2 0 1 0

OwnWebNow
8 Comments

Last week I recorded a SPAM Show podcast with my buddies Erick and Karl about the exciting stuff that 2010 will bring. This has become a tradition of sorts, and we’ve generally been right (hey, we’re still in business) about what’s coming down the pipe. If you aren’t following the SPAM Show, you should – it’s available in the OWN Partner Portal and from our Facebook fan page (you must be a fan in order to download it).

But on to 2010, right? For the first time ever, my prediction is not just something I’m making up and hoping I’m right: I’m actually betting a significant amount of money and 2009 efforts on it. I also believe that the big change we’ve started to see in 2009 is not a short term economic factor but just the start of the extinction event I’ve privately called “Vladville 2012” – hey even if you don’t like what I’m saying the Mayans predicted it centuries ago 🙂

2 0 1 0 – Beginning of The End

In 2009 we saw people sink expensive projects, shelf long term licensing agreements and outright refuse to commit to anything complex or drawn out.

Several factors played a role in this: recession, cash flow challenges, global competition, alternatives and substitutes, aggressive cost cutting, etc. Which factor was the biggest or most prevalent is a discussion of it’s own, the bottom line is that the client expectations have changed and you won’t get 2007 conditions back again.

What this means for the MSP industry is that we’re now at the beginning of the end of businesses that were built on delivering an SLA on top of the on-premise infrastructure alone because value is harder to justify in light of the availability of alternatives and lowered costs.

One question has been asked more than any other in 2009: Can we live without it?

For many, particularly large, companies the answer has been a resounding yes and the tangled web of licensing, infrastructure and legacy solutions got cut. This extended beyond just computer solutions and applied to everything corporate: including human resources.

As the fat get’s trimmed, the realization that fat is actually your margins (what keeps you profitable) was a painful sight for many businesses in 2009. Time will tell if this was a learning lesson or just a part of my hypothesis.

Meanwhile, in 2010..

We will see massive consolidation, from the bottom up. Typically, consolidation is from bigger fish eating smaller fish. In 2010, I see it going the other way.

In 2009, we saw the extinction of the shady businesses I’ve spotlighted for years. No need to speak about them anymore because they no longer exist. People that never were a solid business to begin with are now gone.

So now we’re looking at solid businesses. Speaking from experience here too. Trying to hit a million dollar revenue with a handful of employees is difficult. When at the end of the year you look at your low six or even five figure take, after all the hassle and sacrifices, the 9-5 life at $50,000 with benefits starts to look like a pretty good deal.

Don’t lie to yourself, we’ve all been there. And truth is, we feel that pain no matter how much higher revenue goals may be.

In 2010, I believe many of the larger MSPs will be taking up smaller MSPs for the benefit of having a seasoned veteran on their staff.

It is an inversion of the MSP pyramid (extremely business savvy personnel at the thin top with a wide base of lower cost technicians and helpdesk staff at the bottom) – changing to a wider assortment of business people on the top with very few or completely nonexistent technical staff (mostly outsourced) on the bottom.

As for my other predictions, all you’ve got to look at is our roadmap with ExchangeDefender and Own Web Now. The future is very bright but one thing remains: you have to fight for success, it won’t just happen.

8 Responses to 2 0 1 0

  1. Chris Knight says:

    You only have to look at the Japanese economy during the 90s to see what’s coming up over the next few years.

    Your ELE timeframe is probably on the money if the perception of short term economic downturn becomes the norm.

    As for MSPs – I think we’ll see consolidation along the lines of ISP consolidation 10 years ago. When the same product/service is being provided by multiple players with not much in the way of differentiation or – more importantly – a convoluted method of comparing value propositions, then the race to the bottom based on price will drive the consolidation to a few large players. Totally with you on the acquisition for talented staff.

    Roll on 2010!

  2. Philip Elder says:

    This conversation ties into one I had with one of our local suppliers this week. The JoAT has died.

    Pingback: http://blog.mpecsinc.ca/2009/12/jack-of-all-trades-and-master-of-none.html

    Philip

  3. Andy Trish says:

    I’m not sure some of the smaller MSPs actually would be willing to be swallowed up to be honest. I am aware of some of the larger MSPs in the UK and no-one wants them near them to work for or with.

    Yes they have money for buyouts but what these people really need to understand is bigger doesn’t neccesarily mean better so the SMB customer may not want to stay.

    I’m like many other smaller MSPs, I do it because my customer is valuable to me and we have personal relationships. It’s great to see them succeed when you pointed them in the right direction with IT and sometimes no amount of money can take that place.

    Working for yourself matters to a lot of people. The ability to take control of your own destiny.

    2010 is going to be a major push forward for me and I’ve been pushing really hard in 2009. With the right partners focused on the right solutions we can all make a difference no matter how big or small we are.

    As for larger companies spending less, they probably will for a while. over the last few days we have installed Exchange 2010, OCS, Live Meeting and we’ll have other nice software to play with early on in January and once these companies see the features that can save them time and resources they will want it so we are having it ready to show them. It doesn’t need to be about saving budget, it needs to be about getting the resources that will take your business to the next level, or at least get it out of the level it was in 2009.

    Shady businesses will always be around Vlad, it’s human nature so if you think they are forgotten think again, no doubt you’ll be blogging in 2010 about someone who shouldn’t be trading.

    2010 the year of the cloud as some predict? I don’t think so, certainly not in my area. It’s not about how loud you shout and CLOUD CLOUD CLOUD, it’s about getting the software and the infrastructure ready to cope, and it’s just not there yet.

  4. vlad says:

    @ Andy,

    You’re entitled to your opinion. It’s one I’ve been hearing for years and every year I hear it a little less because people that claim the _insert solution here_ isn’t ready end up getting wiped out by it slowly. First it was Windows NT (Novell guys), then it was Windows Server Enterprise/Standard (big server guys getting it handed to them by SBS), then SBS 2003 by 2007 and hosting.

    Gotta stay on the edge and look where the market as a whole is going.

    -Vlad

  5. Andy Trish says:

    I hear what you are saying Vlad and agree that certain products are ideally situated right now for hosting, some though just aren’t ready.

    unfortunately some of the products are less than adequate for businesses and as it currently stands ADSL, Cable, fast connections are not global or as reliable as SMB’s need to have faith in it. It will come with time I do agree and then changes will be faster than we think.

    I’m not writing it off but of the 1000 customers I have no-one has even asked me about BPOS, hosted exchange or any other hosted service that I havent approached them about (I do offer offsite backup and email filtering – ideal products for hosting along with Live Meeting)

    I can’t see MSP’s being wiped out for a long time, if we weren’t up for change we would still be recommending old stuff and most MSP’s now look at the future not the past.

    In the case of your products Vlad, I can’t and won’t argue. You have got it right. I along with many others admire what you’ve done and you’ve beat some of the big boys to it.

    In my case I do on premise with most of the stuff I sell and after 5 years I’ve got 23 staff and still expanding, I think I’m doing something right too, so does my accountant.

    There is always going to be plenty of work out there for all of us, playing smart is by keeping the profitable customers happy.

    Thanks for the reply Vlad, it’s good to have a sensible discussion but I think only time will tell. I wish you every success in 2010.

    Andy

  6. vlad says:

    I couldn’t have said it better myself.

    We still benefit a lot from people that do on premise stuff – I’ll give you a call, I’d love to work with you and help drag you into the cloud 🙂

    Wish you a Happy and Profitable 2010.

    -Vlad

  7. Adam Randall says:

    I agree completely with this, we are behind by a few years in Australia however once fast/cheap broadband is available here there will be no need for servers and other complex equipment on site anymore.

    Technical ability is becoming less of a requirement which is why anyone can get in and fix computers/servers these days.

    I would say in 5 years time, low level computer techs and the army of MS certified server consultants will disappear the same way TV technicians disappeared.

    Its a hard time and we are in a shrinking market, its only going to get tougher for traditional MSP’s

    Its sounds dumb but I think I am going to take what I have learnt in the MSP business & cross breed it with another profession such as accounting or bookkeeping to suplement the decreasing MSP side because they are always going to be needed.

    All sounds depressing even though for us the MSP side is still growing & we will likely see strong growth next year. This has more to do with maturing in our sales & marketing than anything else.

  8. Naimesh R. Shah says:

    I think I have to agree with Vlad on the general course of this industry. It can be an ugly truth for many including me, but things are headed that way. Lots of Line of Business (LOB) applications have already or are in the process of moving to the cloud. LOBs for verticals with highly complex I.T. needs and internal business processes like Health and Insurance are also now making their way to the cloud. Not all industries are ready yet, but many of them will soon be if the trend continues. And it will. The current economic climate is forcing businesses to run leaner and technologies now can meet this new demand.

    So what will MSPs do in about 3-5 years when most servers are in the cloud? Most I said. Atleast more than there are right now. Could it be possible that an SMB has NO servers onsite? Yaeeks.. Where will we make our money? Workstations? hmm.. They’re getting to fairly simple to maintain. And cost wise it is not that big of a deal if some need to be replaced. Security? Well, kinda. But not so hot when the main infrastructure is sitting elsewhere. Perplexing situation indeed.

    I think there is still some time. Less than we would like. 3 to 5 years I am guessing. Possibly more in many areas in the US. I don’t know if Vlad will concur. But at this point I see 2010 – 2011 being mostly about 2 things.

    1. Client Acquisition: Bigger, Faster, much more Agressive. Like Vlad said, We’ll have to fight hard.
    2. Creating great competetive advatange to facilitate Client retention after 2012 or cashing in on your exit strategy

    Everything is moving at warp speed. Technology is in Hyper Warp. The fast and agile ones tend to reap the benefits. But it is a lot easier said than done.

    The Mantra after 2012 I think is TAAS. I think some companies are already getting their hands dirty with this. Phew!! My head’s spinning now.

    My 2 Cents 🙂

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