The No-Capital-Required Plan to Get Started as an MSP and SaaS Provider

By Frank Ohlhorst  |  Print this article Print

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.

Frank Ohlhorst Frank J. Ohlhorst is the Executive Technology Editor for eWeek Channel Insider and brings with him over 20 years of experience in the Information Technology field.He began his career as a network administrator and applications program in the private sector for two years before joining a computer consulting firm as a programmer analyst. In 1988 Frank founded a computer consulting company, which specialized in network design, implementation, and support, along with custom accounting applications developed in a variety of programming languages.In 1991, Frank took a position with the United States Department of Energy as a Network Manager for multiple DOE Area Offices with locations at Brookhaven National Laboratory (BNL), Princeton Plasma Physics Laboratory (PPL), Argonne National Laboratory (ANL), FermiLAB and the Ames Area Office (AMESAO). Frank's duties included managing the site networks, associated staff and the inter-network links between the area offices. He also served at the Computer Security Officer (CSO) for multiple DOE sites. Frank joined CMP Technology's Channel group in 1999 as a Technical Editor assigned to the CRN Test Center, within a year, Frank became the Senior Technical Editor, and was responsible for designing product testing methodologies, assigning product reviews, roundups and bakeoffs to the CRN Test Center staff.In 2003, Frank was named Technology Editor of CRN. In that capacity, he ensured that CRN maintained a clearer focus on technology and increased the integration of the Test Center's review content into both CRN's print and web properties. He also contributed to Netseminar's, hosted sessions at CMP's Xchange Channel trade shows and helped to develop new methods of content delivery, Such as CRN-TV.In September of 2004, Frank became the Director of the CRN Test Center and was charged with increasing the Test Center's contributions to CMP's Channel Web online presence and CMP's latest monthly publication, Digital Connect, a magazine geared towards the home integrator. He also continued to contribute to CMP's Netseminar series, Xchange events, industry conferences and CRN-TV.In January of 2007, CMP Launched CRNtech, a monthly publication focused on technology for the channel, with a mailed audience of 70,000 qualified readers. Frank was instrumental in the development and design of CRNTech and was the editorial director of the publication as well as its primary contributor. He also maintained the edit calendar, and hosted quarterly CRNTech Live events.In June 2007, Frank was named Senior Technology Analyst and became responsible for the technical focus and edit calendars of all the Channel Group's publications, including CRN, CRNTech, and VARBusiness, along with the Channel Group's specialized publications Solutions Inc., Government VAR, TechBuilder and various custom publications. Frank joined Ziff Davis Enterprise in September of 2007 and focuses on creating editorial content geared towards the purveyors of Information Technology products and services. Frank writes comparative reviews, channel analysis pieces and participates in many of Ziff Davis Enterprise's tradeshows and webinars. He has received several awards for his writing and editing, including back to back best review of the year awards, and a president's award for CRN-TV. Frank speaks at many industry conferences, is a contributor to several IT Books, holds several records for online hits and has several industry certifications, including Novell's CNE, Microsoft's MCP.Frank can be reached at frank.ohlhorst@ziffdavisenterprise.com