I’m starting to worry. About the economy? Not really. Instead, I’m worried about a self-fulfilling prophecy for managed service providers. The media is so consumed with negative economic news that more and more of us expect customers to stop spending on IT.
But here are three key pieces of information to keep in mind as managed service providers digest ongoing economic news.
1. Myth: U.S. unemployment is at an all-time high. Reality:Â Things are bad and I know what it’s like to lose a job during stressful economic times. (My job was a casualty during the dot-com implosion.) The current U.S. unemployment rate stands at 6.5% — the highest mark in 14 years. But during the Great Depression unemployment was as high as 24.9%. Translation: The pain we’re feeling could be far worse.
2. Myth: Nobody is buying houses so the U.S. economy will remain in a downward spiral. Reality: The real estate market certainly is a mess. But the National Association of Realtors says existing U.S. home sales will likely reach 5.02 million in 2008; 5.32 million in 2009 and 5.62 million in 2010. Translation: There are five million deals in a market where “nothing” is selling.
3. Myth: Nobody is making technology decisions right now. Reality: This is similar to the U.S. real estate myth, where “nothing” is selling but 5 million existing homes will be resold this year.
Yes, markets are contracting and even Cisco Systems says its current quarter sales could drop as much as 10 percent.
But look at the flip side: If “nothing” is selling in IT, then why are top managed service providers generating double-digit or triple-digit annual growth rates? Why are customers paying for disruptive technologies like open source IP PBXes, open source CRM and open source ERP (see a pattern?).
Focus on customer pain points (security, storage, surprise IT costs) and many prospective customers will open their wallets for your managed services.
I’m not suggesting these are easy economic times. But let’s fight our way through this mess rather than letting the media dictate our fortunes.
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Posted In: Finance | Marketing | Mergers & Acquisions | North America | Service Level Agreements
Tags: Existing Home Sales | Managed Service Provider | Managed Services | MSP | US Economic Forecast | US Unemployment Rate
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It’s hard to ignore the economic news when AIG’s bailout has grown to $150 billion (with a B) and the price target for GM stock is now $0. But we do need to press forward as an industry and you are correct to say that IT spending continues. We’ve won three new engagements since October, and they will all generate repeat revenue each month thru at least November 2009.
To continue your real estate analogy, houses are still selling but they sit on the market far, far longer than in previous years. IT deals will take far longer to close as well.