Managed Services Still Not for Everyone

I am not an early adopter. I tend to view with suspicion new gadgets that promise to change your life for the better in ways unimaginable.

To give a few examples:

I questioned the need for power windows for a long time.

I was one of the last people I know to get a cell phone.

I replaced my VCR with a DVD player long after everybody else had done so.

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I’m not anti-change. My resistance to new gadgets may be related to comfort, but it probably has a lot more to do with an inclination to question everything. It can get annoying, I admit.

With this in mind, in recent weeks I have developed an appreciation for those VARs that have resisted the managed services wave. Having covered managed services for the past three years or so, I have made a lot of contacts in that subset of the IT channel to the point of half-believing that everyone in the channel is involved in managed services somehow.

But a few weeks ago I started asking for estimates of how many channel companies actually do managed services. The estimates varied wildly – anywhere from 20 percent to as much as 75 percent.

The high estimate came from Arnie Bellini, CEO of business automation software vendor Connectwise. Bellini believes only about a third of that 75 percent is fully committed to managed services and, as a result, is executing properly. The remainder comprises companies at different levels of commitment to the managed services model, from those that invested in a remote monitoring and management tool only to let it gather dust to those that are in the process of transforming the business.

Peter Sandiford, CEO of Level Platforms, estimates that about 10,000 solution providers use remote monitoring and management technology from his company and its competitors. Based on an estimate of 50,000 total channel companies in the United States, the 10,000 amounts to a mere 20 percent, Sandiford says.

Why the wild discrepancy? The definition of the term “managed services” certainly plays a role here. In addition, some channel companies may be using remote monitoring and management systems from companies that Sandiford doesn’t consider competitors.

In any case, when you consider Bellini’s number of companies truly committed to the model versus Sandiford’s 20 percent estimate, they aren’t as far apart as it may seem.

And while that is an intriguing enough question, I was more curious about why after about five years or so of managed services hype, more channel companies haven’t embraced the model. What is causing some people to hold out?

Sure, the hold-out question carries an inherent bias, but if it’s true that managed services provide such benefits as steady cash flow to solution providers and reliable IT performance to customers, why wouldn’t all channel companies rush to do it?

Doug Neumetzger, owner of solution provider Palisade Sales in River Vale, N.J., says when he looked into managed services more than a year ago, he quickly concluded the upfront investment was too high.

“It can be difficult to properly convey [to customers] how an upfront proactive investment will potentially avoid greater costs down the road,” says Neumetzger, who nevertheless has not entirely ruled out managed services.

No doubt, countless other VARs have reached the same conclusion. For them, a hosting option that removes the need for a big upfront investment might be the ticket. Some companies, however, may view third-party hosting as giving up too much control.

Aside from the issues of control and investment, I suspect for many VARs the resistance to managed services may not be all that different from my suspicion of new gadgets. If you know how to read a map, why would you use GPS?

I used a GPS unit for the first time last week. I tested it out on a route I take at least once a week. I kept ignoring its directions, and the unit kept recalculating the route. When I was about to take a left to my destination less than two miles down the road to which I was turning, the unit was telling me to go right. And you wonder why I am skeptical?

Pedro Pereira is editor of eWEEK Strategic Partner and a contributing editor for Channel Insider. He is at pedro.pereira@ziffdavisenterprise.com.