Managed Database Services: The MSP Opportunity
Every few weeks I get on my soap box and tell MSPs to focus on database-level work, such as database as a service, remote database administration and/or managed database services. Now, PICS ITech — an MSP serving Philadelphia and New Jersey — is willing to share some behind-the-scenes information about their remote database administration (RDBA) business. For MSPs seeking alternative revenue streams, this is an intriguing play — especially as Microsoft SQL Server 2012 nears launch on April 1, 2012.
PICS ITech Co-founder and CIO Terry Rossi says his company has offered RDBA services since around 2000. “Our customers that use us for RDBA work are typically manufacturers or someone with a large investment in an ERP system and an even higher investment in labor,” said Rossi. “Often these systems are needed to keep the workforce operating and producing.”
The key to capitalizing on that “need” has been two fold, Rossi added:
- the systems require specialized talent (a dba) which is expensive
- the systems typically are located in remote locations and getting specialized talent is typically difficult
As result, Rossi said his company receives “huge premiums” for the RDBA service. Yes, per-system fees have come down over time. However, some relatively simple, highly visibly systems — typically ERP on Unix — generate $10,000 per month in recurring revenue management fees.
“Typically this type of system would be used for manufacturing, shipping and logistics for multiple plants and it would be 24×7,” said Rossi. “Our longest RDBA customer has been paying over 10,000 a month for over 10 years.” The fee covers planned maintenance (one or two scheduled maintenance windows per month, each of which is one to two hours) and partly insurance against an outage.
Just like a typical MSP, PICS ITech draws a lone and does not include projects, customizations, or anything out of the normal care and feeding. Any Unix or Linux system with a line of business system on it typically starts at $1,750 a month in management fees, and climbs to $12,000.00 per month based on what the market will bear and the complexity of the environment, Rossi added.
Meanwhile, PICS ITech has also partnered up with data center providers that cater to enterprise systems. Many of the engagements involve PICS ITech’s expertise in Progress (the database), QAD (an ERP system), Oracle and SAP.
“We started in the enterprise in 1995 so we have a great story when talking to prospects,” said Rossi. “But my ITech guys (the MSP group) were never part of the enterprise group, I was the only crossover from Enterprise into our MSP group and what the sales team learned was from osmosis.”
Apparently, the osmosis process has gone quite well.
The Bigger Picture
Overall, MSPmentor thinks most MSPs overlook the managed database service opportunity. We’ve spotted a few players that are doing very well in the market — DSP Managed Services, NaviSite, Ntirety and Cloud Creek Systems come to mind. But the list of MSPs promoting their database expertise seems short.
Still skeptical about this market opportunity? Consider this: Thousands of MSPs already offer a range of Exchange Server and SharePoint-related services. Aren’t managed SQL Server offerings a natural extension to those offers — especially as SQL Server 2012 nears launch on April 1? (No joke.)