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:

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.