Dell ProManage-Managed Services: Challenge or Opportunity for MSPs?

Today is a delicate day for Dell's PartnerDirect channel program. The technology giant is carefully rolling out a new effort called ProManage-Managed Services. On the upside, Dell has designed the program to include VARs that want to get started in managed services. But on the downside, some critics will consider this Dell's attempt to sell all managed services directly -- on a nationwide (US) basis -- to small and midsize businesses. Before you listen to the alarmists, here are the facts, and my own perspectives.

First, Dell's official statement about ProManage-Managed Services. The new nationwide (US) service is:

"Built from the ground up for small and medium businesses, the web-based service proactively monitors and manages IT networks, prevents system issues before they occur, and eliminates costly downtime. The expansion to more than 5,500 U.S. towns and cities follows two successful pilots in Dallas and New York City, where Dell helped one customer increase staff productivity by as much as 60 percent
Most of the official press release speaks directly to small and midsize business owners. But Dell points out that VARs and MSPs can participate in the program:
"Starting as low as $9 per month with no upfront investment or long-term contract required, ProManage–Managed Services are available direct from Dell or one of its PartnerDirect Registered or Certified Partners enrolled in the new ProManage Sales Agent program."

What Dell Is Doing Wrong, And Right

Let's be clear here: Dell is selling managed services directly to small and midsize customers, but MSPs can participate in the process or continue to offer Dell Silverback on their own to customers. But what does all that really mean?

First, Dell's mistakes:
  • Dell's press release and follow-up Webcast include perspectives from Dell executives, analysts, small business owners and IT managers working in small business. If Dell had included one of its MSP partners -- just one -- in the official press release or in the Webcast, the MSP could have articulated how it cooperates with Dell in some areas and potentially competes with Dell in other areas. Coopetition is a fact of life. Articulate it.
  • Dell also should have mentioned that it remains loyal to established MSP partners (the Silverback crowd), most of whom surely don't plan to become ProManage sales agents.
  • Yes, VARs and MSPs can become "agents" for Dell ProManage-Managed Services. The problem: Many VARs hate the "agent" terminology. But stick with me and I'll explain why Dell's agent model might be different.
  • Initially, VARs and MSPs cannot re-brand Dell ProManage-Managed Services as their own. Again, stick with me and I'll explain how this may change.
  • Much of Dell's ProManage partner messaging is limited to Dell's own channel blog. The Dell blog is a great resource for channel partners. But those messages should have been stronger in the mainstream PR announcement.
Let's be honest: MSPs competing with vendors is not a Dell-specific issue. My strong belief, and you can quote me:
"All MSPs will wind up competing with major hardware and software providers as all big vendors move into the software as a service (SaaS) market. For the sake of shareholders, Dell has no choice but to offer managed services direct and indirect. The same holds true with Microsoft in the SaaS market. But Dell has to be extra-careful when communicating its managed services and SaaS strategy, because some VARs remain wary of the company's old direct sales heritage."
Perception is reality. And some MSPs are going to perceive Dell ProManage-Managed Services as Dell's massive direct-sales MSP initiative. But read on.

What Dell Did Right

Do MSPs actually fit into this strategy? Yes.

MSPs can still offer Dell's managed services platforms (i.e., Silverback Technologies) on their own to customers.

But here's where things really get interesting: Many resellers and VARs have struggled and failed in the MSP market. Others don't have the time or resources to build out a full-blown NOC. In those scenarios, Dell plans to position Dell ProManage-Managed Services as an MSP alternative to Zenith Infotech's services. Will Dell succeed? I don't know. Zenith seems to have a pretty loyal following. But mark my words: Dell will reach out to resellers and VARs that are seeking an alternative to Zenith Infotech's offerings.

Also, Dell's agent model for ProManage-Managed Services involves more than Dell sending a recurring monthly check to MSPs. I hate the "agent" term as much as the next guy. MSPs want to strengthen their own brands; they aren't out to build Dell's brand.

But there is some value to Dell's agent approach. According to Peter Klanian, senior manager for channel sales at Dell:
  • MSPs that re-sell ProManage-Managed Services will be involved in customer status report meetings between Dell, the MSP and the end-customer. And both the customer and the partner will receive monthly reports for all parties to review.
  • Partners can register their pending ProManage-Managed Services engagements with Dell, in order to mitigate the risk of Dell's direct sales force targeting that customer.
  • Partners receive 15 percent recurring revenue on ProManage-Managed Services.
  • Over time, it sounds like Dell will allow MSPs to re-brand ProManage-Managed Services as their own, but that capability is not currently offered.
Klanian's ultimate perspective:
  • VARs that offer ProManage-Managed Services are looking for a lower-risk, lower-reward business model because Dell is responsible for the Service Level Agreements to end-customers.
  • VARs that continue to offer Dell Silverback managed services on their own are seeking a higher-risk, higher-reward business model because the MSP is responsible for SLAs to end-customers, and can often charge premiums for additional add-on services.

MSPs Still In Control?

Now imagine the following scenario: A small reseller signs up a customer for ProManage-Managed Services today. But over the next few years, the reseller evolves into a full-blown managed service provider with its own network operation center (NOC) tied to Dell's Silverback platform. In that scenario, Klanian says, the Dell partner can migrate the customer from ProManage-Managed Services into the MSP's own NOC.

Dell will need to drive home that point aggressively in the days ahead, as some skeptics will surely consider ProManage-Managed Services a complete direct sales play. Plus, Dell's Silverback MSPs will need to articulate why their services are more valuable -- and therefore cost more -- than Dell's own starting price of $9 per month.

In my mind, Dell's primary press release did a poor job describing how MSPs can potentially participate in the process. But Klanian is working overtime to clarify the situation.

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