Companies at the enterprise level spent the 1990s and early 2000s pouring billions of dollars into IT infrastructure. From building out networks to automating manufacturing plants, the Fortune 5000 built out giant in-house IT teams to build the foundations of digitally transformed business.
Now, it’s the SMB space’s turn.
Research and analysis firm International Data Corporation (IDC) forecasts that total IT spending by small and medium-size businesses (SMBs) will exceed $676 billion in 2021. For Fred Voccola, CEO of business software solutions provider Kaseya, that means huge opportunity for the channel.
Voccola says just eight or nine years ago, it would have taken a huge conglomerate like Citibank hundreds of people to figure out how to provide the same sort of automated solutions and applications that a small dental office or law firm can today, such as text reminders or targeted discount programs designed to increase customer base with certain demographics.
“The difference is that [these small businesses] don’t have an IT department,” Voccola says. “[They have] an MSP.”
The beautiful thing about the SMB opportunity to Voccola is that the market is so large and diverse that there’s no end to the ways MSPs can build a successful practice. Not long ago, the channel looked a lot more homogenous than it does today. At their core, most resellers operated on similar business models with similar business development strategies and similar offerings. But there’s no “one size fits all” playbook for MSPs today.
So how, as Voccola puts it, is an MSP supposed to grow their business and take over the world? One path is to go vertical and begin building business applications, websites, lead-generation platforms and other technologies that enable traditional partners to compete with digital agencies, which are moving in on MSPs’ turf by offering their own IT infrastructure solutions. Over the next five years, Voccola predicts, we’ll see a lot of consolidation of local marketing and digital agencies with local service providers.
Then there are the SMBs that have a small in-house IT team to handle those business applications and vertical-specific applications, but lack the resources to manage the business’ infrastructure demands.
“We use the term project source,” says Voccola. “It’s very specific IT offerings that the larger small businesses are looking to outsource away from their own IT department. They’re not getting rid of their IT department. They’re just looking to push that off to a service provider.”
The SMB IT potential is so huge that it’s attracting an influx of institutional, private equity money as investment firms snap up specialized MSPs to form larger service provider “roll-ups” that can offer customers comprehensive solutions.
“There’s going to be a lot of dynamic change in a market that’s growing as rapidly as the MSP market is growing. The driver behind that is the SMB increase in spend. It’s going to be a lot of fun for the next couple of years.