I read an interesting article today in ESP Magazine called “So You Want to Be an MSP?” http://www.channelinsider.com/c/a/Tech-Analysis/So-You-Want-to-Be-an-MSP/
It’s a well written piece and the author, Frank Ohlhorst, has obviously done his homework. The story digs into the origin of services, and provides some comments on how MSP has become a new word for outsourcing IT functions. In a loose sense, I agree, however, from a more strict interpretation an MSP does so much more.
In a traditional VAR sales model, the customer either pays for services as part of project, or for services based on consumption. With managed services, the customer pays one price for management of their network --- an “all you can eat” IT-as-service so to speak. In this new scenario, the MSP has a steady revenue stream, the customer a steady cost stream, and the end goal for both is to maximize uptime, minimize any issues and ensure an optimal user experience. This move to managed services is an interesting model because it is really the first time that the economic incentive for both parties (the customer and the MSP) have aligned so closely.
But, like Frank point’s out in his article, a number of the IT services we’re seeing today have been in the enterprise in one form or another for some time. And, in many cases the service provider won’t even necessarily need a technology platform to deliver these types of services at that level. The part that makes this whole move to managed services “new” is that this trend for managed IT is being driven down into the SMB marketplace where time and materials, Supplementary Services (aka partial outsourcing), or project work has been king.
While the principals are the same at this level, the business case is quite different. SMBs are extremely cost sensitive, so to make this work, the MSP has to hit the right price point. This is where the MSP platform really comes into play. The MSP platform helps the MSP deliver these IT services in an automated fashion – to help increase efficiency, optimize operational processes, promote scalability, and to manage the risk inherent in these contracts. This platform is the key to allowing the MSP to hit the price points required by cost sensitive SMB’s while still driving much higher profit margins than the average reseller.
The other comment that jumped out at me in this article was this: “Yet, for VARs, some mysticism remains on how to become an MSP.” I know this is true for some, but if the VAR selects the right MSP platform vendor, there doesn’t have to be any mysticism about how to take the next step and become an MSP or simply integrate managed services into an existing practice.
VARs need to look not only at the technology, but at what resources and support offerings the MSP platform vendor offers to help them integrate managed services into their business. Granted no one can offer a miracle pill, or make a VAR an MSP overnight, but the MSP platform vendor should be there every step of the way -- helping, coaching, teaching, sharing experience and best practices. They should also have a team that assists partners with longer term plans around the technology and the business. If you ask me there’s no better time for VARs to become an MSP. The best practices have been established and with the right vendor partner, it really comes down to leadership and business execution.
Just my $0.02.