It seems like I address this issue every few years: is managed services becoming a commodity? While this question was expected back in the early 2000s, having it repeated so frequently today is a little bizarre. So, let's get to it.
Managed Services Is NOT a Commodity
For as many years as I have been talking to MSPs, I always ask MSPs this question expecting someone to break. It never happens.
Me: "Is your MSP practice becoming a commodity?"
MSP: "No! It's one of the few areas of our business growing in revenue, customer satisfaction, and in margin."
So, if a fair number of MSPs do not believe managed services are a commodity, from where does this misconception come?
Managed Services Was Never Supposed to Succeed
In the mid-1990s, managed services and its close cousin application services (ASP) were viewed as temporary business models and never supposed to last. Managed services was supposed to be a temporary fling before moving on to another technological fad. Many in the analyst and press community shared this view, and probably helped it along. The pace with which new technology trends was progressing almost guaranteed managed services not staying around for very long.
A large number in the IT channel was heavily invested in managed services NOT succeeding, even if few would ever publicly admit to this.
Yes, you heard me right. Managed services was viewed as a direct threat to the status quo and challenged many existing business and political models within the IT channel. Everyone from hardware manufacturers, distributors, even the IT media was in on the game. Keep managed services from becoming mainstream...protect the VAR model.
Why? Simple. The VAR business model placed much of the control and power in the hands of the vendors. VARs were merely foot soldiers, taking vendor products and providing marketing, sales, and some integration services as value adds. Power resided with the vendor.
Managed Services Saved the IT Channel
Managed services was a disruptive business model. It changed the VAR from being a simple reseller of a product to the VAR actually selling a service of its own, separate from the hardware and software components. By delivering its own services, the reseller became less important, but not irrelevant. In fact, many MSPs will tell you they influence a lot more hardware and software purchasing decisions, beyond the hardware they actually sell through their business.
