Andrew Allen says that “squeezing in the middle” is not the way forward amid a looming recession and that the lack of profit will lead to “being out for a long time”.
It comes after IBM CEO Arvind Krishna agreed at the 2022 Xchange Best of Breed conference that partners should respond to inflation by raising their prices.
And last month, SAP revealed it would increase its support fees for the first time in nearly a decade, as the software vendor blamed inflation.
Can price hikes help fight a recession?
Speaking aMSP transformation of rt CRN event on Thursday Allen believes that raising prices can help fight the recession.
He said: “We are being squeezed by the impact of the impact of the dollar in part of the supply chain. There has also been significant wage inflation, which is correct.
“We can’t just keep pushing up the middle, we have to be successful, we have to be profitable.
“We provide an outstanding, valuable service to our customers, and if we don’t stay profitable so we can invest in our people in our future, we won’t be around for long.”
Meanwhile, Chris Gabriel, chief strategy officer of Sapphire Systems, says the ERP distributor has taken a “proactive approach” rather than “shipping 1,000 renewals at plus 10 percent cost.”
He said: “What else can be added to this renewal that offers some kind of compensation against this?
“So we offer subsidized RPA.”
What should MSPs do amid economic uncertainty?
The UK economy is expected to slip into recession later this year.
According to Goldman Sachs, UK GDP will fall by around one percent by mid-2023.
Despite the uncertainty, Gabriel believes there has “never been a better time” for MSPs to refine their business model to operate more efficiently.
“If I were an MSP, I’d probably focus more on the internal operations of my business today,” he said.
“If I can operate more efficiently, if I can do these things better, I have better value to the market and certainly help my customer base.
“I think MSPs need to focus on being the best they can be.”
Meanwhile, Allen believes that organizations can become “defensive” and that capital projects could be affected.
“I think there will be a shift away from capital projects,” he said.
“However, we can also show them opportunities as to where we could raise funding as some of the suppliers.
“But I think they’re going to behave like any other part of their business, they’re going to accumulate cash. So we have to be a little more flexible in how we help them invest in the future well.”