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Transforming the SMB opportunity for MSPs

Ryan Walsh, Pax8 Chief Strategy Officer

Exploring results from the Pax8 and Channelnomics digital transformation study.

When you hear digital transformation or DX for short, most people think about large enterprise businesses. But it’s everybody, including local gyms, your favorite restaurant, and even the doggie daycare are all streamlining business practices, improving customer experiences, and increasing their bottom lines through modern digital solutions.

To better understand the opportunities this movement presents for the channel, Pax8, with sponsorship support from Microsoft, Veeam, and Wasabi, engaged Channelnomics to create a study of SMB IT initiatives. More than 400 senior leaders at SMB organizations across North America were surveyed to determine where they stood in their transformation journey. The results were eye-opening, and they revealed a clear path forward for MSPs and the channel as a whole. These results were shared in an extremely informative report entitled “The Transformation Imperative: Evolving Customer IT Needs.” Let’s dive into it.

According to the Channelnomics study, a whopping 84% of SMB decision-makers polled said they plan to buy more IT solutions related to their digital transformation initiatives in the next 12 months.

I could just post that stat and end this blog right here with a link to the recording of our recent webinar where we discussed the report findings. But there is so much more to unpack around the useful takeaway of this study.

Experts say that digital transformation will account for 53% of IT spending by 20231. That seems unbelievable until you realize that a lot of digital transformation is actually based on technologies and products already in the market. Their adoption is being accelerated, and they are being applied in new and innovative ways. This is why we see predictions that digital transformation and services will continue to grow at almost 16% year-over-year for the next decade2.

References
[1] “IDC: Digital Transformation Spending Will Eat Up 53% Of IT Budgets By 2023”. 2019. Techrepublic. https://www.techrepublic.com/article/idc-digital-transformation-spending-will-eat-up-50-of-it-budgets-by-2023/.

[2] “Cloud Services Market Size, Share & Growth | Forecast – 2030”. 2022. Allied Market Research. https://www.alliedmarketresearch.com/cloud-services-market.

The Actual COVID Effect

Of course, we have to address the elephant in the room — the COVID crisis. It’s not unreasonable to think that the pandemic was the driving force behind many businesses and companies engaging in digital transformation efforts. The reality we found in doing this research is that a large number of SMBs were already well into their digital transformation journey. The pandemic served as a catalyst to accelerate these timelines and continues to do so.

/></p> <p>We have seen this ourselves here at Pax8. When we were a startup, we built a cloud-based infrastructure, but we felt it was important for everybody to collocate. We wouldn’t hire somebody who could not come to our office. When the pandemic happened, we couldn’t adhere to that policy anymore. This pivot has allowed us to tap resources in places we would never have looked before because we are fully embracing a business and IT structure that enables people to work wherever they are, not necessarily where we are. SMBs are no different and need somebody to help them with their own hybrid infrastructure.</p> <h3>SMBs Facing Workforce Pressures</h3> <p>SMBs have to contend with the same workforce challenges your enterprise clients face. Yes, I’m talking about what is commonly called “The Great Resignation.”</p> <p>As we see it, this is actually a coalescence of two different factors. This first is a shift in mindset within the workforce. People are choosing not to work for companies and businesses that don’t embrace their values or workstyle needs. The second is a shrinking workforce. As older workers are choosing to simply opt-out of the workplace, a declining birthrate over the last few decades means there are fewer workers to fill those spots.</p> <p>In the webinar, Channelnomics CEO, Larry Walsh, talks about how a reduction in available workers has driven businesses to adopt new, more automated tools to account for the smaller workforce. He cites self-checkout as a great example of businesses turning to digital transformation, enabling a process that used to require a human employee. Utilizing automated tools to allow clients to do more with less is another great opportunity and area of focus to add to your SMB sales talk track.</p> <h3>SMBs Facing a Shrinking Global Supply Chain</h3> <p>We don’t need to get into the economic or political factors causing the collapse of the global supply chain. From a channel standpoint, all we need to know is that it’s becoming more difficult for all types of businesses, especially SMBs, to get the products, materials, and supplies they need to not disappoint their customers.</p> <p>Digital transformation is an opportunity for us to help SMBs find new and innovative ways to effectively source and manage their supply chain and their inventories, so they can meet changing customer expectations.</p> <h3>How SMBs are Finding Their Solutions</h3> <p>With digital transformation happening at a double-digit rate, let’s look at how SMBs are approaching their initiatives and how this creates one of the greatest growth opportunities across the channel.</p> <p>What the SMBs told us is that they’re adapting to change. They recognize the world is moving around them and realize that they have to get to market faster. They have to change their delivery models and accommodate the needs of their customers and their markets in ways they haven’t had to before — all while trying to enable today’s fluid workforces.</p> <p><img width=Mission Briefings; through the technical intensives of our Bootcamps; through the courses, peer groups, and coaching of Pax8 Academy; and through the bandwidth-extending support of our ProServices.

How We Can Boost Everyone’s Success

I know I threw a lot at you here, but I really only scratched the surface. These and a lot more ideas are discussed in greater depth in our webinar and the report.

To sum it up, let me leave you with this:

  • As a channel, we need to shift our own thinking around digital transformation.
  • We need to become more than just purveyors of solutions.
  • We need to be advisors, educators, and trainers as well.
  • The MSP who is able to deliver a solution and support its success for their clients is the MSP who will build long-lasting relationships that will deliver strong recurring revenue.

Watch our webinar, read the report, and use the insights to guide your own evolution and success as a provider of digital transformation. And if you have any questions, please feel free to reach out to us here at Pax8.

Read the report
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