as a managed service provider?

More Good News for MSPs

Many of your are sitting around waiting for the other economic shoe to drop. Perhaps if you are a VAR you have a good reason to be worried. However, even if you are a VAR, I thought this article might cheer some of you up.

Pyramid Research estimates that in 2009 the total network services (including managed network services) will reach close to $400 billion. Obviously, this number includes large telco services but I would guess that there is a sizeable amount of SMB and mid-market revenue to be obtained here as well. This represents a lot of potential business for MSPs. Just think of all those companies out there who desperately need a qualified MSP.

For MSPs, I cannot think of a more optimistic piece of news. Hope this cheers you up!

What should the MSPs do?

This is a great article about the pressure "resellers" are facing in our current economic situation. It underscores the importance of how MSPs have insulated themselves from many of these pressures by adding managed services revenues to their business.

It does beg the question, though, about whether most of you consider yourself resellers or service providers (as differentiated by delivering at least one service that you provide yourself, and do not resell)? What do you think?