Google: Managed Services Shifting to Applications

When Google takes the stage at the ConnectWise Partner Summit, channel manager Jeff Ragusa will deliver a key message: The managed services market is poised to expand beyond infrastructure management to application management. Regardless of your stance on Google Apps, Ragusa's message is dead-on: It's time for MSPs to figure out their application management strategies.

Google has spent recent months building the Google Apps reseller program. In a typical scenario, VARs and MSPs can earn $10 per seat per year reselling Google Apps. For a typical 20-user company deployment, that's only $200 in recurring annual revenue for a VAR. Ragusa concedes that's not a huge figure. But he sees Google Apps opening up a range of higher-margin recurring revenue for VARs and MSPs.

A prime example: Ragusa asserts that MSPs are using Google Apps as a wedge that opens the door to strategic business discussions with customers. In theory, if customers are willing to pay a flat annual fee for Google Apps, they're being trained to embrace key business models -- SaaS, cloud services, subscription fees and so on. Suddenly, Ragusa says, VARs and MSPs can transition customer conversations beyond basic SaaS applications toward comprehensive managed services.

Ragusa also notes that Google offers Google Apps APIs, which allow VARs and MSPs to "develop applications that automate administrative tasks and integrate with your existing infrastructure." Google also is considering an ISV partner program for Google Apps, The VAR Guy hears.

Reseller Agents vs. Application Integrators

There's a key theme here that I will explore more in the days ahead: It's not enough for VARs and MSPs to be reseller "agents" that earn small commissions from Google Apps, Microsoft Business Productivity Online Suite (BPOS), Exchange Online, SharePoint Online and other third-party SaaS (software as a service) applications. Already, Microsoft is cutting BPOS  and SaaS prices, which could pinch reseller agents over the long haul, I believe.

I truly believe the most profitable solutions providers will maintain application control -- and perhaps even operating system control -- in the cloud. Progressive integrators like Levementum and OpenBI are already deploying CRM, ERP and business applications in the Amazon Elastic Compute Cloud (EC2). Those integrators maintain application- and operating system-level control of the software they deploy in the cloud.

Meanwhile, MSP software providers are adjusting their tools to remotely monitor on-premise and cloud applications. The most recent example involves Nimsoft's new Unified Monitoring dashboard.

Still, challenges remain: What applications -- in which clouds -- should you monitor? What type of pro-active services can you wrap around application monitoring? How do you price such services.

I'll share more thoughts in the days ahead. And I look forward to your thoughts. In the meantime, Google's Ragusa is right: It's time for MSPs to master application-centric managed services.

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