I’ve been pondering this one.
An article in CIO Dive considers how the “big-four accounting firms are buying up third-party technology services firms to fill critical skill gaps and chase high-margin consulting revenue. “
“Market opportunities for a general-purpose, downmarket MSP are getting smaller,” Craig Lowery, a vice president analyst at Gartner, said. “[An MSP] that’s a small company that serves other small companies, definitely is in this situation of having a declining market opportunity for infrastructure managed services because the applications are coming more and more from SaaS providers.”
And further in the piece.
While big four consulting firms may have an apparent edge through business and technology expertise, one challenge they might face is how to integrate the MSP model into a consulting business, said Robin Ody, a senior analyst at Canalys.
“If you acquire a 10- or 15-person managed service provider, they have a very specific way of doing business incentives that will focus on different KPIs than [a big-four firm] will usually have,” said Ody. “I think it’s actually a big problem internally about how you set expectations, how you set compensation, how you hire new people, and how you incentivize them.”
Why do we care?
Many listeners may be very dismissive of this story. There’s a willingness to say, “Oh, they can never come for my customers.” There are several observations to take from this analyst
First, “declining market opportunity for infrastructure managed services.” Just note that. Then why? Because applications are coming from SaaS.
Second, note that the acquisitions considered are of smaller providers. Ten to Twenty is a relatively small provider.
Finally, while I agree wholeheartedly that the incentives are complicated, the big four consulting firms are whom I might pick to solve that problem.
