Take a look at recent financial data points from CA Inc., Nimsoft and Siemens Enterprise Communications Group (SEN Group). You’ll notice an emerging trend: It’s hip to disclose recurring revenue and managed services revenue information. The reason: Wall Street and financial watchers consider the recurring revenue model a sign of business stability. Plus, there’s a need to rise above the MSP industry noise, where the mainstream press and some of the high-tech press continue to foolishly hype managed services as recession proof. Here’s some perspective…
First the good news:
CA: During the company’s first quarter, CA booked nearly $400 million of business with managed service providers, including one contract for more than $100 million with a duration of seven years, according to CA’s financial release.
Nimsoft: Although privately held, Nimsoft does share some financial metrics each quarter. For the quarter ending June 30, 2009, the MSP and enterprise software provider saw monthly recurring revenue grow by 40% from the prior year, and its order backlog was up nearly 60%, according to a Nimsoft press release.
SEN Group: The company says it has signed $100 million in new and extended Managed Services agreements with enterprise customers in the public sector, financial services, pharmaceutical, education and healthcare industries. The deals, SEN Group claims, typically lower customers’ voice and network total cost of ownership (TCO) by up to 15 percent to 20 percent.
Financial buzz can even occur in casual conversation — as ConnectWise CEO Arnie Bellini proved at Microsoft’s Worldwide Partner Conference in New Orleans earlier this month.
Now the Bad News…
Much of the press continues to hype managed services as “recession proof” — suggesting that all software providers and their MSP partners are thriving amid the recession. Sorry, that just isn’t true. I know plenty of software companies and MSPs that are generating mixed results and even poor results.
As a result, well-performing companies are working hard to distance themselves from the MSP industry pretenders. And the fastest way to prove you’ve got momentum is to disclose some financial information.
It’s good to see healthy financial data points from the companies above. But the rising MSP tide won’t lift all boats. Plenty of pretenders remain in the market…
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Posted In: Sales
Tags: CA Inc. | ConnectWise | ConnectWise CEO Arnie Bellini | managed services revenue | NimSoft | Nimsoft CEO Gary Read | Recurring Revenue | SEN Group | Siemens Enterprise Communications
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The thinning of the MSP herd will be a good thing for partners. Ideally, from an ITSP standpoint the consolidation will allow for some good features to be unified under stronger products and ultimately yield better choices all-around. I’m more interested in what companies like Kaseya, Virtual Administrator, Nimsoft, ConnectWise are going to do than what HP might do.
Brendan: I understand your thoughts. But MSPmentor will also continue to watch HP (and other major IT vendors) closely because they could buy their way into this market very quickly and potentially change the competitive landscape…
I see disturbing issues on both sides of the argument. The crux of the matter is that someone needs to develop and manufacture the boxes that MSPs manage. I do not see R&D investemnt at the levels that are needed to sustain any viable business. Quarterly results are often achieved by laying off the talent needed. This is very short sighted, and I would not invest in any business that prefers this route.
Marek: I could be wrong but I think the IT industry has MORE IT innovation and R&D under way than ever before. Desktop, server, network, cloud and SaaS options/alternatives are more abundant than ever. Of course, selecting the most ideal solutions can be overwhelming. But customer confusion is a GOOD thing for VARs and MSPs that want to offer informed recommendations to their clients.
If you can’t find the R&D in the traditional closed source world, chances are their’s an open source widget or plugin that can fill your need. The piece products are out there. But it takes time to find the right ones that form your solution.