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.
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