Do-It-Yourself MSP

Ambitious VARs, interconnects or agents can build their own managed services provider. Many have done so successfully. Take Alpheon Corp.

Alpheon transitioned to an MSP in late 2005, after spending three years as an IT VAR charging based on time and materials. “We determined back in 2005 that we would not be able to scale the business under the previous model and the only way to grow was to make a shift in our business model to something more scalable. The managed services model is scalable if designed properly,” said CEO and president Greg Donovan, who also is a board member for the MSP Alliance.

Today, Alpheon offers end-to-end IT outsourcing to small, medium and large businesses; its sweet spot is companies with 50-500 employees. A majority of the subscription-based service is delivered remotely on a fixed fee per device. To do this, Alpheon had to create a NOC, which costs hundreds of thousands of dollars and requires continual investment in people and technology. “There is a very large technology component to becoming an MSP and to be proactive rather than reactive,” Donovan said.

“We started small and ramped it,” he said, noting that Alpheon’s foray into managed services was a two-man reactive help desk. “If I had to do it again, we would have more call coverage and more depth and we would have built the [proactive] NOC function at the same time as the reactive [help desk].

Looking back at the past three years, Donovan said his advice to other companies that want to go the do-it-yourself route to managed services is to “get focused fast.” “Figure out your sweet spot and define it,” he said, noting it’s OK to offer a broad set of services, but each needs to be defined. “I’ve seen several MSPs in my market fail. Each of them in hindsight has communicated that it was a focus problem.”

As customers become more familiar with the managed services delivery model, they will begin to demand more services fall under the subscription model, he said. He cautioned newbies not to take on too many services with limited demand. Offering such services as traditional billable service to interested clients makes more sense than spreading NOC resources too thinly, he explained. “If you are going to do everything for everyone, you will have a problem. ... You will get in trouble when you find out you can’t do it, or you will lose a lot of money getting it done,” he said.

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