How the Cloud will Rain on the MSP White Label Parade

 

For as long as MSPs have been around, the prevalent business model has been to package up services on a wholesale level and bill them to an end-client on a white-labeled bill under the MSP’s brand.  And why not?  It simplifies the customer’s life, creates one neck to grab and  continues to form a direct billing relationship between MSP and their beloved MRR paying customer.

 

White labels work for most everything: software licenses, VoIP phone solutions, POS hardware, Exchange mail,  Cloud Services and many more managed services solutions comprised of lots of individual parts.  But what many MSPs don’t realize is that the Cloud is about to make them re-think what it means to White Label.

 

As more SMB CxOs continue to be bombarded with articles of their specific industry moving to the cloud and an increased frequency of the discussion to evaluate ‘moving their data to the cloud’ continues to rise, a growing number of SMBs are starting to say ‘YES’!  And the bars and charts back it up.  But, as SMBs really sit down and think about the ramifications of that decision, they discover:

 

 1. Their data will NOT be housed in a server they own

 2. Access to their data can be shut off if a bill isn’t paid to the underlying cloud provider

 3. Access to their data can be disrupted if they lose Internet connectivity for any reason

 

This means that customers who do make the leap to the Cloud will demand a *direct* contract with the cloud provider.  They will not risk their MSP or any other middle-man somehow not being able to pay their white-label bill and getting locked out of their own Data, which is the crown jewel of their business.  

 

Similarly, Cloud customers are going to demand redundancy to connect to the Internet, and with carrier wholesale requirements being what they are, white-labeling broadband will also be problematic for most MSPs.

 

Of course, there will always be a market for MSPs and white labeling, but expect the Cloud and increased sensitivity to Data ownership and access to play a huge role in the un-bundling of the MSPs yarn of product offerings.  But all is not lost – the telecom industry and its professional sales partners (who broker/distribute retail services w/o white labels) have been doing exactly this for a very long time, and quite successfully I might add.