Memo to MSPs: Don’t Demand Free Software, Do Pursue Financial Help
These are unprecedented times for MSPs and their software suppliers. The IT channel is caught in a coronavirus domino effect: As some small business customers shut down, furlough their operations, or cut headcount, their MSPs must recalibrate monthly revenue streams and profit models. Many of those MSPs, in turn, are knocking on their software providers’ doors for financial relief.
Using a classic technology called a phone call, I’ve heard from about a dozen MSP owners/operators who are calling on their software providers to “do more” to help them. In a handful of cases, MSPs are pursuing free software subscriptions or major relief from recurring monthly fees.
My view? I’ve called on MSPs to immediately explore all cost-saving options. But I’d respectfully remind MSPs: Software is highly valuable — the very electricity that powers many of your IT services. And software providers face financial hurdles as well.
Amid those realities:
- It’s fair game for MSPs to work closely with their software and technology providers in a bid to potentially negotiate better terms. Loyal, long-term MSP partners with deep relationships will likely move to the front of that negotiating hotline.
- However, public outbursts demanding “free” software — which some of us have witnessed on social media these past two weeks — positions you and your business as anything but a strategic partner.
MSPs: Key Financial Moves
TruMethods CEO Gary Pica
ConnectWise VP Arlin Sorensen
From ConnectWise VP Arlin Sorensen (“Adjusting Your Business for Remote Workforce“) to TruMethods CEO Gary Pica (“Navigating the Choppy Waters Together“), pundits are advising MSP owners to work closely with their in-house CFOs, sales leaders, accountants and legal advisors to:
- Understand your current cash flow and cash position.
- Recalibrate near-term and long-term cash flow based on revised revenue forecasts for Q2, Q3 and Q4 2020. And keep recalibrating at least on a weekly basis.
- Check in with your local SBA-approved lender for Paycheck Protection Loans that potentially convert into grants that you don’t have to repay.
I wonder: How many MSPs took the steps above before they started hammering software providers for free subscriptions?
To be clear: Calling your vendor to discuss your financial challenges is fair game. But publicly blasting a vendor for not waiving monthly fees? That’s uncalled for.
Technology Companies: Key Financial Moves
Overall, MSPs and their software companies should give each other the benefit of the doubt. Some MSPs were upset with “vendor silence” in mid-March as the pandemic began to shut down businesses across the U.S.
Research: Channel Chiefs pivot amid COVID-19 pandemic.
But remember: Those software companies had to huddle internally and recalibrate their own businesses before they could emerge with some guidance, programs and help for partners. The internal huddle happened in mid- and late March. By the close of March, channel chiefs pivoted their partner strategies in a range of ways, The 2112 Group research revealed.
Toward the end of March, we also heard some strategic CEO statements from SolarWinds and Datto, and then more formal programs emerged from ConnectWise and Kaseya, among many others. We also saw expanded financing programs from the likes of Ingram Micro.
Fact is: Nearly every technology company has rolled out some sort of revised partner program or extended free trial to channel partners. Perhaps some programs are sell-serving, but overall I think vendors are working hard to solve problems and mitigate financial risk for partners.
MSPs: Don’t Lose Faith In Technology Partners
Bottom line: MSPs should not doubt their technology providers at this time. Those software and technology companies need their MSPs to survive. But that doesn’t mean technology companies can or should write blank checks to their partners.
The economic shutdown is squeezing or impacting just about every reader of this blog, regardless of company type. The pain we are all feeling is shared pain. Even as technology companies strive to take care of MSPs and channel partners, they must focus aggressively on their own company preservation. Executives at quite a few technology companies are cutting or completely waiving their near-term salaries to avoid or minimize layoffs.
Keep that in mind as you seek financial assistance from your strategic partners in the days and weeks ahead. Special thanks to those who have called me privately in recent days to share their views on background.
Special: More Coronavirus Pandemic news, analysis and partner assistance programs.
We are all in this together. Our 650 MSP partners know that we will work with them so we can all emerge stronger on the other side. Great message.
Charles: Thanks for the note. Please keep me posted as Green Cloud Technologies navigates the pandemic. Wishing you all the best. Be safe.
-jp
I agree that asking for free software is unreasonable. That said, I attended a webinar hosted by Solarwinds earlier this week, where they encouraged us as MSPs to offer our “Tier A” customers discounts off our monthly services, to the tune of 30% if needed.
In that webinar I asked them if they would be willing to extend the same courtesy to us, a 30% discount for a set period of time, to help us out during this financial crisis. Crickets.
Today my account manager reached out and said they are offering to extend our terms to Net 45, but no discount off services.
I find it all very hypocritical that they are preaching the need for us to offer discounts while refusing to do the same themselves. Solarwinds CEO Kevin Thompson recently said “We are absolutely committed to your success as our partners.”
I am still waiting for them to put their money where their mouth is. Hopeful, but not optimistic.
Andrew: Thanks for the note and for your readership.
I think vendors, partners and end-customers are navigating these challenges in real-time. Some comments and decisions may appear hypocritical. Other comments may align better over time. i would judge vendor-partner relationships on their overall long-term performance, rather than a point-in-time comment or one piece of advice that raises concerns.
That said, I understand your pain in terms of trying to figure out my own budget, and then trying to align vendor partnerships to fit with my budget. I went through it extensively during the dot-com implosion (2001) & then the financial crisis (2008). During both of those events, there were points in time where I had to agree to disagree with some vendors and partners on various steps forward. But over time, the vast majority of those relationships remained in place because of the value they delivered.
Best wishes as you march forward.
-jp
Seeing the same attitude from Connectwise. My attorney had to send them a letter on my renewal to keep them from raising prices above what is written into their own contract. Took several weeks and wasted a lot of my and their time, just to honor the terms of the contract. I have been a CW partner almost 10 years now, its disappointing to see that happening. I think this crisis is really going to shake out the actual customer/partner allied vendors from the ones just saying that.
I am not expecting any discounts and am doing our budgeting around that, but any predatory vendors are going to get dropped ASAP.