Competition to Increase Among Master MSPs

Interest in subscription-based IT services is growing, but many solution providers that have yet to embrace managed services or software as a service (SAAS) still don’t quite know how to make the transition.

For them, partnering may be the best approach. With that in mind, Network Depot has launched a service that takes a lot of the mystery out of launching a managed services practice.

Having started its own managed services practice only a couple of years ago, the solution provider is now redefining its market position by offering prepackaged managed services to other providers under the name of Virtual Administrator. In doing so, Network Depot is joining a relatively exclusive group of channel companies that function as master MSPs or distributors of managed services.

The group so far includes Santa Ana, Calif.-based distributor Ingram Micro’s Seismic division and Do IT Smarter, a San Diego-based aggregator of managed services from vendors such as Level Platforms, Dell SilverBack, SonicWall and MX Logic.

Network Depot, Reston, Va., has built its flagship offering on Kaseya’s managed services platform. Much like Do IT Smarter did with SilverBack a few years ago, Virtual Administrator removes the high upfront costs of adopting the platform by instead offering the service to other solution providers on a per-use basis.

That means that rather than come up with tens of thousands of dollars to build a network operating center (NOC) from which to run the platform to monitor clients’ IT environments, small solution providers pay as little as $6.95 per user for use of the platform through a hosting arrangement with Virtual Administrator.

“Our target customer is a small IT shop,” says Chris Amori, a principal partner in Network Depot and Virtual Administrator. “Most of these shops are new to the model.”

By chasing the business of small, local IT shops, Amori predicts that Virtual Administrator will double in size before year’s end. He declined to disclose how many solution providers the company has already recruited.

In addition to extending the Kaseya platform to small IT shops, Virtual Administrator also plans to add other subscription-based technology services, including SonicWall’s SAAS offerings.

In doing so, Virtual Administrator will position itself as an up-and-coming competitor to Do IT Smarter and Seismic.

Keith Bradley, North America president for Ingram Micro, says increased competition in managed services is a given, but Seismic has the advantage of having been a “first mover.” Switching platforms is costly, he says, so the reasons for switching have to be very compelling.

Amori says he believes the IT channel now is full of companies that want to get into managed services. By partnering with Virtual Administrator, they can ease into the model, he says, and eventually they may decide to go it alone and build their own NOC. And that, he says, is just fine with him.

“We have no worries about finding more people,” he says.

The timing of Virtual Administrator’s launch may be just right. With the economy slowing to a crawl, technology buyers are putting off capital expenditures on hardware and software but are increasingly amenable to per-user subscription services.

As a result, the conditions for launching a master MSP company are more conducive than they were two or three years ago.

“The timing for that is better now than when we tried it,” says Oli Thordarson, CEO of MSP Alvaka Networks, of Irvine, Calif.

Alvaka is a managed services pioneer, and even though it does some business with other solution providers, its attempts to become a master MSP some years back fizzled.

Thordarson says the market wasn’t ready and the available managed services tools then didn’t fit his company’s profile of focusing on large midsize companies.

Virtual Administrator is an offshoot of the MSP solution Network Depot has been offering its own clients. Amori says that growing interest from other solution providers in the solution compelled the company to launch its own partner program.