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Co-Managed Services: Coronavirus Economy Drives More Mid-market MSP Opportunities

It sounds like Deja Vu all over again. Each time there’s a recession or an economic slowdown, savvy MSPs typically gain momentum selling co-managed services into mid-market customer settings.

Why’s that? The four-part thesis goes something like this:

  1. Most MSPs already have deep relationships with small businesses that lack IT departments.
  2. Amid the coronavirus economy, MSPs that look upward into the mid-market will notice end-customer CFOs looking to cut costs.
  3. After the obvious marketing and travel cuts, those CFOs often freeze or eliminate open positions — including headcount in the IT department.
  4. Stretched thin, those mid-market IT departments often look for outside help instead of making full-time hires. The resulting talent gap often involves hiring MSPs to deliver co-managed services.

ChannelE2E is not suggesting a “market boom” for co-managed services. But multiple MSP market experts suggest the co-managed MSP wave is building again — lust like it did in certain vertical markets during the 2009 U.S. financial crisis.

Co-Managed Services: Buzz From the Experts

JR Cunningham, SVP, Herjavec Group

Sal Sferlazza, CEO, NinjaRMM

Rob Rae, SVP, Datto

Among the conversations ChannelE2E has had in recent weeks…

1. During a conversation about the coronavirus and its impact on MSPs, Datto SVP of Business Rob Rae said:

“We’re fortunate that SMBs had a big reliance on MSPs when the coronavirus arrived. Now, we’re about to see customers that are under business and IT stress hit the accelerator button on co-managed services.”

2. And during a recent conversation between NinjaRMM CEO Sal Sferlazza and ChannelE2E, Sferlazza noted:

“We’ve seen an interesting shift among MSP’s clientele the past few months, with more MSP partners taking on significantly larger clients. In-house IT teams at midsized businesses are now supporting hundreds to thousands of remote employees, and in most cases, the IT team has never experienced remote support at this scale. These IT departments don’t have the bandwidth or the resources, so they’re seeking expert help, and shifting to a co-managed IT services model.  If remote work continues for the foreseeable future, and it looks like it will, I think there’s a big opportunity for MSPs to move upstream and target these larger midmarket businesses who may be hurting.”

Shortly after that conversation with ChannelE2E, NinjaRMM disclosed a reseller partner program (partners@ninjarmm.com) for VARs and MSPs. Partners that resell NinjaRMM into business environments stand a good chance of winning co-managed services deals, the software company believes.

3. The co-managed chatter doesn’t end there. During a recent MSSP Alert webcast, Herjavec Group Senior VP JR Cunningham explained customer demand for co-managed security services. He believes strongly in the opportunity, but was careful not to hype co-managed services. Among the challenges: Setting service level agreements (SLAs), and understanding how much (or how little) a customer wants to be involved in the service.

Co-Managed Services: More to Come?

Admittedly, co-managed services (and associated software tools) aren’t new.

Longstanding examples include Datto’s Autotask TaskFire tool and ConnectWise’s Streamline IT offering — both of which strive to give MSPs co-manage capabilities with end-customers. More recently, Harmony Business Systems in 2019 introduced PSA (professional services automation) software that extends co-managed capabilities from MSPs to end-customers.

So what’s next? Technology industry leaders are closely watching to see if the “other shoe drops” in the coronavirus economy. Among the potential indicators: Multiple economic stimulus plans are set to end before August arrives, and there are signs businesses may explore more layoffs in September 2020 or sooner.

in theory, that means more customers may shift their priorities from internal talent to external talent — particularly MSPs that offer co-managed services.

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