All you have to do is look at the news. Mergers and acquisitions seem to be happening every day in the channel between vendors and, in some cases, providers. Questions arise around their long term direction and what these deals means for their partners. Will they disrupt the development of key products and services, or diminish the value of their channel programs? The answer to those questions, at least in the short-term, is typically a resounding “no.”
Companies normally buy other companies with the intention of expanding their offerings, moving into new markets, or scaling operations. They often acquire or merge with a business that meets one or more of their long-term goals, basically checking off a major objective in what may seem to be “one fell swoop.” In some cases, the changes start happening before the sale has even been approved by both companies, such as selling off parts of the portfolio that might not be a fit or discarding business units if there are potential anti-trust concerns.
This process may take days, weeks, months, or even years. Complexity and sheer size of the companies often stretches the timeline, as in the case of the proposed Dell-EMC merger. Some compare it to courtship, with each side making statements and strategic moves designed to create a workable, hopefully long-lasting relationship. If all goes well, the process will move forward, a new organization will emerge and, if their directors have done their due diligence and all goes as planned, the new company should flourish.
But what does that mean for their channel partners? Will the company do right by them during and after the process? In most cases, at least short-term, the new organization will. Partners are a crucial part of most IT vendors’ revenue streams and few would do anything to jeopardize what are likely their most valued relationships. Even when the dominant M&A organization has a direct go-to-market strategy, it isn’t wise to walk away from that much income (solution providers, on the other hand, might see the writing on the wall and find new opportunities).
Cue the Portfolio Backup Plan
Most MSPs I know are more than willing to give their vendors a little leeway after being acquired or merging with another IT firm. Unless the ensuing organization openly suggests taking its business direct or severely degrades its partner program, many will wait until the dust settles before jumping ship. That “honeymoon period” may not last long and in most cases, shouldn’t.
After all, solution providers have businesses to run, employees to pay and, most importantly, clients to support. They can’t afford to be caught by surprise without solid backup plans in place. When the 'newness' of a major vendor partner’s merger wears off, will an MSP be in a better or worse competitive and financial situation? Will the services firm be able to offer its clients similar (if not improved) solutions and support? If the answer to either of those questions is negative as a direct result of the M&A activity, not due to other factors, a partner may need to move on.
It’s their responsibility to explore other options if they exist. It’s in their own best interests as well as those of their stakeholders, employees and customers. Every IT firm needs a plan for replacing virtually every product and service in its portfolio, as well as its training, helpdesk and other key partners. So, what exactly would that process look like for an MSP?
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Create a list of two or three prospective suppliers for each offering. If a preferred vendor exited the channel today or failed to live up to your expectations, what companies have viable alternative offerings? If the portfolio is large, MSPs may want to prioritize suppliers and start by evaluating those that support key profit centers.
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Don’t worry about the offerings that are rarely used, sold or supported. Focus in the ones that are most critical to your clients (or your own operations) or that drive the largest share of company revenue and profits. For example, an MSP should know the top alternatives for their PSA platforms, RMM solutions, email and backup and disaster recovery. Security professionals should maintain a preferred replacement list for their antivirus,anti-spyware, firewall and other similar protection applications.
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Continually scrutinize backup suppliers and update the lists accordingly. Invest a couple hours each month researching available options, talking with peers about the advantages (and disadvantages) of the products and services they use. Check out new vendors at channel events and attend webinars.
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Understand the time requirements: if the worst case scenario were to happen (loss of a vendor), how long would it take to replace that part of your portfolio? Hardware and software may be fine for a year or more, but a cloud or managed service offering might need immediate attention. Make sure you have a realistic understanding of the time it would take to train employees, configure and swap out the new offerings, and get everything back on track.
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Divide and conquer: larger MSPs often appoint team leaders to manage key technology programs. For example, someone may be in charge of a company’s PSA. They typically ensure the platforms are updated and optimized, offer new and advanced training support, and manage the vendor relationship. If developing a backup plan for their specific specialization, no one would be better qualified to lead the charge.
Of course, these five steps are not a complete portfolio backup plan, but they do provide a framework for those looking to build one. It’s the process a number of successful MSPs have used over the past several years to ensure their business and their customers’ operations don’t miss a beat if an unexpected vendor decision has to be made. Chances are you won’t need one, but like data disaster recovery simulations, they’ll help insure everything goes as planned if the occasion arises.
Brian Sherman is Chief Content Officer at GetChanneled, a channel business development and marketing firm. He served previously as chief editor at Business Solutions magazine and senior director of industry alliances with Autotask. Contact Brian at [email protected]
