“There is tending to be a shift of budgets from SMBs doing their own technology -- developing their own IT infrastructure, if you will -- to moving more to outsourcing,” he said. “We followed a couple of studies [that say] roughly speaking in the 2009-2010 time frame give or take, there were 15 percent [or so] of SMBs whose budget was outsourced, rising to about 35 percent in 2014. So even if you’re out a couple of points it’s still going to be a really significant shift. ... That data is supported anecdotally everywhere I go.”
Cattini described his views in this MSPmentor FastChat Video:
Cattini credits the “recession mentality” in the United States -- an ongoing restructuring mentality, he said, that is “looming over the western worlds right now. ... And I think businesses are recognizing that revenue growth may be harder to achieve than it has been previously, at least for a period of time.” As a result, companies are focusing more of their efforts -- and money -- on their core competencies and outsourcing the rest.
Also, he said, there is a shift in focus on how companies work with their infrastructure. “The days of ‘I’m moving my ERP to the next version and the operating system to the next version, and it’s over budget, it’s over time, and it’s expensive,’ -- those instances where the ROI is questionable -- that’s really shifting to what’s being called ‘edge applications - it’s about applications that have business impact. It’s about customer touch points and understanding customers,” he said.
Cattini points to recent business deals such as Oracle’s acquisition of RightNow Technologies and Salesforce.com’s acquisition of Radian6 as perfect examples of companies that understand the importance of those edge applications.
For MSPs, such change presents huge opportunity. “I think there is a movement away from low-margin commoditized services to higher-end recurring managed services,” Cattini said. “We hear our customers talk about that all of the time [as well as our] prospects and people in the industry.” He noted a recent conversation with an Autotask MSP, during which he asked how customers are managing multiple devices and the MSP replied, “they’re not.”
“He said, ‘The first question you ask the CIO or general manager of the business [is], “What’s your IT strategy?”, and they scratch their head confused,” Cattini said. “‘They literally are just trying to stay on top of what they can today.’ So technology is so fast-moving and there’s such opportunity .. I think there’s enormous opportunity for managed service providers to ... lead them through these changes.”