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 Channel Futures

Technologies


Rise of the Managed Services Distributor

  • Written by Joe Panettieri 1
  • September 24, 2008

During the ConnectWise Partner Summit last week, CEO Arnie Bellini described how cloud computing would converge with managed services. Now, a research report from Techaisle also describes this convergence — and they coin the term Managed Services Distributor.

So, what exactly is a managed services distributor (MSD)? And how will MSDs impact managed service providers? Here are some thoughts from Techaisle, and MSPmentor’s perspectives.

According to a Techaisle research brief:

“Broadband providers and traditional web and email hosting providers have new opportunity to increase their average selling prices, specialized SaaS providers are evolving into XaaS providers adding management as a value proposition.

Over time, customers will look to a channel that can aggregate multiple Cloud and SaaS services and provide integration and support services and a single SLA.”

MSPmentor agrees fully with the statement above. We’ve been evangelizing the need for MSPs to plug into multiple cloud services, and then present those services as a suite of options to their small business customers.

Techaisle goes on to say:

“There is an opportunity for the channel therefore to transform their current business model to adapt to this new environment, blending local onsite and remote support models. At the same time direct marketers, especially in the mature markets are also experimenting with entering the market looking for services margins.

Until the messaging is crisp the market will remain confused giving rise to a new set of Distributors namely, Managed Services Distributors (MSDs) who provide a standard platform and service models to VARs, retail and other resellers who in turn resell to their customers within driving distance.”

Welcome to the managed services party, MSDs. You sound a bit like Master Managed Service Providers (Master MSPs). It’s unclear to me whether MSDs and Master MSPs are one in the same. But I’m sure readers will debate me on that.

Tags: Cloud Service Providers Digital Service Providers MSPs VARs/SIs Technologies

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13 comments

  1. Avatar Lane Smith September 24, 2008 @ 1:26 pm
    Reply

    Joe heading to the MSPA conference, but I am sure I will have much to say on this discussion later…

  2. Avatar Joe Panettieri September 24, 2008 @ 1:28 pm
    Reply

    Lane: Good luck at the summit. Keep us posted with your perspectives.

  3. Avatar mspsn September 24, 2008 @ 3:12 pm
    Reply

    I never thought “Master MSP” was broad enough to describe what we here at MSPSN do because the name itself implies that all you are is a big MSP, and really the term has been reduced down to mean that if you are a Master MSP you are simply sharing your extra monitoring tool licenses with other MSPs.

    When I was at Breakaway last month I did a quick video thing with Autotask which included a “live” Qamp;A session. When they asked me to describe exactly what MSPSN does, what came out of my mouth was that we were really more like a value added distributor, someone who aggregates services and solutions for VARs/SPs/MSPs/Etc. We pull proven profitable Managed Services offerings together from the different top tier MSP vendors and manufactures and deliver those solutions to our partners, who in turn deliver them to their end users. Finally, there is hope in getting rid of the “Master MSP” moniker, and we have a term that more closely describes what we do!

    Amy Luby
    http://www.mspsn.com
    aluby at mspsn dot com

  4. Avatar Joe Panettieri September 24, 2008 @ 7:38 pm
    Reply

    Hi Amy: Good to hear your thoughts. My only concern about the “Value Added Distributor” tag is that you might accidentally get lumped in with Avnet Technology Solutions and other “traditional” value-added distributors.

    But that’s just my two cents. Either way, it’s good to see a healthy debate, and good to see research firms saying that something new (and disruptive) is happening across the channel.

  5. Avatar Lane Smith September 25, 2008 @ 12:19 am
    Reply

    I am happy with the Master MSP moniker for us here at Do IT Smarter, http://www.doitsmarter.com. As an MSP your ultimate goal is to be the Trusted Advisor for your customers. That too is the goal of a Master MSP and what I believe sets us apart from that of a Managed Services Distributor.

    I think that Ingram, Synnex and Avent all fit well into the Managed Services Distributor title. They are bringing managed services to the channel from a distributors perspective. The Master MSP brings managed services to the channel from an MSP / reseller perspective.

    So Amy are you a distributor or an MSP?

  6. Avatar mspsn September 25, 2008 @ 12:56 pm
    Reply

    I don’t know if Master MSP has been fully defined. I am sure your goal, as is part of mine, is to be a Trusted Advisor to your partners. So in that sense, you and I are walking a parallel path. Frankly, I don’t like labels, so whether the industry decides you and I are Master MSPs or Managed Services Distributors is really a moot point because you and I, and some of the others entering this game, are leading the way regardless of what the others who are just now doing studies want to define us as. It’s hard to define those companies who are ahead of the curve.

    Ingram, Synnex, amp; Tech Data are definitely trying to do more and more on the service side. Their biggest Achilles heel is that they have never been a services organization and therefore have a very difficult time translating the product sales amp; finance model into a services sales amp; finance model. This is why it’s taking them so long to get it all right. Notice how often they change their pricing, change their offerings, etc. That’s exactly why the “Value Added” makes such sense, and that’s why someone like you or I can make a big difference in the MSP Channel as a Managed Services Distributor. Look at what you do now. You are bridging the gap between resellers who don’t know how to or who want to implement quickly Level Platforms and Autotask. You source Level and Autotask and resell with value wrapped around it. I would assume you’re going to make sure those fundamental tools are fully integrated, fully functional, and will wrap your past services expertise around that offering to make a lot of good sense for your partners to buy from you rather than go direct to Autotask or Level Platforms.

    That is VERY different from what Ingram does (I am picking Ingram because they resell Autotask and Level Platforms too, so in a sense look like a competitor to you and I). All that Ingram does is resell those products. In fact, they work with Level and Autotask sales people in a referral relationship – no direct expertise at all. The only way they can deliver industry best practices or consultation is to hire it in house or outsource it to someone like MSP University. You and I already have that expertise in house – we’ve lived and breathed building a profitable MSP practice and there is value in that knowledge that simply cannot be recreated by the big guys (Ingram, Synnex, Teach Data, Dell, etc.).

    Maybe you and I are something different that has yet to be defined by those who are analyzing what’s happening right now?

    Amy Luby
    http://www.mspsn.com
    aluby at mspsn dot com

  7. Avatar Justin Crotty October 2, 2008 @ 2:41 pm
    Reply

    I have to shed light on some inaccuracies in Amy’s comments as they relate to Ingram Micro, specifically.

    Regarding Ingram Micro’s capabilities and investments into this business, and contrary to your continued inaccuracies, with a dedicated services division staff, field-based educational and training best pracice events, our annual service partner conference, and over 15 years of expertise with field-based IT labor service delivery with the IMSN, we very much have in-house expertise.

    Our relationships with LPI and Autotask are not, in fact, referral agreements. We built and maintain a hosted environment and our internal teams are experts in selling our entire service portfolio.

    As I’ve stated to Amy before, I welcome discussion and debate about emerging and existing models – we are all trying to rob the same train here. I also encourage all players in this space to aggressively differentiate themselves. I simply ask that the arguments and positions being made to articulate that differentiation are based on facts. And as always, I encourage any interested party considering oing business with any of the players to simply do their homework and make their own decisions.

    Justin Crotty
    VP Services North America
    Ingram Micro, Inc.

  8. Avatar Lane Smith October 2, 2008 @ 4:21 pm
    Reply

    Justin,

    I was under the impression that your LPI solution was hosted by SAVVIS, and your NOC and Help Desk offerings were provided by Synergy. Is this not the case? Is your internal team actually supporting these solutions?

    I can certainly appreciate that your team has 15 years experience in a field-based IT service delivery model. However what Amy is pointing out and I agree differentiates their solution and my solution for the Ingram offering is that we were once resellers, we moved to an MSP model and are now helping other resellers do this as well. I do not believe that this is a claim that Ingram can make.

    Lane Smith
    President
    Do IT Smarter, Inc.

  9. Avatar Justin Crotty October 2, 2008 @ 5:03 pm
    Reply

    Lane,

    Great question! Amy made the suggestion that Ingram (as well as the other distributors, but my response is focused on Ingram alone) had no direct expertise in the managed service market. She also made inaccurate statements about how our relationships with some of our partners are structured – referral agreements, etc.

    You are accurate – our hosted environment is managed by a Tier 1 data center provider. Our NOC and Help Desk are managed by a quality provider. However, my argument is that we do have expertise – dedicated sales, consulting, and technical support – that we leverage to assist our solution provider clients to achieve success in this market. Our significant investment in this infrastructure also demonstrates our committment to this model and our long term participation in it.

    If Amy is arguing that Ingram does not have direct end user expertise because we do not deploy services directly to end users she is correct – obviously we only enable our solution providers to be successful. The solution provider is the entity selling Seismic solutions into end users under the solution provider brand.

    However, I interpreted her argument to state that our strictly tier 2 value proposition translated to a lack of expertise in this market. My rebuttal simply stated that we have deep expertise – its our target customer base that differs. Our strict adherence to the tier 2 distribution model is a benefit to our solution provider clients – we do not compete with them.

  10. Avatar Lane Smith October 2, 2008 @ 6:01 pm
    Reply

    Justin,

    Thanks for the clarification. I should point out as well that Do IT Smarter has a 100% indirect business model as well and we do not compete with our resellers.

    Lane

  11. Avatar Michael Minnich October 7, 2008 @ 8:04 am
    Reply

    Amy,

    As an MSP owner that has partnered with both Justin’s and Lane’s companies, I too believe Ingram and the other “Managed Services Distributors” have direct expertise and provide additional considerable value to MSPs – but for different reasons than Justin.

    First, MSD involvement improves the services/tools available to MSPs. For example, Level Platforms significantly increased product development and support as a direct result of: (1) Ingram’s influx of business; and (2) the leveraging of Ingram’s manufacturer partner relationships to work with Level on improving templates and toolsets.

    Secondly, MSDs provide a single point of contact from which to engage, and manage, numerous vendor relationships. Yes, we still have contact with the ultimate service provider such as Synergy; but we if there is ever a problem, one call to Ingram can resolve it.

    Thirdly, with their profits, MSDs provide educational programs and tools that most MSPs could not afford. For example, Ingram gave Service Leadership templates and tools to all Seismic Partners and it hosts valuable Seismic Partner Summits to try to better their clients’ businesses.

    Lastly, MSDs bring credibility and size to an MSPs sales and marketing arsenal. CDW currently uses a marketing battle cry of doing business with a stable, large, Fortune 1000 company. (#342 in 2007 Fortune 1000). We counter that with “if size matters (no pun intended), then choose our firm because we are backed by a Fortune 100 company with almost 5 times the horsepower of CDW.” If we have an issue with a manufacturer, Ingram will usually get it resolved.

    That said, we also value greatly the assistance of “Master MSPs” such as Do IT Smarter, which provided us with invaluable assistance and a map-of-the-earth roadmap to providing managed services.

    So, while a Master MSP may have more “direct expertise” in providing services than an MSD, the MSD brings to the table far broader and deeper business acumen and resources than MSPs or Master MSPs can afford/provide; and MSDs help shape/develop the MSP industry at a different level than Master MSPs – and both are important and valuable.

    If this sounds like a commercial for Ingram and Do IT Smarter, it is unintended. We have a philosophy about loyalty in our culture. Just so happens that Ingram and DIS are those partners for us.

    Wishing you continued success,

    Michael Minnich
    President and CEO
    NetGain Information Systems Company

  12. Avatar mspsn November 3, 2008 @ 1:37 am
    Reply

    Justin,

    I did not mean to illicit such an angry response from you. If I upset you, I apologize. I do believe there is a big difference between being a Master MSP and delivering the tools an MSP uses. MSD’s deliver tools to MSPs. Master MSPs deliver a Road Map to profitability in Managed Services. That Road Map can include tools, but also includes the knowledge, information, process, and procedure to execute on a daily basis to build a profitable Managed Services practice. That knowledge is not delivered by a third party who studies the market and trends. It’s delivered by an MSP who’s been there, done that in building a profitable Managed Service company.

    Amy Luby
    CEO, MSP Services Network (MSPSN)
    aluby at mspsn dot com
    http://www.mspsn.com

  13. Avatar mspsn November 3, 2008 @ 1:40 am
    Reply

    Michael,

    On your three points, for the most part I agree with you.

    1. “MSD involvement improves the services/tools available to MSPs.” LPI developed their Hosted Service Center for Ingram. They would have developed it anyway, but they certainly did it faster because of Ingram and it’s the only top tier remote management tool that is truly multi-tenant and developed from the ground up as a hosted solution. MSPSN was providing hosted LPI before LPI developed a hosted version, but having a hosted version certainly improved our internal process in delivering Hosted LPI to our partners.

    2. “MSDs provide a single point of contact from which to engage, and manage, numerous vendor relationships.” This is true, but that’s what a distributor does anyway. That’s not a process or an attribute simply because they deliver MSP tools, it’s because they are a distributor. This has been my point all along; Ingram is a distributor. A distributor warehouses product and delivers it out to the reseller. There’s nothing wrong with that. It just isn’t what a Master MSP does.

    3. “…with their profits, MSDs provide educational programs and tools that most MSPs could not afford.” This I would have to disagree. There are many places to get MSP education and an MSD does not inherently have the knowledge in house to deliver the education themselves. By your own example, Ingram gave you Paul Dipple (Service Leadership). That’s not Ingram imparting their own knowledge to you. That’s hiring a third party to deliver stats and industry knowledge. Not that this is inherently bad, but you can get the same knowledge from Do IT Smarter, MSPSN, MSP University, or MSP Partners for very reasonable cost to you. Heck, MSP Partners is only $49 per year. There are other places to get this kind of education too, but my point is that having a MSD deliver third party stats doesn’t really give you any advantage as the MSP when you can get that knowledge elsewhere. What’s the unique differentiator here?

    4. “MSDs bring credibility and size to an MSPs sales and marketing arsenal.” I am not sure on this one. I can only speak to my experience, but none of our partners are selling the MSPSN brand. They have made the transition from selling product (brand names and feature sets) to selling value. Value is what they deliver under their brand so I am not sure that having any particular MSD or Master MSP working for you is any particular advantage on the sales side. Maybe I am being short sighted here? The greatest advantage our partners see on the sales side is that they are backed by an arsenal of highly skilled engineers who are awake and working 24x7x365. So I am not sure here on your point unless you are selling a lot of product, but again, that’s what a distributor is for.

    5. “…we also value greatly the assistance of “Master MSPs” such as Do IT Smarter, which provided us with invaluable assistance and a map-of-the-earth roadmap to providing managed services.” This point takes me back to my original post. The Master MSP can give you the Road Map to profitable Managed Services delivery that the MSD cannot.

    Amy Luby
    CEO, MSP Services Network (MSPSN)
    aluby at mspsn dot com
    http://www.mspsn.com

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