Well, it’s not just Office Supply and Print Service Resellers who are witnessing changes which pose both opportunities, and threats to their Status Quo. When Sycamore Partners the Private equity firm who owns Staples bought the office supply wholesaler Essendant - many office products re-sellers 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 buys DEX Imaging a mega copy/print dealer. It is safe to say in the last three months that Sycamore Partners with their holdings in Staples DEX Imaging and Essendant have changed the infrastructure of two channels.
Now, let's talk about the Managed IT Services re-seller space. We recently heard 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 who 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 the least bring up some questions to the MSP’s who are dependent on them.
1) Continuum, The world’s largest Master Service Provider. I believe it safe to say that they serve over 5,000 MSP on their platform. The question is, Should Managed IT Service Providers considered bringing their helpdesk in-house and seek alternative backend 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's could put together an un-disputed powerhouse of capabilities. So, another question is, who do they sell to? It must be evident to all logical thinking the return on investment would be a higher return if the same buyer bought both Continuum and ConnectWise. This buyer would then be in the position to deliver Managed IT Services to the SMB space globally. They would also be a position to filter out or expand the current partners on these platforms.
So, the thousands of MSP’s who outsource to these organizations may indeed find themselves outsourcing service to a competitive threat. Those that believe this un-probable should visit with the office supply resellers who are currently questioning their path after Sycamore Partners, Staples owners bought Essendant the wholesaler who 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, ConnectWise, and of course, I imagine very soon they will acquire a few more Mega Print Services dealers and likely will include IT service providers as well.
Amazon revenues in its B2B space are in excess of 10-Billion Dollars. Over half of that revenue was generated by third-party sellers who use Amazon Business to expand their customer reach. Amazon is also one of the largest cloud services providers in the world with over 33% of the market, and they are expected to have 71-Billion 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?
So, 2019 is turning into the year for the history books. The year the channel re-sellers’ 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 who 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 re-sellers 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 re-sellers once thought impossible will indeed become probable. Over the next couple of years, the advances in cloud services, A.I. technologies, innovative solutions, and the shifts in business’s processes will affect thousands of channel resellers.
What are some options in the PSA/RMM space and the Master Service Provider space?
The opportunities for PSA/RMM providers especially as the channel re-sellers continue delivering alternative services. An excellent example of this is the number 3 PSA/RMM tool Tigerpaw; they are 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 a much more accurate method for managing service labor cost against contract revenue, 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 MSP’s will seriously consider bringing their Helpdesk in-house and look for alternative backend solutions. MSP's 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 they focus on delivering the past to the future instead of delivering the future to the present.”
Hope to see you all at ITEX