Silent Disqualification Risks Rise as UK Platforms and US Buyers Automate MSP Selection

Dave Sobel (0:02)

You're going to have a quiet quarter at some point in the next 12 months, and you're going to blame the market. There's a reasonable chance you were removed from consideration instead. And from where you're standing, those two look identical. This is The Business of Tech, I'm Dave Sobel.

Three thresholds were written down in three different parts of the MSB business. Start with channel life and start with a caveat because this one is a byline. Scott Frew, who founded and runs iAsset, a company that sells channel lifecycle software, writes that Microsoft has cut its global distributor base from about 180 companies down to roughly 60 Two out of every three, gone. To stay in, a distributor now has to clear 30 million US dollars in cloud solution provider revenue over 12 months. In each region, it's authorized for. A million if you're a direct-build partner. Frew calls what that leaves behind a lifecycle execution problem. With fewer parties in the middle and ownership shifting between them, tracking who owns which renewal and who is answerable for it gets harder for everyone downstream. Which is the diagnosis you would expect from a man whose product manages life cycles and the numbers are his. I could not confirm them anywhere else.

Then, Managed Services Journal. Their reporting says regulated buyers are disqualifying managed service providers whose remote, monitoring, and management platform does not carry Fips 140-3 validated cryptography. Fips 140-3 is the US federal standard for validated cryptographic modules. It is not a claim a vendor makes about its own encryption, it's a certificate issued after testing, and a product either holds one or it doesn't. The publication is careful to say that having the validation does not, by itself, make a provider compliant with anything. The buyers are using its absence anyway to take providers out of consideration. And then, technology reseller out of the UK. A company called Compare IT has launched what it builds as the country's first AI-powered platform for comparing managed service providers. Businesses use it to search, compare, and monitor more than 8,000 MSPs across up to 197 data points per provider. Giacom is behind it as a strategic supporter, and on the other side of the platform, Compare IT sells MSPs access to the leads it generates. 8,000 providers, 197 fields each. Three announcements. One of them sits in the supply chain, one sits in the tool stack, and one sits in a database in another country. In each case, somebody wrote down a number that separates the providers who qualify from the providers who don't and then published it. Three parties who don't talk to each other reaching for the same instrument in the same time frame. It's not coincidence and it isn't a conspiracy either.

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A threshold is what a large party uses when it has too many small parties to talk to. That's the whole of it. And you can watch it work by following what happens to one of them after it gets set. Take the cryptography requirement. Kaseya is not arguing with it. In October, according to IT Pro and Channel Pro, Datto RMM gets Fips 140-3 validated cryptography and native Apple device management, and both arrive at no additional cost. Think about why a vendor gives that away. A platform whose partners are being disqualified by their buyers loses the partners. So the platform absorbs the requirement rather than letting anyone fail it. And once it's absorbed, clearing that bar costs a provider one account level setting, which means clearing it distinguishes nobody. Only failing it does anything at all. A threshold never really gets negotiated, it gets absorbed. That absorption is what converts it from an advantage into a floor. Now the same logic running in the other direction, on the supply chain.

CyberFox makes privileged access management, a password manager and DNS filtering, all built for MSPs. This month, it signed a North American distribution agreement with Ingram Micro. Putting those products on Ingram's platform in front of more than 165,000 channel partners and resellers. Channel Dive describes the deal as scaling beyond the MSP market. Look at the shape of that decision. Not recruit providers one at a time, sign once with a party that already holds all of them. And the party holding them keeps getting thicker. TD Cynics, and this is TD Cynics describing its own platform, has expanded partner first with AI Assistance, Lifecycle Analytics, Quoting Tools, and Accounting Integrations, saying customers transacting regularly across its digital offerings are growing nearly 30% on average, outpacing the ones who aren't. That is the company's own number about its own product. But the direction is what matters. The middle layer is absorbing the tracking of renewal and ownership. So nobody decided to exclude anybody. A threshold is just what scale reaches for instead of a conversation. And every one of these is held by a party that got bigger by not having the conversation. And not one of those decisions produces a phone call.