Update on MSP Shark Jumping

Little while ago after finishing a brutal summer of conferences and launch of Shockey Monkey I posed a question and opinion to my audience on whether or not the MSPs have jumped the shark. One of my awesome partners wrote a long email that I posted on Vladville because it was just remarkably well written. I decided to put together a survey on the subject just to get the idea of what everyone else is thinking.

To be clear: I don’t think the MSPs have much to worry about. MSPs on the other hand are very worried and with the consolidation, economy going further in the toilet and even global concerns (EU members defaulting, UK cutting half a million jobs) heading into the holiday season of typical inactivity – the fear out there is pretty thick as folks struggle to figure out a way to keep on growing.

I personally do not believe MSPs have jumped the shark… but I think the IT consultants and IT generalists, if they aren’t already working for a software/hardware vendor, are looking for real jobs. The cycle is similar in nature and exactly opposite in direction than the one we took 10 years ago – when massive layoffs and downsizing forced a lot of people who haven’t kept their skills up to go into the private sector either in small consulting firms or in business on their own. Now, nearly a decade later, with compressed margins and higher expenses, many are finding that 10 years of experience can fetch above $50-60,000 at a much lower level of frustration and effort.

We have to understand and accept the fact that every technological evolution is cyclical. When things are hot, many pursue the opportunity and exercise their options. The same is true in reverse – as technology becomes less complex (less profitable) the safety and perks of full time employment become more attractive.

Frankly, multiple things contributed to this:

1. Small business IT never quite recovered from the SPF (single point of failure) consultant problem we used to have. Too many bad apples made it excessively difficult for MSPs to sign profitable long term contracts because IT consultant experience was so bad.
2. Microsoft killed the channel. Then it started directly competing with it.
3. It’s just too damn easy.

Big problems are expensive to fix.

Small problems can be fixed by anyone.

Most small business IT Solution Providers manage to keep talented staff capable of fixing big problems by making a great margin on managing small problems. With the small stuff becoming free and too many people moving too slowly to adopt the cloud and grow their market share, things get difficult.

Hope:  I know this sounds like doom and gloom but real life is difficult. As a vendor though, I have better and better numbers to show every single month which proves that adaptive businesses are not just growing, but thriving.

Now, for your opinions..

Do you consider yourself to be a Managed Services Provider (MSP?)
91% Yes
3% Sort of; we’re getting there though!

What are your major concerns as an MSP?
55% Vendors going direct
12% Marketplace has too many “managed service providers”

What are your major opportunities as an MSP?
38% More clients to sell MSP services to
33% Selling more cloud services

What is your #1, sure thing, most certain area of marketing and sales in the coming year?
46% More clients to sell MSP services to
18% Selling more cloud services to

Health care as a $20 billion dollar opportunity?
31% Bullshit
28% Total bullshit
26% It’s there but I’m not making much money yet.

The numbers speak for themselves. The health care question was there for my amusement because I find the whole medical industry opportunity as laughable as the “government opportunity”. It’s for people who think they could sell casualty or E&O insurance to the mob. Yes, there is a ton of money but virtually all of it controlled by very few players and the remainder of it pure hype – as evidenced by the results most of which were padding attempts coming from IP address of a well known EMR vendor to the MSPs. Nice try.

One thing is for sure – the marketplace is getting crowded but people are more optimistic about competing.