Just when the world began to emerge from the COVID-19 pandemic, Managed Service Providers (MSPs) were challenged with the possibility of a looming recession, driven by political unrest, outright war, and lingering supply and demand issues.
“Some businesses benefitted from the pandemic, given the immediate need for people to work from home, and this was especially true for MSPs,” said Ryan Walsh, Chief Strategy Officer of Pax8, one of the world’s fastest growing cloud B2B marketplaces, which itself grew during the pandemic through its support of the MSP industry. “The pandemic created pressures on businesses to reduce staff and businesses of all sizes, especially small and medium-size businesses (SMBs), recognized the risks of trying to manage their own IT infrastructure, including cyber security as attacks surged during the pandemic. Even the current economic uncertainty can benefit MSPs, depending on their strategy.”
The challenge is for MSPs to grow profitably and look at this moment as an opportunity to digitally transform themselves, so they are in a better position to digitally transform their customers’ businesses.
“The absolute best thing MSPs can do at times like these, and all the time, is to focus on improving their operational efficiency, their margins, and their ability to quickly and constantly respond to change,” Walsh explained. “Our customers are now, as a whole, in a much better position to handle this and future downturns and turn a negative into a significant positive.”
Starting in 2020, Pax8 ensured they could support dramatic shifts in work-from-home and hybrid models.
“Our team rallied to be able to fully support all the participants on our marketplace,” explained Walsh. “We found our tens of thousands of MSP partners were incredibly resilient and even inspired by the opportunity to support businesses. Being competitive and winning for MSPs meant being able to bring every layer of the IT stack to their customers – not on-premises, but from the cloud. We all saw the dramatic adoption rate of Microsoft Teams and other collaboration solutions for example. For organized MSPs, they appreciated the ability to discover, buy, provision, and sell cloud-first applications to their customers from a single source on a single pane of glass in the Pax8 Marketplace.”
Pax8 not only grew by leaps and bounds over the last three years, but also attracted significant funding, with $185 million in new equity capital from SoftBank Vision Fund 2, increasing the company’s valuation to $1.7 billion. SoftBank Vision Fund led the funding series with additional contributions from existing investors Catalyst Investors, Sageview Capital, Blue Cloud Ventures, and Liberty Global Ventures.
At the time, a little over a year ago, Pax8 had cloud-enabled more than 200,000 businesses with its 20,000 MSPs and its platform, marketplace, education, support, and solutions. Today, the company has grown to 25,000 MSPs by simplifying the IT buying experience for small and medium-sized businesses (SMBs) through the IT channel ecosystem.
“We knew we had to go way beyond a traditional B2B marketplace and we did, by focusing purely on the cloud, and by investing millions of dollars to develop increasingly sophisticated and automated billing and provisioning,” Walsh said. Offering MSPs education, enablement and community has been key, too, he said.
Through its marketplace, Pax8 is empowering SMBs with technology solutions they would otherwise not have access to while simultaneously granting software vendors distribution capabilities to a hard-to-reach customer segment.
According to Walsh, this segment “easily scales – so as the MSPs who are driving industry growth attract even more end-customers, they can add more services, while also bringing new applications including cybersecurity that is cloud-first, which is so much easier to install and manage than legacy solutions.”
MSPs don’t have to have all the answers – especially in often strange and uncertain times.
“What do they need? Strong partners and super-efficient platforms,” Walsh said. “When they can do more for less, and when they can scale more profitably by moving up to a unified, stable, and easy to use platform, they are less afraid to lose money and less afraid to aggressively go out and grow their businesses.”
Recent reports from government, economic and industry analyst firms are starting to reveal a brighter future.
Walsh agrees: “I’ve been in the IT and MSP industry for decades, and I’ve never been more excited about the potential. The world is more connected than ever, and it is inevitable that MSPs and enterprises will need more cloud and cloud-infrastructure and software solutions than ever. There is no turning back, and for those who look at the expense side in balance with the new revenue side, their businesses will only continue to grow.”
Edited by
Erik Linask
