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
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.
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.