MSPs Ride ServiceNow Into Co-Managed Services

ServiceNow’s IT service management (ITSM) software is emerging as common bridge between MSPs and corporate IT departments. And that bridge could lead to more co-managed IT services opportunities for MSPs that support midmarket and enterprise customers, ChannelE2E has heard from multiple MSP industry sources.

Think of it this way: MSPs often run one form of ITSM and help desk ticketing software. Corporate help desks and ITSM departments often run another form of that software. Getting the two (or more) software platforms to “talk” to one another in terms of workflow, business processes and security isn’t easy.

Meanwhile, three key trends are accelerating:

  1. ServiceNow is emerging as a de facto standard for enterprise ITSM deployments.
  2. Systems integrators are extending ServiceNow down into mid-market IT departments.
  3. And MSPs are pulling ServiceNow into the SME managed services sector.

That third point is particularly interesting. Although ServiceNow has some service provider focus, the company is so busy selling multi-million-dollar software deployments into enterprise accounts that it doesn’t really have time to push itself into the MSP sector — particularly the SMB and SME areas.

The twist? MSPs are filling that vacuum by pulling ServiceNow into their own businesses. First movers include Fully Managed, an MSP that jumped on the ServiceNow bandwagon long before it went mainstream.

Roll those three trends together, and ServiceNow’s software is creating ITSM alignment between MSPs and large customers that have IT departments, multiple sources tell ChannelE2E. As a result, it’s getting easier (well, less difficult) for ServiceNow-based MSPs to sell co-managed services into SME and enterprise accounts.

ServiceNow Partners: M&A and Investor Activity Accelerates

Investors and entrepreneurs are catching onto the trend.

Amid booming demand for ServiceNow deployments, M&A activity across the ServiceNow partner ecosystem is strong.  In the first eight weeks of 2021, ChannelE2E spotted and documented these eight M&A deals:

Related: Detailed List of ServiceNow Partner M&A Deals – Buyers, Sellers, Investors

MSP Software ISVs Engage ServiceNow

Meanwhile, ISVs within the small business MSP ecosystem remain committed to SMB but are also extending up-market toward ServiceNow integrations. MSP software companies climbing up and into the ServiceNow ecosystem include Liongard and Sophos, among many others.

I’m not suggesting that ServiceNow will somehow extend all the way down and dominate the MSP-SMB sector. In many cases, the company’s software is either too complex or too expensive (or both) for SMB channel partners to consume. Remember: ServiceNow’s core partner focus is building multiple $1 billion revenue streams with specific systems integrators in specific vertical markets.

Still, the mid-market co-managed services trend is real. And it increasingly involves ServiceNow as a common ITSM bridge between MSPs and mid-market IT departments.

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    Gavin Garbutt:

    Hi Joe,
    This looks like the RMM platform space 21 years ago. N-able was created back in 2000 so the IT channel could have an affordable multi-tenant RMM platform to support SMB customers. I strongly believe companies like Augmentt Technology will accomplish the same feat and provide MSPs & MSSPs with a SaaS Management / Managed SaaSOps platform to support SMBs & SMEs modern IT. It is time for the channel to modernize its tool kit. Cheers, Gavin Garbutt, Co-founder & Chairman of Augmentt.

    Joe Panettieri:

    Hey Gavin: Well, you’ve got me beat by about seven years. As a blogger, I jumped into the space around 2007. I agree: There are some current-day similarities between cloud monitoring compared to RMM two+ decades ago. But there are also some clear differences. For instance:

    1. Consumption Models Are Now Understood = That’s Easier Today: Today’s MSPs don’t have to “sell” or “educate” customers on the business model/pricing model/consumption model. Early MSPs had to explain that entire monthly model & its associated value to customers.

    2. What Type of Infrastructure to Manage = That’s More Difficult Today: Many of today’s MSPs (in SMB) simply “resell” Office 365 and don’t really get too involved monitoring/value add. The situation is even worse with PaaS or IaaS. In many cases, the MSPs are still trying to figure out if/how/where to add value via cloud monitoring/management. In contrast, the early-day MSPs fully understood their endpoints (PCs, printers, servers) and wanted to end truck-rolls.

    I’m sure I missed a bunch of additional examples…

    Gavin Garbutt:

    Hi Joe,
    We should have a live chat about this topic. It is really quite exciting!
    I agree with #1, but for me, #2 is more about the applications than the infrastructure.
    If an MSP asked a customer
    – How many SaaS applications do they have running in their organization?
    – How much are they spending?
    – Do they have duplicate applications or unused licenses?
    – Are their SaaS applications secure and compliant?
    – Do the current SaaS applications optimize employee and corporate performance?
    Could the MSP get an accurate answer?

    SMB & SME customer wants an IT stack (including SaaS) that will optimize employee and corporate performance, is secure and cost-effective. We want to help MSPs deliver this level of service.

    Cheers, Gavin

    Joe Panettieri:

    Hey Gavin,

    Thanks for the note and readership. No doubt, SaaS application management/monitoring is on our radar. Curious to see if/how/when the mass market Office 365 partners learn how to monetize beyond “reselling.” Keep me updated.


    Peter Briden:

    This is a great thread, as an early 2000’s N-Able adopter, I see the same opportunities pivoting to deeper value add as customers try and figure out the cloud. Most MSP’s are still stuck in the 2010’s, between cloud management and security, the model is moving again, and fast. Great content.

    Gavin Garbutt:

    I agree 100% Peter. Derik and I have a mission, and that is to help our partners become the worlds leading MSPs with Managed SaaSOps.

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