Jay McBain on Why AI and SaaS Marketplaces Are Redefining MSP Revenue Models

Dave Sobel (0:14)

And it's Services is now a $608 billion business, one and a half times the size of the entire SaaS industry, one and a half times the size of all the hyperscalers combined, and growing at 13%, while the broader tech industry grows at 7%, and the global economy grows at just over 2%.

If you're running an MSP today, you are running a shop inside the fastest growing business category in enterprise technology. And in the same year this number comes out, MSP's own quarterly surveys from that same research shop showed the cohort expecting more than 10% growth dropped by 14 points, and the cohort expecting a 10% or worse decline grew by 19

Vendor satisfaction in the UK and Ireland fell from 37% to 19% year over year. Broadcom just cut roughly 90% of VMware's partners and took the top 2,000 accounts direct. Something is off. Both stories are true at the same time. The person who wrote the $608 billion number is the same person who's telling the audience for a year that the way the ecosystem is being reassembled around them is the biggest strategic shift in the 25 year history of the channel. It was last on this show a couple of months ago, almost to the days. And since then, he's published the Omnia Global Partner 1000, the 7-17% Partners Forecast, 158 billion agentic AI opportunity, and a very specific warning to the small and mid-sized MSP world about the missing next wave, the way they miss SaaS. In the meantime, every single vendor in the operating layer of an MSP is raced to launch a marketplace. So we're going to bring it all together and see whether the picture on top of the pyramid actually adds up with the picture in the P&L at the bottom. Welcome to the Business of Tech Lounge. This is where we break down what's changing in the IT services market, what it means for providers and vendors, and what to actually do about it. If you're running or supporting an MSP, this is about making sense of the environment you're operating in, not just the headlines. Now, to make this conversation possible, a message from our sponsor.

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Our guest today is Jay McBain, Chief Analyst for Channels, Partnerships, and Ecosystems at Omnia, which now includes what used to be Canalys after Informatech's acquisition. Jay is the author of the Omnia Global Partner 1000, the ranking of the top 1000 channel firms in the world. He's been named Channel Influencer of the Year, and if you've read anything published this year about the shape of the partner ecosystem, you've almost certainly read something Jay put his name on. Jay, welcome back to the show.

All right.

Jay McBain (3:39)

Well, thank you so much for having me back.

Dave Sobel (3:41)

I'm looking forward to this. You and I get to mix it up, and it is always great fun. So let's start with the Global Partner 1000 from last October. I want to start there because it feels like it's the map for everything you've built for what the ecosystem actually is right now, and everything we're going to talk about fits around that. So it was the first attempt to rank, name, and size the top 1000 channel services firms in the world, and that would include Systems Integrators, VARs, MSPs, Consulting firms, those professional services players deliberately excluding distributors, vendors, telcos, SaaS providers, ISVs. So to make the list at all, you had to clear $28 million in revenue. So together, the 1000 firms you ranked generate $1.7 trillion a year, 63.3 percent of the entire global IT services market. The shape of it is what I was thinking a lot about that. The top 30 firms alone generate the same amount of revenue as the bottom 970 combined. The global 100 ranks 31 to 100 is $274 billion or 26 percent of the total.

The partner 500 ranks 101 through 500 is another $280 billion, that's about 19 percent. And the long tail ranks from 501 to 1,037 billion, 3 percent. Half the roster is 3 percent of the money. So let's start with the concentration number. Top 30 partners generating the same revenue as the bottom 970

Is that the picture of a healthy channel that finally has scale players, or is it a picture of an ecosystem that's tipped, and the channel we've always talked about is really 30 companies plus a long garnish?