That’s the big question facing a large number of independent MSPs right now. A question that only you, as the owner of an independent MSP, can answer. After all, your choice depends entirely on your personal ambitions and beliefs. The meaning you want to make with your company and its services. Want to know more about this? Then read also: Make Meaning – what meaning do you have?
But that is entirely from your own point of view. What are the strengths and weaknesses of independent living? And what opportunities and threats in the market affect such a choice? Looking at the market and your own business in this way can make it easier to make the right choice for you. And you can see if you want to become part of parties like Arcus IT, Broad Horizon, Hello, Interstellar, Sentia, Team.Blue, Techone, TWS or just stay your own course.
Market consolidation creates a small group of parties that determine much of the direction of the market. If you want to know more about this, read our article: The provider market is consolidating, next steps? These types of large parties will claim a position in the market mainly through branding and brand perception. Where this will be targeted to appeal to a large portion of the market.
For independent MSPs, agility is a big advantage. This allows you to better adapt to the specific changing needs from a specific target audience. So by choosing to specialise in service, target market, region, technology or a combination of these, you can create an advantageous position as an independent party.
And with choosing a specialisation, you should not stop at your sales and marketing, but also develop your portfolio and technology more specialised. For example, as a smaller and medium-sized MSP, you can position yourself as an industry specialist, with specific industry solutions. The challenger to the larger providers in that particular market. Here you can use a very targeted commercial approach.
Market consolidation gives the new major players a strong position with suppliers. Above all, this will be of great financial benefit to the consolidated parties. This benefit will be used in two ways, namely as an additional profit margin for shareholders. And second as a competitive tool to lower the selling price in the market. And thereby increase market share.
As an independent party, it is currently almost impossible to compete with price against the major parties. This is because, as described above, the consolidated parties use precisely the financial advantage to improve the competitive position. So currently, as an independent party, you will have to provide a premium service. That way, your customer remains willing to pay extra for the service.
With the current national consolidation and migration abroad, it is very likely that within 5 to 10 years very large European players will emerge in the MSP market. These parties will serve a very large portion of the entire European market with their standardized services and products.
For small parties, the opportunity lies with speed. Among other things, the speed at which new technologies can be deployed. Given the current speed of development in the market, it is easier for smaller parties to appreciate the value of these new technologies and deploy them where the most value is also directly created. Especially companies that want to make a difference themselves with the deployment of new technologies can be better served by small, more specialised MSPs.
In the Cloud industry, the biggest threat is that a new technology will make current solutions obsolete. Here, such a technology may be fueled by the market’s current vendors, but it is also possible that it comes from currently completely unknown parties.
This threat applies to the entire market. Should this new technology be developed by the current vendors in the market, think Microsoft, Amazon, Dell, etc, the large consolidated parties will be at an advantage. Independent MSPs, however, are much closer to their customer, and therefore the ultimate market. Such new development often comes from unknown parties. Independent MSPs are more likely to be informed of such new developments because of their personal approach. This allows you, as an independent party, to turn a threat into an opportunity.
As already indicated, your own ambition is an important driver of your choice. But through the above points, we have provided insight that there are always two sides to a medal. So does the market consolidation medal.
By joining the larger parties, you lose some control, but gain volume and funding. Joining a party that is becoming one of the leading service providers nationally, with possibly even international developments, can be very attractive.
As an independent MSP, you and your team can be very valuable to a specific market or group of clients. These clients will greatly appreciate your approach and expertise.
Unfortunately, no single answer, but plenty of room for both ideas. Based on our expertise, we therefore believe that both the larger parties and the independent MSP parties must develop. A clear, recognisable sound, with clear added value for their customers and audiences.
For large parties, it is mainly about a clear, recognizable sound with added value for a large part of the entire market. And for more specialized parties, on the contrary, a clear, recognisable sound with added value for a specific target group. There is room in the market for both and both have a right to exist.
As Force21, we help service providers primarily with (re)positioning, go-to-market and then execution in portfolio development, marketing and sales.