Managed services provider Do IT Smarter is shifting its business focus from selling to end-user customers to partnering with other providers.
Company management concluded two years ago that zeroing in on VARs and integrators would open the door to a large market where Do IT Smarter, of San Diego, could apply a lot of the lessons learned providing managed services to end customers.
In the past six months the 6-year-old company has enlisted 25 VAR partners and is shooting for 230 by the end of this year, said Do IT Smarter President Lane Smith. The company is retaining its legacy customers but no longer pursues the end user.
VARs can set themselves up as MSPs (managed service providers) through partnerships with Do IT Smarter for as little as $99 a month. That is a significantly lower than the $35,000 initial investment they would have to make if partnering directly with the managed services platform vendor that Do IT Smarter uses, Billerica, Mass.-based SilverBack Technologies Inc.
"We actually worked closely with Do IT Smarter on this MSP program," said Christine Washburn, vice president of marketing at SilverBack. "We have a special arrangement with them because they are so good at what they have done."
That arrangement is called the Instant-MSP Program and targets resellers with annual revenue in the $1 million to $5 million range.
By partnering with Do IT Smarter, VARs avoid the costs of setting up a data center while retaining customer contact. The data center—commonly referred to as NOC, or Network Operations Center—is central to the managed services model. From there, providers remotely monitor and manage all or some of their customers' outsourced IT functions.
To set itself up as a provider to the providers, Do IT Smarter emulated the on-site training programs, planning assistance and best-practices resources SilverBack offers its own partners. The company also augmented its support capabilities, said Smith.
"We've had to add a whole second level of support to our NOC to focus on resellers," he said. "This level of support is for more senior technical people."
Managed services has caught the attention of an increasing number of VARs and integrators in the last couple of years as end-user acceptance of the model has spread. Customers like the predictability of services, and providers enjoy the predictable revenue they get from billing customers monthly. If asked, most VARs will say they are at least considering adopting the model, but many don't know how to go about it.
Instant-MSP, Washburn said, gives VARs with limited resources and no expertise in the model a quick-start option.
One such VAR is NetManage IT, of Liverpool, N.Y., which signed up for the Do IT Smarter program recently and already has three customers using managed services, including a new customer.
NetManageIT President Herb Bender said he researched several managed services platform options before calling SilverBack, which referred him to Do IT Smarter.
Bender is banking on managed services as the future of his company, which has annual revenue of about $300,000, even changing its name from DMH Consulting to better reflect its new model. He sees the managed services model as an important differentiator from competitors that do not offer it.
The model, he said, has made NetManageIT more responsive to customers because of the systems-monitoring component. "When there is a problem, we can fix it quickly. We have improved efficiencies, and we can do a lot more for our customers," he said.
Customers are used to dealing with IT providers only when making a purchase or when something breaks. Outsourcing IT to an MSP creates an "out of sight, out of mind" outlook with customers who may not realize how much work the provider is doing when systems are running smoothly.
This is why SilverBack's platform includes technology to document for customers work performed and diagnostic issues.
Smith said he believes at least half of the channel eventually will offer managed services as VARs and integrators get wise to the idea that repeatable IT tasks such as software updates, network maintenance and backups are better executed when done remotely for customers.
"What VARs are going to realize now is, as customers become more dependent on technology, they need more and more attention," he said.
But a lot of education on the managed services model, which involves longer sales cycles and different compensation approaches for sales people, is still necessary, he said.
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