VARs Adopt 'Smarter' Managed Services ModelBy Pedro Pereira | Posted 2007-01-09 Email Print
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One year after deciding to shift its focus, Do It Smarter has recruited 75 VARs as partners and hopes to recruit twice as many this year.Do IT Smarter has recruited 75 channel partners since it decided a year ago to phase out of the end-user business to instead become an intermediary between managed services providers and software tool vendors.
Encouraged by the response thus far, the San Diego-based company is stepping up recruiting efforts and aims to enlist 100 to 150 more partners this year, said Todd McKendrick, vice president of sales at Do IT Smarter.
Formerly a solution provider itself, DO IT Smarter has been reinventing itself as what McKendrick called a "managed services specialist." As such, the company is becoming a virtual distributor of subscription-based fixed-fee software services to MSPs, as well as VARs and integrators making the switch to the managed services model.
The 75 Do It Smarter partners collectively have generated about $250,000 through the company's Instant-MSP program, earning profit margins of at least 30 percent, said company executives. VARs pay fees starting at $199 per month for five licenses.
McKendrick said about half the partners Do IT Smarter has recruited are solution providers already working with such vendors as SonicWall and MX Logic. Those partners, he said, have a good understanding of the benefit of creating customer "stickiness" through managed services.
"That's the principal way that we get VARs coming to us," he said.
The other half of recruits come from equal parts cold-calling and in response to end-user customer demand for managed services, McKendrick said.
Even though customers may not necessarily know the term "managed services," McKendrick said, more and more have learned of the remote monitoring and management model. This happens as a result of word of mouth, technical staff moving from company to company, and from reading in the trade press about the model, he said.
Demand from end users, he noted, is a new phenomenon. "This really kind of only happened in the last quarter or two."
Jeff Kaplan, managing director of THINKStrategies, a research firm in Wellesley, Mass., said the end-user demand comes as no surprise. Between press reports and research by companies such as THINKStrategies, he said, managed services have been in the spotlight.
"I think the idea of managed services is getting a lot of attention, and therefore, there's a lot of in-bound demand," he said.
The demand probably also owes to the evangelizing that MSPs have been doing about the model because customers may not readily understand how it works. Customers are used to seeing their IT services technicians on site when something goes wrong or for an installation, and it takes an adjustment to trust that what providers say takes place remotely is actually happening.
Doug Ford, president of The IT Pros, an MSP and Do IT Smarter partner in San Diego, said winning customers over to the model still requires a lot of evangelizing. Ford said he hasn't seen any end-user-generated demand yet.
IT Pros, founded in 2001, went into business as an MSP at a time when the term "managed services" was not in use. As remote monitoring and management tools became available, Ford said, the company started investigating them for its use.
It struck a deal with SilverBack competitor N-able Technologies, of Ottawa, but decided after awhile the N-able technology didn't suit its needs, Ford said.
That's when the company turned to DO IT Smarter, which at the time was a competitor of IT Pros. Ford conceded he felt some trepidation about the partnership originally, but added Do IT Smarter has given him no reason to fear any competition for customers since they partnered.
"It's worked out really well," he said.
McKendrick said Do IT Smarter has stopped engaging end-user customers directly, though the company has retained some legacy customers. Do IT Smarter has handed over some of that business to its partners, he said, but the company can't divest itself completely of the direct business until it replaces the revenue it generates with revenue from partners.
As the company steps up recruiting, McKendrick said it will place more emphasis on VARs in specific vertical markets. "We're working a lot more with specific-industry software vendors," he said.
"Five years ago we were a traditional VAR. Today we sell to VARs a kind of MSP-in-a-box solution we call Instant-MSP," said Don Begg, CEO of Do IT Smarter. "We've invested $500,000 in technology and services that a small VAR shop can exploit for $199 per month, which includes five licenses."