MSP market may thrive in a downward economy

The managed services industry could further expand if the U.S. faces another major economic downturn, according to the CEO of MSP software firm NinjaRMM; more news from the week.

As fears of a recession grow amid the COVID-19 fallout, channel industry watchers are speculating on how the MSP market might fare in a downward economy.

According to Sal Sferlazza, CEO of NinjaRMM, a provider of remote monitoring and management software for MSPs, the MSP market could remain strong -- if not see a boost -- if the U.S. economy collapses. The MSP market could thrive in a similar way as it did during the 2007-2009 recession.

"This is something that occupies a lot these days, thinking about that timeframe, because there is a high chance we could go into a full recession," Sferlazza said.

Sal SferlazzaSal Sferlazza

Sferlazza previously served as CTO at PacketTrap Networks, a monitoring software vendor. During the recession, PacketTrap observed MSPs evolve into a distinct category of IT service provider as cash-strapped SMBs increasingly turned to MSPs to augment or replace the IT function in their organizations. PacketTrap pivoted from the corporate IT industry to the MSP market before being acquired by Quest Software in 2009.

"We saw the [economic] collapse, and we saw companies like Kaseya [rapidly grow]. Why did they grow so fast? It is because the MSP market exploded," he said. "[The recession] essentially changed the MSP space forever."

If a new recession constrains customers' IT budgets, many organizations will again look for support from outside organizations such as MSPs to act as an elastic labor force and help lower operational expenditure, he said. Companies that wind up having larger IT budgets due to the expansion of their remote workforces will also benefit from MSPs for help with endpoint management.

"I think the MSP industry could potentially get much bigger," he said.

The end of break/fix?

In the initial stages of COVID-19 containment efforts, MSPs have been handling a wave of customers abruptly expanding remote work technologies and transitioning to remote workforces. Sferlazza said this trend may be further pressure channel partners to abandon the break/fix model of providing IT support.

For customers, break/fix services, which generally function on a time-and-material basis, doesn't make as much economic sense as contracting a service provider under a service-level agreement (SLA), he said. While MSPs typically provide services under SLAs, many have continued to offer break/fix. For example, an MSP may cover have a certain number of customers' endpoints on an SLA and provide break/fix services for a subset of those nodes. But this practice could be unsustainable under the current circumstances.

"It is going to be too costly for those customers to stay in a break/fix model. Ultimately, they might just say, 'Roll me over into an SLA and just take care of me,'" Sferlazza said. 

Other news

  • Perficient Inc., a digital consultancy based in St. Louis, has acquired Catalyst Networks Inc., which also provides digital consulting services. Catalyst Networks, a $13 million Georgia company that operates under the Brainjocks brand, specializes in the Sitecore platform. In a related transaction, Perficient agreed to acquire Brainjocks Europe. Perficient said the Brainjocks deal will provide deeper Sitecore capabilities in web and content management platform development and strengthen its presence in the Atlanta market. Brainjocks will also add about 80 professionals to Perficient's roster, including 30 people in Eastern Europe.
  • InterVision, an IT service provider based in Santa Clara, Calif., rolled out a managed cloud service that builds upon AWS Managed Services. The offering, branded AWS Managed Services by InterVision, aims to help enterprise IT customers speed up cloud adoption, cut costs and mitigate security and compliance risk, according to the company.
  • Cisco is encouraging channel partners to look into Ngena, a cloud platform that offers SD-WAN as a service. In a blog post this week, Cisco said service providers can "partner with Ngena for faster design and implementation" and the ability to tap a scalable portfolio of offerings based on Cisco SD-WAN products. Cisco is a Ngena technology partner. Ngena is based in Frankfurt, Germany.
  • D&H Distributing Co., a distributor based in Harrisburg, Pa., is creating a remote student/teacher bundle as part of a strategy to help organizations transition to work-at-home environments in light of COVID-19. The company has established a Mini Task Force to develop such offerings, which will also include a telemedicine bundle.
  • IT automation vendor Atera enhanced its software's capabilities for deploying remote workforces. The new capabilities come through an integration with Splashtop's remote access software, Atera said.
  • Anexinet Corp, a hybrid cloud solutions provider based in Philadelphia, is working with Sloane Automotive Group on a cloud migration project. The initiative will move the car dealership off a Citrix on-premises environment, migrating six locations and 600 employees to Microsoft Azure and Office 365.
  • Technology services firm Marco introduced a partner program for reselling its managed IT services. Under the program, certified partners can access Marco's training specialists and proposal team, the company said.
  • Resolve Systems, an IT automation and AIOps vendor, entered a partnership with Prodapt, an MSP and consulting firm. Channel partners are showing increased interest in AIOps.

Market Share is a news roundup published every Friday.

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