How Will Vendor Consolidation Affect Your Managed Services Business?
GMS Live Expert / MSP Helpdesk
You see the quote in every press release, how the sale of an IT channel vendor won’t negatively impact its partners and other relationships. It’s the standard line created years ago by some long forgotten public relations expert who thought a few words would provide comfort to the greater business community. Of course, most people read through the lines and understand that anything said during the acquisition process comes with a major caveat: changes may occur after a full review of the “synergies” between the two organizations.
What does that mean for the managed services providers who use these suppliers’ tools and services to support their clients’ operations, as well as their own? For experienced MSPs, it validates a commonly accepted philosophy of proceeding with caution after an acquisition, vigilantly evaluating that vendor’s commitment to their partners’ businesses. After all, that check-and-balance goes both ways. Vendors frequently gauge the value of their partnerships and allocate marketing funds and other incentives accordingly.
Despite the well-intentioned assurances of a vendor’s channel team, most employees are not privy to the discussions and decisions that can have major implications on their partner program. They earn the trust of solution providers by focusing on their needs and acting as intermediaries with their employers, but strategy is often handled by those with a C-level title. And, in an era of venture capital and public investment, those executives often have to answer to higher powers themselves.
Those forces may have played a significant role in some of the latest happenings in the managed services space. In just the past six weeks, three of the most respected vendors have new owners:
- N-able: announced its acquisition by SolarWinds on May 24th
- Level Platforms: the press release on its purchase by AVG went out June 12th
- Kaseya: announced a major investment by Insight Venture Partners and the appointment of Yogesh Gupta as its new CEO and president
Each of these acquisitions resulted in a new management team, each significantly experienced at selling through both indirect and direct channels. While each news release contained statements intended to reinforce their commitment to the MSP community, it’s simply too early to assess the implications these transactions will have on their partners. For the benefit of their employees, investors and their reseller associates, let’s hope the changes will all be positive.
After all, businesses fail every day. Management teams may shift their focus from time to time (vendors have left the channel and gone direct) and yes, acquisitions can lead partner programs to go awry. There are no guarantees to prevent any of these circumstances, but most suppliers are more likely to enhance their programs than decimate alliances that have put millions of dollars in the bank.
Without knowing their vendors’ long-term strategies, how can providers position their businesses to avoid the negative effects of industry consolidation? For starters, every MSP should have a backup plan for replacing each of the key tools they use in their operations. Not necessarily an extensive write up of each option and their benefits, but a short list of prospective alternatives and contact information for their channel teams. After all, a number of things can happen to disrupt the supply of products or services from vendors.
The second recommendation is to have a beta project in place within your own organization or work with dual suppliers. Many MSPs use an alternate (secondary) cloud backup service to test its functionality, evaluate security measures and assess the value of its integrations. Others leverage two (or more) RMM solutions in their practice, often based on the specific system needs of their clients and the support levels they expect from the service provider. For example, MSPs may give deploy a more comprehensive monitoring tool for their “Gold Level” customers who contract for top-tier services, and use a more “cost-effective” solution to observe basic services. In the event they need to switch RMM vendors, they have an automatic backup in place to use until a suitable replacement can be installed. While the quantities required to obtain partner pricing make limit this approach, it’s a quicker way to rollout alternate solutions whenever needed.
The final suggestion is to remain diligent. MSPs have to watch for signs that their preferred vendors are wavering in their support, or making changes that will negatively impact their business. If something causes genuine concern, providers need to have a heart-to-heart discussion with their channel representatives and their managers. While most vendors deserve respect for their years of partner support, their channel providers merit the same consideration. A few personal assurances will typically go a lot further than a couple of supportive press release comments.