It's not just office supply and print service resellers that are witnessing changes which pose opportunities and threats to their status quo. When Sycamore Partners - the private equity firm which owns Staples - bought the office supply wholesaler Essendant, many office products resellers became gravely ill knowing that their product's wholesaler was now owned by their competitor.
As the dust was settling on the Essendant deal, Staples bought DEX Imaging, a mega copy/print dealer. It is safe to say that in the last three months, Sycamore Partners, with its holdings in Staples DEX Imaging and Essendant, has changed the infrastructure of two channels.
Let's talk about the managed IT services reseller space. We recently heard that ConnectWise is the latest addition to Thoma Bravo's portfolio of 35 software/IT service companies. It seems they continue buying up the tools and services used by independent service providers which in turn use these products and services to deliver managed IT services to their end-user customers.
Here are three organizations owned by Thoma Bravo which should at least bring up some questions to the MSPs that are dependent on them.
1) Continuum The world's largest master service provider. I believe it serves over 5,000 MSPs on its platform. The question is, should managed IT service providers consider bringing their helpdesks in-house and seek alternative back-end support?
2) ConnectWise The world's largest PSA/RMM tool in the managed IT services space. The question is, what will Thoma Bravo do with ConnectWise?
3) SolarWinds/N-able Maybe the second-largest PSA/RMM tool in the managed IT services space. The question is, will SolarWinds/N-able be rolled into ConnectWise?
Thoma Bravo could put together an undisputed powerhouse of capabilities. So who do they sell to? It must be evident to all logical thinkers that the return on investment would be higher if the same buyer bought both Continuum and ConnectWise. This buyer would then be in a position to deliver managed IT services to the SMB space globally. They would also be in a position to filter out or expand the current partners on these platforms.
So the thousands of MSPs that outsource to these organizations may indeed find themselves outsourcing service to a competitive threat. Those that believe this is improbable should visit the office supply resellers currently questioning their path after Sycamore Partners, Staples' owner, bought Essendant; the wholesaler which sells them the products they sell to their end users.
Could Office Depot or Staples be the infrastructure that could benefit from ConnectWise and Continuum? After all, if Amazon is the end game for both Sycamore partners and Thoma Bravo, Staples would be an extremely diversified deliverable with Continuum and ConnectWise. And, of course, I imagine very soon they will acquire a few more mega print services dealers which will likely include IT service providers as well.
Amazon's revenues in its B2B space are in excess of $10bn. Over half of that revenue was generated by third-party sellers using Amazon Business to expand their customer reach. Amazon is also one of the largest cloud services providers in the world, with over 33 percent of the market, and they are expected to have $71bn in revenue by 2020. When Amazon is ready to complete its deliverable with the addition of SMB service capabilities, they would be very interested in Staples/DEX, Continuum, and ConnectWise. Wouldn't they? Will Amazon one day be the master service provider to the independent MSP?
This year is turning into one for the history books. The year the channel resellers' infrastructures were redefined. Soon there will be no borders between channels; office products, print services, IT services, and telephony services. Service providers will become conduits for massive enterprise delivery systems. Those organizations that have the processes to execute in the pull economy will prevail as they gather the needed support from those who understand the processes of the push economy.
All dealers and resellers must open their minds to what could be possible based on the realities of their deliverables along with the shifts in the market. There will be massive realignments in channel sales and what many resellers once thought impossible will indeed become probable. Over the next couple of years, the advances in cloud services, AI technologies, innovative solutions, and the shifts in business processes will affect thousands of channel resellers.
What are some options in the PSA/RMM space and the master service provider space?
The opportunities are ripe for PSA/RMM providers, especially as the channel resellers continue delivering alternative services. An excellent example of this is the number three PSA/RMM tool Tigerpaw; the only PSA tool designed for the managed IT services deliverable which includes an application for print service dealers. Tigerpaw's PSA/RMM is a much more beneficial system over the print service industry's legacy ERP.
Tigerpaw is providing dealers with a much more accurate method for managing service labor cost against contract revenue, with a built-in RMM tool, more efficient inventory controls, and even the ability to collect meters from nearly all print tracking software allowing dealers to manage meter activity. It will be interesting to see how Tigerpaw capitalizes on this and other opportunities as ConnectWise gets to know its siblings at Thoma Bravo.
Also, the master service provider space will surely ramp up to differentiate themselves. I expect that many MSPs will seriously consider bringing their helpdesk in-house and look for alternative back-end solutions. MSPs joining forces will allow for shared resources. So over the next couple years we should expect MSP roll-ups to gain in momentum.
2019 started only two months ago; there will be much more to come, and the one thing we should all agree on is this:
"A company becomes obsolete when it focuses on delivering the past to the future instead of delivering the future to the present."
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