Mastering Managed Services

Most voice and data VARs are well aware of the imperative to transform their businesses from time-and-materials shops to managed service providers. The annuity revenue model is the obvious lure in an era of slimming hardware margins. Indeed, the managed services model can add value to VARs’ businesses beyond the next sale, but it’s also increasingly used as a competitive strategy for gaining account control in a converging marketplace.

It’s no longer interconnect versus interconnect or VAR versus VAR, but interconnect versus VAR versus carrier agent versus software as a service provider, etc. Competition for business technology spend involves numerous previously discrete channels and an ever-widening circle of products, services and applications; managed services, practitioners say, offer channel partners a better chance at controlling more of it.

As evidence of their view, business customers are showing a willingness to change the way they purchase and consume technology (see chart, Outsourced and Managed Services Adoption, below).

Migrating to a managed services model may be inevitable, but it is no small undertaking (see related article, “Do-It-Yourself MSP”). Establishing a network operations center initially can cost tens to hundreds of thousands of dollars, depending on the hardware and software required to deliver the service. Upgrading or expanding such capabilities as well as staffing the NOC 24/7 with professional technicians are significant ongoing expenses. For many smaller channel partners, this is not an option. And for any channel partners interested in expanding beyond their core expertise, it can be an uncomfortable risk. Rather than watch their customers flee to larger or multifaceted providers, they can achieve instant scale and expertise by becoming agents, resellers or franchisees of an existing MSP.

“It’s almost impossible with one, two or three people to have an effective managed services offering unless you partner with someone else,” said Charles Weaver, co-founder and president of the MSP Alliance, an international organization for MSPs. Weaver said there is no shortage of opportunities to partner; larger MSPs are eager to take advantage of customer relationships already forged by channel partners.