Continuum: 'Smartsourcing' The Wave Of The MSP Future

Continuum CEO Michael George believes there is a paradigm shift taking place in the channel and he wants to make sure small IT businesses that want to succeed in the upheaval can make it.

George said in an opening keynote address at Continuum’s Navigate conference in Boston Monday that larger companies are coming into the space of managed services, and the sea change could wipe out smaller companies with competitors like Amazon and Google in the mix.

MSPs who want to profit will have to adopt to offering cloud in an efficient model and Continuum’s greatest suggestion is to go ’smartsourcing,’ a way of outsourcing services through the solution provider’s own platform so those in managed services can continue their focus on business.

[Related: Continuum Rolls Out New Programs To Help MSPs Support Customers]

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It's expected that there will be 28 million small businesses and 140 million devices in managed services by 2020, George said.

’No matter how you manage it, it’s enormous,’ he said. ’Managed services will grow to $241 billion in the next five years. … You’re looking at that and saying, ’It’s difficult for me to gain access to that market, to grab your slice of the pie.’’

Paraphrasing Jimmy Dean, George said MSPs won’t be able to ’change the direction of the wind, but you can adjust your sails to get to your destination.’

He touted the benefits of outsourcing services, noting cloud specialists earned an average annual salary of $132,000 in 2013. An IT generalist in that year earned on average more than $63,000. Factor in taxes and benefits, and the costs are too much for a small business to compete, he said, adding IT problems are episodic and don’t necessarily take place during the 8 a.m. to 6 p.m. workday.

George used Big Sur Technologies, a Tampa, Fla.-based MSP, as an example of where smartsourcing with Continuum has worked. Their full outsourced model brought in $5.3 million in revenue this year, up from $3.7 million in 2013, he said.

The CEO of the Boston-based managed services solutions specialist stressed MSPs must remain neutral on whether to offer cloud or on-premise services to customers.

Tom Blandford, CEO and owner of the MSP eTrepid in Hughesville, Md., said his company is looking into smartsourcing with Continuum. Following the presentation, he said George’s ideas spoke to him. Blandford noted his business nearly doubled last year with 47 percent of his business coming from recurring revenue.

’We haven’t been able to execute (smartsourcing) 100 percent because there are things that require boots on the ground,’ he said. ’We’ve been agile with ways we’ve crafted our service offerings. We chose a smaller market, geographically speaking, to be the bigger fish in the smaller pond.’

Raul Ramdayal, owner of Powerlink P.C. Technology in New York City, said his goal is to smartsource everything in his company.

’That’s less overhead,’ he said. ’We have about eight employees. We want to keep it that way, service everything and have our techs pretty much focusing on monitoring and outsource things like service decks.’

George made an analogy in his talk to the state of affairs in 2001 when China joined the World Trade Organization and in years following, hundreds of thousands of small businesses went under in the retail market. There were reportedly 2.6 million small retailers in 2001 that dwindled down to 1.4 million in the next five years, while Walmart rose to prominence along with other big-box stores.

He said similarly, the MSP market will undergo a dramatic change with giant competitors capitalizing on it. Smaller companies will have to rise up to triumph.

’The big guys are coming into this space. They’ve declared it, and when they do, it’s a dog-eat-dog world. The same phenomenon that happened to that small retail environment is happening in our industry today,’ George said. ’The big guys want the SMB market. It’s been the holy grail since the beginning of IT but it’s always been unattainable for them.’

MSPs are ’going to need a bigger boat,’ he said, referencing the movie "Jaws" and with Continuum they can weather the storm together.