Blog | October 29, 2012

What Hurricane Sandy Is About To Do For MSPs And The Cloud

By Jay McCall

I just got back from N-able's Partner Conference, which was held in Montreal last week. One of the conference highlights for me was CEO Gavin Garbutt's keynote speech. He shared the results from N-able's extensive research conducted earlier this year, involving feedback from 1,800 IT service providers throughout the United States and Canada. Following are a few points that got my attention. 

Nearly every channel company considers itself a managed services provider, yet upon further examination, the stats reveal a different reality. Of the 1,800 "MSPs," here is the average breakdown of their businesses:
■ only 6% of their customers are on a flat-fee, monthly recurring revenue program
■ 12% of their customers are on a proactive contract that could entail some form of remote monitoring, but still incorporates time and labor billing into the contract, causing the monthly fee to fluctuate.
■ 82% of the MSPs' customers are entirely break-fix!
■ Each channel company averages 200 customers. The average size of the end customer is 32 seats, 2.5 servers, and 2 network devices.

After seeing those stats and hearing Garbutt's presentation, it was very apparent to me that the channel is still in the early adoption/transition stages of managed services. That's why CompTIA's research stat, predicting that managed IT services for SMBs will grow from $7 billion in 2011 to $12 billion by 2015, seems very realistic.

As I write this, I can't help but wonder how it translates to IT solutions/service providers selling cloud services. Many channel companies claim to back up their clients' data to the cloud and boast about the end of downtime. As Hurricane Sandy picks up speed and the Eastern and Mid-Atlantic states prepare for the impending damage and power outages, it will be interesting to see how well the cloud -- and everything that's being billed as cloud -- holds up. I have a feeling we're going to hear some horror stories about so-called cloud services that are revealed to be nothing more than servers sitting in unprotected facilities with no failover features. On the flip side, if your customers' data is set up in true co-location centers with built-in power redundancy and automatic failover, this will be your time to shine.

For those of you with break-fix-only customers, situations like the one we now find ourselves are the perfect opportunity to highlight the benefits of proactive remote monitoring and cloud-based business continuity services. And, don't forget the most important part of the equation -- "all wrapped into a managed services plan with a predictable, monthly flat fee."

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