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IT Channel Value Rises As Partners Respond To COVID-19: XChange Panel

‘In our area, for instance, IT was one of the first [industries] to go 'essential.' And we were allowed to continue even though the rest of the economy was shut down ... because we kept a lot of the economy going in the background,’ says Joe Ussia, CEO of Infinite IT Solutions.

Solution providers and managed service providers have found that their value--both in terms of their importance to customers and their company valuation--has increased during the COVID-19 coronavirus pandemic as clients view them as essential partners.

That conclusion, reached by a panel of MSPs who Wednesday met in a virtual XChange forum moderated by The Channel Company's Senior Vice President of Event Content and Strategy Robert DeMarzo (pictured, top center), stemmed from the participants' belief in the power of being ready to respond to clients' needs even in the case of a totally unexpected pandemic.

Pre-COVID, most customers probably saw their IT services providers as just another supplier or vendor, said Joe Ussia (pictured, top left), CEO of Infinite IT Solutions, a Concord, Ontario-based MSP and data center services provider.

[Related: 32 Free Data Storage Offerings To Help Reduce COVID-19 Impact]

"Other customers get it, and they treat you with high value," Ussia said. "But out of all the industries out there, MSPs for the most part have shown their value to the customers in a way that [customers will] now embrace them."

Coming out of the COVID-19 coronavirus pandemic, Ussia said he anticipates the IT channel will be deemed as essential services based on channel partners' demographics and geography.

"In our area, for instance, IT was one of the first [industries] to go 'essential,'" he said. "And we were allowed to continue even though the rest of the economy was shut down. And I say, rightfully so, because we kept a lot of the economy going in the background in the same way that our frontline workers were helping people that were ill."

And after the pandemic passes, IT channel partner valuations will be up, Ussia said.

"You'll be more highly valued by your customers, and much more strategic, which I think ends up meaning higher revenue for everyone, more profitability, smaller sales cycles, and easier to quote," he said.

Everyone in the IT channel would like to say channel partners’ values have gone up because of their response to the pandemic, said Dawn Sizer (pictured, bottom right), CEO of 3rd Element Consulting, a Mechanicsburg, Pa.-based MSP with a focus on municipal government and first responder clients.

"The reality though is, when I look at the number of clients that started calling us day one, as soon as the state started to shut down, they said, 'What do we do now?'" Sizer said. "Almost every single one of our clients called us and asked what they should do. [We responded] just pick up your things, take them home, plug them back in, and you will go right back to work. It's not that big of a deal. We can all manage to get through this together."

Since that first day, all of 3rd Element Consulting's clients have remained in touch with the MSP, Sizer said.

"Were we of value to them? Absolutely," she said. "Was it more than 10-percent [additional company] value? I don't know. I'd like to say that it was. I guess we'll see how it shakes out in the end. For us, it was a lot of pre-planning for some of our [clients], and after-planning for some of the other ones to keep them going."

MSPs have been going through a difficult last few months, and even if their valuation has remained steady, that is pretty impressive, said Jason Ulm (pictured, bottom left), vice president of sales at Axia Technology Partners, an Indianapolis, Ind.-based MSP and hosted voice services provider.

"So folks that have grown, I think that they're actually moving a little bit forward," Ulm said. "And maybe that's just by the nature of the customers they're serving. Some of the customers they're serving may be essential, maybe they're growing, delivering services. So if you've got a diversified portfolio of customers, you'll probably see a little bit of an uptick, and a little bit of a downtick. That's what we've seen. Some of our customers are struggling a little bit, some of our folks are really going gangbusters. For us, we'll come out of this a little bit further ahead."

It will be interesting to see how Axia Technology Partners comes out in terms of valuation after the pandemic, Ulm said.

"I think we'll be in a good position to move forward faster," he said. "And what we've found is that we truly had a relationship with our customers. We really weren't transactional based. And I think that's what the key was. When you think about managed service providers, you're really focusing on building the relationship with those organizations."

Ulm said that Ussia was correct in saying that MSPs have proven to be essential businesses in the face of a pandemic.

"And I think if you had good relationships with your customers, you should come out of this stronger and in a better position to move forward," he said.

MSPs have always had a strong trust level among customers, and that will only increase because of the pandemic, said Brian Ruschman (pictured, top right), president of C-Forward Information Technologies, a Covington, Ky.-based MSP with about 30 employees and about 140 clients.

During the first couple weeks of the pandemic, solution providers sold more hardware and emergency services, Ruschman said.

"But now that it's played out, I think that we, as trusted advisers, will benefit from it long-term because of the trust that has been built."

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