Dell’s Next Move: A Master MSP Strategy
As part of its ongoing managed services push, Dell hopes to launch a Master MSP strategy in late 2008 or early 2009, MSPmentor has learned. The move has potential implications for anyone involved in managed services. Here are some of the preliminary details, based on a conversation I had with Greg Davis, vice president and general manager of Dell’s Americas Channel Group.
Davis and I spoke on June 20 about Dell’s quest to keep improving communications with partners. I plan to post a few blogs this week about the conversation. First, up: Dell’s Master MSP Strategy.
When asked if Dell plans to build hosting facilities and network operation centers (NOCs) that MSPs can tap into, Davis delivered a firm and quick “yes.” The concept is rather simple: MSPs will be able to re-brand the Dell hosted services as their own — with no need for the MSPs to build and manage their own NOCs (though MSPs certainly can continue to do so, if they choose).
Dell’s strategy is somewhat similar to Master MSP services offered by Do IT Smarter, Ingram Micro Seismic, Jamcracker, Symantec Protection Network, Secure My Company, and dozens more.
Master MSPs: Not All the Same
However, there are some subtle but important differences MSPs should note. For starters, solutions like Do IT Smarter, Ingram Micro Seismic and Jamcracker offer a range of managed services platforms from multiple third parties (and Jamcracker, for one, doesn’t plan to host the services).
In stark contrast, Dell’s strategy will likely focus on the company’s own MSP platforms (Silverback, Everdream, etc.). I plan to have a follow-up conversation with Mike Menegay, director of Dell Business Services, to see if Dell will plug additional third-party platforms (Autotask, ConnectWise, etc.) into its Master MSP portfolio.
Pros and Cons of Dell
So, what does Dell’s Master MSP strategy mean to aspiring and existing MSPs?
First, let’s start with the potential upside: Aspiring MSPs that believe in Dell’s Silverback platform will be able to jump into the managed services market without paying for a major NOC or data center deployment or writing a big check for initial software licenses. Also, the MSPs will be able to brand the services as their own — or even hand off the services to Dell while collecting a commission on the deal.
Now, the potential downside: Many VARs and MSPs remain skeptical of Dell, because of the company’s direct sales heritage. Will Dell try to take all MSP business direct? I strongly doubt it, because Dell’s number one priority is driving its stock higher to please disgruntled investors. And Dell’s financial strategy depends heavily on VARs and MSPs assisting Dell’s SMB sales push.
Another key concern: Some partners worry because when they register deals with Dell, they have to turn over customer information in order to receive Dell partner discounts. But Davis notes that this is standard operating procedure between numerous hardware companies and their partners.
Davis is working overtime to communicate the company’s partner strategy, and is in San Francisco this week meeting meeting with partners to answer their questions. More than 100 solutions providers signed up for the meeting, Davis says.
Pros and Cons of Master MSPs
There are also some potential pros and cons tied to the broader Master MSP model.
Proponents are quick to note that the Master MSP approach allows VARs to quickly move into the managed services market without pay big lump-sum fees for hardware, software and related services.
But skeptics assert that the hosting model will commoditize the managed services market. Here again, I beg to differ, since VARs can add additional services onto the Master MSP services.
Also, VARs continue to control the customer account and business relations — so they can fine-tune their services to meet specific customer needs that the hosting provider would otherwise overlook.
In Dell’s case, it sounds like the company is striving to introduce its Master MSP services in late 2008 or early 2009, according to my chat with Davis.
More thoughts on Dell to follow this week.
You hinted that there’s a difference between vendor-driven Master MSPs (like Dell) and vendor-neutral Master MSPs (like Ingram Seismic). I think that differentiation deserves a lot more discussion and consideration.
Do you want a single-vendor hosted solution? Or do you want a long list of potential solutions from a single trusted partner?
Rich: Do you work with Ingram Micro? Another third-party that’s hosting multiple solutions? Always good to know a person’s background as it relates to the comments they post. Thanks.
This strategy sounds similar to Zenith Infotech and Kaseya’s new direction. The big difference is that you have a vendor trying to be an MSP. These two business models are quite different. Also the basis of the Master MSP model is that they are leveraging their experience as a MSP to deliver services to other MSP’s. Does Dell have any experience as an MSP?
Lane: I think we are going to see similar moves by IBM, HP, Microsoft and others down the road. Cisco is the only company to say definitively that they had no plans to become an MSP.
While I think vendor competition is healthy for the market, I also have a small worry that vendors will repeat the mistakes they made during the hosting craze. Anybody else remember how Intel and others started building co-location sites and hosting sites during the dot-com boom, only to retreat when the boom went bust?
Ahhh…fond memories from the dotcom bubble….I still have a bursitis-like pain that flares up whenever I’m surrounded by too much hype…. Lane makes an excellent point in that it appears that vendors are trying to deliver MSP services to MSPs without the benefit of an experienced business model. I personally vote for the independent master MSP model, like Do IT Smarter.
It will be interesting to see the impact on the market as IBM, HP, MS, etc. get in on the act. At least we’ll have a client base that’s been exposed to managed services. I have to wonder how we’ll have to switch our approach to clients in regards to educating them about managed services. After all, those of us who remain independent, or at least not participants in the big vendors’ programmes, offer a much different experience than our larger cousins will…..
Jim, Lane: the independent Master MSP model certainly is a worthy approach, but the vendors (Dell, etc.) have deep pockets to generate marketing hype. The Master MSPs will need to go viral with marketing in order to match the big company noise — or at least stand out from the noise.
All very interesting! Clearly the #1 reason to work with Dell in this model is because of their ability to generate leads. That’s certainly a big reason, but unless they limit the number of partners they will have in a market, I’m not sure of the impact it will have on any single partner.
Mike Cooch
http://www.everonit.com
http://www.smbitpros.com
Mike: I think market saturation is a potential concern down the road. But it’s also a tricky discussion, since in the 1990s, VARs and IT franchises faced their own limitations on geographic reach. With managed services — coupled with on-site support partnerships — the geographic footprint for each MSP increases. In other words, even if Dell limited the number of partners in certain regions, those regions may face competition from distant MSPs located in other geographies.
That’s certainly the case. I had a conversation with an MSP this week that said that about 75% of the msp advertising in his market is now from companies hq’d outside of his market!
Mike
http://www.everonit.com
http://www.smbitpros.com
Mike: Good to hear MSPs are extending their geographic reach. But even more impressive to hear they’re actually advertising. Marketing, PR and advertising generally haven’t been strong spots for MSPs and VARs.
This is a very interesting time to be an MSP, that is for sure. With Wall St’s love of recurring revenue, there is no question that the big firms are going to do their best to eat our lunch. What I’m not yet sure of is how successful they are going to be.
In terms of marketing, obviously, they have the power to kill anything that we can do. In terms of locality, I think we’ll always have them beat. What are the ramifications of that? I suspect that means that small MSPs will remain small and will entrench themselves largely on the back of close personal relationships with their customers. Sadly, this approach doesn’t scale very well. So, if you are content to run a lt;$10M company, the next few years will probably be pretty good. If your ambitions are to rise beyond that, you better figure out a way to raise a ton of money and go on a buying spree. Failing that, I’m not sure if ours is still the business to be in? I would love to hear others thoughts and have you poke holes in my comments.
Trent
http://www.dyrandsystems.com
http://www.trentdyrsmid.com
I am meeting some Dell folks at CompTIA Breakaway next week. I’ll be sure to get an update on Dell’s strategy, as well as attendees’ thoughts on scaling their businesses beyond $10M.