Analyst Q&A: Managed Services ‘Came of Age’ in 2018

managed services

… an increased comfort level among both large and small customers in outsourcing key service functions to MSPs. Security, disaster recovery and telephony/collaboration are among the areas with strong customer adoption, especially in the SMB and midmarket segments. SMBs and midmarket customers typically don’t have the specialized resources to dedicate to robust cyber or DR practices. Those are also the businesses most vulnerable to the negative impact of incidents should they occur. MSPs with multiple services in their portfolios are making themselves more relevant to their client base[s] and ensuring a continued seat at the table.

PartnerPath's Diane Krakora

PartnerPath’s Diane Krakora

Diane Krakora: A trend toward more pre-sales services – consulting, assessments, advice, your own IP – services that pull product sales, and the development of vertical specialties in these services that help to differentiate you from your competitors.
Michael Diamond: There’s an amalgamation of trends or key intelligence topics we monitor, but the one that’s top-of-mind for “everyone” is how is Amazon’s encroachment on the B2B channel going impact resellers, distributors, retailers, vertical markets, etc. For example, Amazon’s real beachhead in the IT channel besides cloud is the office supplies market targeting Staples, Office Depot, dealers, etc. We’ve seen countermeasures from the notable retailers (e.g., Office Depot buying CompuCom and Staples recently acquired two-tier distributor Essendant) to try and counterbalance the threat but the key question is will those movements thwart the threat?

CP: Could you give us one prediction for the channel or business technology in general in 2019?

AH: A trend we at The 2112 Group see as key in 2019 is the rise of nontraditional channels as a new breed of partner. We also see that most vendors today are unprepared to engage effectively with these customer influencers. The rise of cloud, IoT and new platform vendor ecosystems, and the shift in conversations from technology to business outcomes, are bringing to the forefront non-technology-focused consulting organizations that haven’t typically been a part of the traditional chain of influence in technology buying decisions. The CPAs, law firms, marketing service organizations, HR consultants, and business process re-engineering firms that make up the “new breed” partners have significant sway with line-of-business owners within an enterprise and are increasingly providing advice on the technology necessary to bring about desired business outcomes. Effective engagement with this nontraditional channel requires rethinking partner programs, enablement, joint business-planning models and overall route-to-market strategies.
MD: I predict there will be continued merger and acquisition activity between B2C retail and the B2B market (e.g., resellers, ISVs, etc.) in their pursuit of creating defensible barriers to address the Amazon threat;

According to our panels, the U.S. B2B or indirect market has grown north of 9% from the first half of 2018 versus the first half of 2017, significantly outpacing U.S. GDP. Thus, I expect the channel to outperform the traditional retail market, which means the channel is more resilient than most believe.

From a technology perspective, as resellers begin to sell different cloud applications…

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