While some managed services platform providers race to recruit more partners, SilverBack Technologies Inc. is setting its sights on increasing business with existing partners.
The Billerica, Mass., vendor has about 100 partners that use its technology to monitor and manage the IT systems and applications of their customers. Even though the company plans to continue adding providers, it is a painstaking process that requires technology training and extensive business consulting.
"We're more interested in building up our current set of new partners," said Christine Washburn, SilverBack's vice president of marketing.
SilverBack partners typically start with 100 licenses, which combined with a monitoring appliance and setup consulting services cost them $35,000. The investment is worth the money, said Washburn, because partners using the technology can earn margins of 60 percent or more.
"Eighty-two percent of our partners will buy more licenses from us within a year," she said.
It isn't hard to burn through the initial wad of licenses, said Washburn, because each device being monitored by SilverBack technology requires a license. A single customer can easily rack up multiple licenses.
Central to SilverBack's pitch to partners is to encourage them to attach a SilverBack license to every piece of hardware their customers add.
Devices are monitored from a partner's data center. Partners have the ability to remotely monitor and manage various IT functions such as e-mail and security filters, perform such tasks as rebooting servers, set usage policies, and set up alerts through a point-and-click interface.
"We're not completely self-healing but, that said, anything with an IP address we can manage," Washburn said.
SilverBack is one of a handful of IT vendors trying to persuade channel companies to standardize on their platforms. Other platform vendors, each of which has a different strategy for pushing its wares, include N-able Technologies Inc. and Level Platforms Inc., both of Ottawa; New York-based Corente Inc.; and Kaseya Inc., of San Francisco.
Managed services over the past year have gained serious traction, with hordes of VARs and integrators making a shift to this utility-based services model for the promise of predictable revenue.
For customers, the attraction is dependable service and a lessened burden on their IT staffs to keep systems up and running. Some customers don't have IT personnel at all and rely entirely on their service providers.
"Once a service provider is monitoring a customer's network, they're locked in," said Washburn. "They start small, and what happens is it mushrooms."
According to market research firm Thinkstrategies, about 90 percent of managed services customers renew their contracts and nearly two-thirds, or 64.7 percent, buy additional services after signing their initial service contracts.
Market research firm Gartner Group predicts the utility computing services market in North America will increase to more than $25 billion in 2006, about triple the market's size in 2003, which was $8.6 billion.
And that's a lot of opportunity for the channel, but seizing it requires a considerable amount of planning and investment, which is why the platform vendors have been putting more effort into aiding partners with the transition to the utility-based model.
SilverBack takes a very hands-on approach to preparing partners for the shift, said Washburn. "We will come on a site and we have a very specific process that steps partners through it sequentially," she said.
Setting up a managed services business requires overcoming three major hurdles, according to SilverBack, the first of which is to assemble a remote monitoring and management infrastructure.
The second major challenge is retraining field service engineers to become effective remote management technicians. Thirdly, channel companies have to learn how to effectively package, price, promote and sell their managed services.
SilverBack helps partners analyze their businesses to identify weaknesses and strengths, even scouring their databases to determine in which vertical markets the partner does business.
San Diego-based managed services provider Do IT Smarter Inc. became a SilverBack partner 18 months ago in large part because of the vendor's approach in helping partners on the business end, said Lane Smith, president of Do IT Smarter. SilverBack provided the sales training and technical expertise that was instrumental in setting up Do IT Smarter's NOC (network operations center).
"What I really liked about SilverBack was their whole philosophy," Smith said. "They focused more on business than just the technology."
Do IT Smarter, in business for six years, has evolved into a vendor in its own right since partnering with SilverBack. The company is using its NOC to partner with VARs and integrators that want to get into managed services. Though the company is retaining its legacy customers, it no longer seeks new ones.
"We've actually switched our model completely," Smith said. "We're no longer selling direct to end users. We're selling to VARs."
Do IT Smarter's experience is not unusual. SilverBack itself started out as an MSP in 1999, and that was a few years before the model started gaining momentum. At the time, the MSP model was largely conceptual while the application-hosting model known as ASP, or application service provider, was believed by many to be the wave of the future.
Washburn said the transition from services provider to platform vendor was a natural evolution. Partner recruitment, she said, has largely taken place through word of mouth.
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