The No-Capital-Required Plan to Get Started as an MSP and SaaS ProviderBy Frank Ohlhorst | Posted 2011-06-06 Email Print
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Entering the managed services and software-as-a-service businesses used to require an upfront capital investment in hardware, software and maybe even a data center. But the cloud has changed all that and now many vendors are offering a quick way to enter this higher-margin business. Here's how to get started as an MSP and/or SaaS provider with little to no investment required.
The managed services provider (MSP) model has been around for years and has brought ongoing revenue streams to a multitude of solution providers that had made the leap into the hosted services space. Much the same can be said for Software as a Service (SaaS). And although many SaaS solutions are offered via direct channels, there has been some opportunity for solution providers to benefit from SaaS, thanks to channel friendly software vendors.
The challenges of MSP and SaaS solutions have left many solution providers wondering if there is still room for them in that growing market. Still others have been scared away by the perceived high cost of entry, a myth that still needs debunking.
The truth of the matter is that the dynamics of becoming an MSP and/or SaaS provider has changed recently. In the past solution providers embarking on the MSP path would have to make a significant investment in hardware, software and even data centers to build an MSP practice. However, evolution of the market has brought many cloud based hosts into view that will sublet their offerings to solution providers, eliminating much of that up front investment required previously.
Originally, most of the cloud based service hosts were looking to bring their offers direct to an end customer, ignoring the benefits that the channel had to offer. Over time, those same hosts began to realize the power of the channel to extend their reach into more markets by leveraging the partner model.
That shift has created the opportunities for solution providers to become MSP or SaaS providers, even at this late stage in the game. An added incentive is that many hosts are allowing partners to self brand or rebrand offerings, giving the solution provider control over the customer relationship and adding an air of uniqueness to the solution provider’s offerings.
What’s more, the very idea of an MSP has evolved from the traditional managing-PCs-and-servers practice into a vast array of offerings, ranging from unified communications to virtual desktops. Take for example OS33, a host that is offering fully hosted IT, where all of the servers and desktop applications actually run in the cloud, provisioned by an authorized partner. Solution providers can sign up with OS33, rebrand the offering and sell their customers hosted desktop services and offer complete network management under a single umbrella - a virtual quick path to becoming an MSP and more.
A more specialized offering comes from Chartec, an organization that is offering HaaS (Hardware as a Service) to channel players. The company’s first solution is an appliance designed for backup and disaster recovery for the SMB market. Treated as a service, customers pay a monthly fee for the appliance, which is used to backup their servers and endpoints and then transfer the backed-up data to an off-site host for additional protection. Chartec’s solution uses virtualization to recreate servers and services if there is an IT disaster at the customer's location. Solution providers can leverage HaaS to build a managed disaster recovery service and roll it into their MSP customers.
Other examples abound, including from the big players out there - Both Kaseya and N-Able offer hosted asset management solutions that can become part of an MSP offering with very little effort and little upfront costs.
For those solution providers looking to transform into an MSP, additional opportunities abound, especially since "the cloud" has started to become an acceptable business term. However, there are few tricks of the trade that will help to ensure success, and they all come down to partnering with the correct hosts.
Some simple guidelines for vetting managed services and software-as-a-service vendor and host partners include:
- Determine if there is an upfront investment required.
- Determine what the channel program tiers are and if there are minimum sales goals.
- Check for exclusivity of the offering, what it takes to become a partner and how territories are protected.
- Validate the rules around re-branding.
- Verify customer ownership, make sure you retain control of the customer relationship.
- Check the provisioning requirements, make sure you can provision services quickly and easily.
- Verify the host's viability, make sure they will be around for a whileCheck the service level agreements, make sure downtime is avoidable.
- Check for service scalability, integration with other services and management capabilities.
- See if the support policies are adequate for your needs, see who offers first line of support.
Those guidelines will help you to decide what hosts are good partners and ultimately help you to decide on a pricing structure and determine if that pricing structure offers a high enough margin. The keys to becoming a successful MSP lie in two places – your business sense and the technology you offer. Ideally, you should be able to offer a customer a unique bandoleer of services that are affordable and offer demonstrable benefits, as well as cementing a strong customer relationship.