The IT channel is headed for a crossroads as more VARs and integrators adopt the managed services model, according to the president of an organization that represents MSPs (managed services providers) and vendors.
VARs and integrators have to decide whether to make a fundamental shift to the model or simply resell packaged services from other providers, said Charles Weaver, whose MSP Alliance represents 230 members worldwide.
Weaver said he worries that the reselling approach will dilute the overall value of managed services and hurt profit margins. Providers who opt for reselling packaged services do not truly become MSPs, and he said he would rather see VARs and integrators make a serious commitment to invest in the model.
“It takes time and it takes a lot of internal reorganization of your business model,” he said. “It’s not something you can just bang out in a cookie-cutter mold.”
That concern will be among the topics of discussion at the MSP Alliance’s first-ever international gathering. At least 150 services MSPs, VARs, integrators and vendors are expected to attend the gathering Oct. 24 and 25 in Arlington, Texas.
“The discussion will be [centered on] one theme: How do you move forward as an MSP in 2005 and 2006?” Weaver said.
The event will allow VARs and integrators that still are not doing managed services, but have an interest, to learn more about them, connect vendors with service providers, and clue providers in on how to expand their existing managed services practices.
Mark Scott, CEO of N-Able Technologies Inc., a managed services platform vendor in Ottawa, said he believes channel companies have started to understand that managed services must be delivered properly with the aim of facilitating specific business functions.
“What technologies you fit into these offerings is really secondary; it’s what business service the VAR is supporting for the customer that’s important,” said Scott, who plans to attend the MSP Alliance event next week.
“Most VARs now understand the importance of leading with properly packaged and priced managed services—not vanilla managed services, but vertical-specific and/or solution-specific.”
Despite Weaver’s concern over potential dilution of the value of managed services, the fact the 5-year-old MSP Alliance is able to attract members for the event from as far as the United Kingdom and India indicates that managed services has moved from mere concept to reality in many quarters.
So much so that end users now are becoming attuned to the model. Weaver said he now gets calls from potential customers asking him for references for MSPs.
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“That’s something we never saw, three, four, five years ago,” he said. That end users pick up the phone to call him now, he said, indicates that the market is starting to understand the value of the model.
“What I’m most proud of as an organization, and as an industry, is that we now have true recognition by the end-user community,” Weaver said.
For end-user customers, managed services bring predictability of service and the security of knowing that systems are updated and running properly. For the providers, who deliver the services as a utility, the approach generates recurring, predictable revenue and can prove essential to retaining customers.
Despite paying monthly fees, customers can save money by keeping their IT staffs to a minimum, or in certain cases having no IT staff at all, while providers also can control hiring costs because much of the services are automated and handled remotely.
As it seeks to give voice to MSP interests and lend professionalism to managed services, the MSP Alliance has launched an accreditation program for providers.
The MSP Alliance Managed Services Accreditation Program is the first created specifically for MSPs. It covers such criteria as financial well-being, business practices and service delivery processes to measure whether an organization meets a minimum level of managed-services capacity.
Accreditation, which costs $649 for alliance members and $1,500 for non-members, serves as a badge of competence that providers can use in promoting themselves to customers.
Weaver said his mission five years ago was to call services and solution providers to get them interested in the managed services model. “That has completely changed. I haven’t made a call pitching that concept probably in two years,” he said.
Scott said N-Able has been a member of the alliance from its inception.
“From a vendor perspective, the MSP Alliance helps firms understand the changing face of the IT value chain and the importance of adopting a service-centric approach to developing and marketing technology to and through the channel.”