How MSP Marketplaces are Changing Channel Dynamics for Solution and Service Providers

How MSP Marketplaces are Changing Channel Dynamics for Solution and Service Providers

By Arti Loftus

Digital transformation is impacting every organization, from small and medium-sized businesses to large global enterprises – across every vertical industry. B2B marketplaces are no exception, and neither are sales and marketing channels, as the entire process of discovering, trialing, provisioning, consuming and scaling Everything as a Service (XaaS) has changed radically over the last several years.

Managed Service Providers (MSPs) were put through their paces during the global pandemic and had to scramble to ensure their small, medium, and large enterprise customers were equipped with the technologies and services they needed to enable work-from-home for their organizations.

Scott Chasin, Chief Technology Officer at Pax8, a cloud marketplace provider that has experienced massive growth over the last several years, explained that, “MSPs are retooling their business models and adding more intelligent instrumentation to capitalize on new Everything-as-a-Service revenue streams and digital transformation investments. XaaS offerings are getting more sophisticated and robust, and changing the dynamics economically, as businesses require less CapEx, but more OpEx given consumption-based pricing models. It’s not easy to navigate the transition, but what we are finding is that with the right strategy, MSPs are benefitting greatly by digitally transforming themselves, and tapping into the kind of innovation we are passionate about bringing to the market.”

Chasin credits their MSP members with bringing Pax8 their biggest challenges to solve: “MSPs can successfully deliver on the demands of our increasingly hyper-digital world, despite ongoing supply chain constraints and tight labor markets. In fact, in this uncertain economic time, taking advantage of integrated systems like ours, which blend the marketplace with PSA platforms, is a must-have, not a nice to have.”

According to Grand View Research, by 2025, the size of the global professional service automation software market is projected to hit $16 billion.This growth is fueled by the global professional services sector, which is expected to climb from $5.4 trillion in 2021 to $7.1 trillion (about $22,000 per person in the US) in 2025.

“We are going beyond traditional cloud marketplaces,” Nick Heddy, Chief Commerce Officer at Pax8, said. “As a result of the global pandemic, our customers, Managed Service Providers, experienced a surge of interest in XaaS and, by extension, the need for reliable and profitable cloud infrastructure services. Those MSPs who jumped right in to help their customers outperformed during the pandemic, and they are now enjoying continued growth as they learned how to serve their customers in better ways – accelerating, for example, digital transformation initiatives that may have been underway at the time, but lagging until the shockwaves of work-from-home and the borderless environment hit everybody at once.”

Not only do MSPs need to replace traditional revenues – for example reselling hardware as well as networking equipment, such as routers and phone systems – but they also need to reimagine how they efficiently procure cloud services and applications and manage them for greater operational automation, Heddy said.

Chasin and Heddy also talk about trends in cloud and edge, their acquisitions of similar businesses around the globe (the company most recently acquired Umbellar), and the motivation of the $185 million round of funding announced earlier this year, led by Softbank Vision Fund 2 and including original investors.

“We are integrating our marketplace into all ecosystems to give our partners the choices they want, and to bring the best new solutions into the world of Pax8 after we carefully vet each one,” Chasin said. “We are constantly working closely with our MSP members and the vendor partners, whether in real-time communications, collaboration, workflow, accounting and finance, cybersecurity, or entire ERP systems, all of which can be delivered as a service, via public, private and hybrid clouds.”

MSPs are finding themselves at the crossroads of the growth of their own industry, the growth of cloud services, and the growth of applications that consume cloud services in the XaaS era.

According to MarketsAndMarkets spending in the cloud managed services market is expected to reach $139 billion by 2026, up from $86. billion in 2021.

The breadth of services is also expanding, according to the same report. Cloud-managed services today span mobility, security, and data services, the report indicates, with the overall goal of cloud-managed to deliver “hassle-free management of businesses, network, security, data center, and mobility services.”

“Navigating the pandemic was an intense time for every business, including ours,” Heddy said. “At the same time, it was an inspiring time as we were able to help so many of our members and vendor partners. Necessity was the mother of invention, and for those MSPs and other businesses who rallied – who adapted – who move quickly. Innovation accelerated and we are benefitting from all the hard work undertaken under the worst of circumstances.”

“In the world of IT, optimization is a key component for success,” Chasin explained. “Even if something works, why not try to make it work better? If there are areas where a process can be fixed, streamlined, or otherwise improved, why not utilize that to make your operations as seamless and efficient as possible?”

There are opportunities for optimization everywhere, he said.” “For MSPs, one of the biggest areas is between their Professional Services Automation (PSA) tool and their distributor’s platform. Historically, these two components did not interact with each other, and much of the management work between them had to be performed manually. Today, MSPs can integrate their PSA tool with their distribution platform, allowing for cloud management to be optimized in a number of ways.”

Pax8 has integrated leading PSA tools including Autotask, Syncro, ConnectWise, Tigerpaw, Kaseya, and RepairShopr.

Through the integration, MSPs can:

  • Browse products, place orders, and update seat counts
  • Manage and import company data
  • Import Pax8 products in real-time
  • Automate provisioning
  • Customize billing agreements
  • Prorate services

Pax8 PSA integrations “uncomplicate many daily management processes, often reducing them to just a few clicks. Instead of flip-flopping between your PSA tool and the Pax8 Platform all day, you can do things like order, provision, bill, and more all from the comfort of either tool,” Chasin said.

Arti Loftus is an experienced Information Technology specialist with a demonstrated history of working in the research, writing, and editing industry with many published articles under her belt.

Edited by Erik Linask
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