In CompTIA's 2016 MSP study, the take-away is that MSPs expect to make more revenue, but they don't know how that will be. "Their optimism is countered by continuing worries about their role in a market increasingly dominated by cloud computing solutions and by a persistent problem with employee retention," reports the CompTIA press release.
"But bullishness on future business is tempered by worries about margin erosion. Just over half of the firms cite margin erosion as a factor that keeps them awake at night." Every sector of telecom and IT is seeing price pressure. Every sector has a couple of giants that control the lion's share.
Google, Amazon, Microsoft and Rackspace are the computing giants, but traditional MSP vendors like Cisco and Microsoft have affected MSP business models. Carolyn April, senior director, industry analysis, CompTIA says, "Naturally occurring market commoditization accounts for a portion of slimming margins, but some of the blame also falls on MSPs themselves, many of whom continue to compete with one another solely on pricing."
In an interview for Ramblings, Host.Net's Lenny Chesal remarked, "The world we see requires a lot more hand-holding, problem solving, and out-of-the-box thinking. We're really taking advantage of that, and going forward we are really focused on an open mentality toward solving problems, bringing in more, stickier solutions that aren't pure infrastructure." Creativity, Solution Selling, Out of the Box Thinking - and other cliches are actually needed today. Not just by MSPs either. CLECs, ITSPs, VARs, Agents are all competing in a different world. However, they are using old models to do that with to their detriment.
My favorite quote: "Topping the list of things that keep MSPs awake at night is cloud computing, cited by 62 percent of companies." The hottest sector that they used to own and could continue to own, but they think that price will beat them. All about Value and service.