Techaisle Blog

In a word, the most significant potential disruption factor for the managed services market and channel partners is still cloud. Techaisle data shows that 68% of VARs are offering managed services to their SMB customers but only 46%, that is, less than one-third (31%) of all SMB-focused VARs have been very successful in achieving consistent growth and profitability within managed services. On the flip-side, 83% SMB-focused MSPs have become very successful in their managed services business model. But the MSPs have not achieved the same success in cloud. Only 63% of MSPs are currently offering cloud and although 72% of them have achieved cloud success, it is still, only 45% of all SMB-focused MSPs, slightly less than half of the managed services success. In fact, when extended, data shows that VARs are still caught in a spaghetti junction, they are neither achieving great success in cloud nor in managed services. In the case of MSPs, the overwhelming vendor forces are proverbially narrowing the banks of the river with over capacity.

The success in SMB mobility-focused business model is even lower than cloud and managed services.

Operational efficiency, employee empowerment, customer intimacy and product innovation form the four pillars of digital transformation within US midmarket (100-999 employees) firms. Techaisle’s unique study, US Midmarket Digital Transformation Trends, provides readers with statistically-significant and current data on digital transformation. A sample of 876, outstanding for a single country, midmarket-specific research initiative, considered accurate at a 95% confidence level (19 times of 20) at a margin of error of +/- 3.3%. The study reveals details about the four foundational pillars of digital transformation along with drivers, motivations, challenges, inhibitors, and business outcomes.

The first step in understanding the potential of a technology trend is identifying the extent to which technology aligns with or supports executive ‘care-abouts’: technologies that connect directly to C-level objectives are most likely to obtain corporate support. Taken together, the size/robustness of the data makes it the most reliable source of information on digitalization adoption in the US midmarket (100-999 employees).

The Cloud channel partners are operating between the raindrops. Techaisle’s channel survey trend data clearly shows that the sources of competition and channel conflicts for cloud business is increasing thereby creating untenable conditions for many channel partners. From 2013 to 2017, the percent of channel partners experiencing competition from vendors has gone up by 15 percent whereas from distributors it has increased by 55 percent.

At a high level there are three types of channel conflict:

1. Competition between the vendor and its channel partners,
2. Competition between distributors and channel partners, and
3. Competition between similar types of channel partners (e.g., VAR/VAR).

Figure below shows the trend data from 2013 to 2017.

US and European SMB buyers believe that managed services contribute to both cost savings and to business growth. As the figures below show, managed services is seen as helping buyers to achieve lower IT costs, greater control over IT environments, and higher performance with less IT downtime; managed services also helps businesses to “maintain a lean business environment” and to provide predictable performance, user experience and cost. On the growth side of the equation, superior (relative to internal options) MSP responsiveness to IT problems is seen as a means of achieving better productivity; MSPs are also seen as helping SMBs to maintain focus on core business competency, staying abreast of technology changes and providing support for business continuity and disaster recovery.

54% of US SMBs and 68% of Europe SMBs say that managed services help improve bottom-line, contribute to profitability and reduce costs. On the flip side, 46% and 32% respectively state that they view and have experienced managed services as a technology contributing to growth and revenue. A more detailed look at the data underlying this summary analysis illustrates the many benefits that SMBs obtain from managed services (and MSPs).