The Downside of Working With MSPs

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Defining the misalignment of the managed service channel segment to technology vendors’ go-to-market expectations
As more vendors look to adopt service- and subscription-based sales models that generate recurring revenue, they’re looking at managed service providers (MSPs). The conventional wisdom among vendors is that MSPs – and managed security service providers (MSSPs) in the security segment – are the preferred partner type of the future because they understand the sales process and mechanics associated with recurring revenue.

The logic behind this premise is sound, even though it’s too simplistic. MSPs operate on recurring revenue. As per Channelnomics’ 2021 Channel Forecast report, they generate as much as 33% of their income and up to 30% of their profit from services based on vendor technology sold on a recurring-payment contract. Some MSPs earn more than one-ha...