As the SMB and lower-Mid-Market Managed Services industry continues to expand and evolve, the advent of Master MSPs provides yet another potential path for MSPs to acquire the ability to scale.
In addition to, or instead of, driving for scale by buying a competitor or selling to one, an MSP may consider evaluating using a Master MSP to provide some of the benefits of those actions, as well as the potential benefits that are largely unique to the Master MSP model.
Where is Managed Services Going?
The Master MSPs of today each approach the market with different business cultures and value propositions, which is as it should be to best serve the market. More variations on the Master MSP theme are expected to be seen in the future.
There are perhaps 30,000 Solution Providers worldwide whose predominant business model is empirically Managed Services. After most of the current wave of consolidation has run its course, it's likely that there will still be 15,000 or so. Most will simply be larger and, if the past years’ trend continues, even more profitable.
The SMB MSP Channel
Today, small and medium businesses are ever-more reliant on ever-more complex technologies, and the strategic thinkers among them will seek out MSPs to fulfill these their IT planning, management, procurement and support needs.
In addition, most hardware and software vendors do not yet fully perceive the size the SMB MSP channel, which we believe to be about $50BB annually in product resale and services in the U.S. alone. As a result, Wall Street is also not yet fully aware of the SMB MSP industry.
Looking to Scale
The major vendors also do not yet fully appreciate the strong influence these MSPs exert on their customers’ choices of brands bought through the more traditional channels that vendors are familiar with. Over time, they will learn of this, and so too will their major investors in Wall Street. Whether grown by Private Equity or grown on their own, we expect to see publicly-traded SMB Managed Service Providers in the not too distant future.
To explore more about the state of SMB MSP organic growth, how a Master MSP may improve financial performance and more, download our new white paper, Address Challenges to Profitably Scale the SMB MSP Business Model, today!
By Gretchen Hoffman
By Gretchen Hoffman