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A year ago the typical VAR would require a fair amount of explanation and persuasion when being pitched on the merits of managed services.

Not anymore, said Peter Sandiford, CEO of LPI Level Platforms Inc., an Ottawa-based provider of managed services software for VARs and integrators.

“Everybody gets it,” he said “When we entered the market, we spent a lot of time talking to customers about why this was a good thing to do. We don’t do that now.”

More and more VARs are making the transition from the traditional model of product sales and reactive services to managed services.

The appeal of managed services to the VAR is the opportunity to bill customers monthly, as opposed to the more traditional feast-or-famine model of invoicing per project.

Through managed services, a VAR takes over part or all of a customer’s IT department to manage it remotely, in what Sandiford termed a proactive services model.

Level Platforms’ software, Managed Workplace, lets VARs and integrators monitor their customers’ computing environments over the Web.

Users keep track of customer networks through a dashboard that provides performance reporting and real-time alerts, as well as an inventory of assets such as hardware, software, networking devices and patches.

Since launching the product in May 2004, Sandiford said the company has recruited 500 channel partners to use Managed Workplace as its managed services platform.

Level Platforms wants to boost that number to 10,000 over the next two years, he said.

“We’ve had a fantastic response to our product. Just think, we’ve been in the market only a year,” he said.

Level Platforms isn’t the only successful player, either. Its main rival, N-able Technologies Inc., also based in Ottawa, is targeting VARs and integrators for its remote network monitoring technology.

“We’ve always targeted those partners because they’ve got those existing relationships with customers that don’t have IT groups,” said N-Able product manager Rob Bissett.

N-able claims to have signed up more than 600 resellers during the last couple of years, including a number of managed-services providers.

Level Platforms is counting on two strategic partnerships to help it reach its target growth rate.

One is a distribution agreement with Ingram Micro Inc., of Santa Ana, Calif., and the other involves the world’s largest software company, Microsoft Corp., of Redmond, Wash.

The software giant is integrating Managed Workspace with its Microsoft CRM, a customer relationship management solution aimed at the SMB (small and midsize business) market.

Product integration provides opportunities.

With the integration of the products, VARs and integrators can provide managed services and identify new service opportunities without having to leave the Microsoft CRM interface.

“The integration of Managed Workplace will provide CRM users with a wide range of information needed to make faster and more effective business decisions,” said Lori Vangerud, channel development manager for CRM at Microsoft.

Microsoft Certified Partners receive CRM as part of their partner agreements. When they buy a Managed Workplace license, they receive a Microsoft CRM connector that allows Managed Workplace to run as part of CRM, allowing CRM to function as their single customer management platform, said Sandiford.

“Each product can operate independently, but with both integrated, it operates effectively as a single integrated application,” he said.

Level Platforms developed Managed Workplace on Microsoft’s .Net platform, so the integration was natural, said Sandiford.

Managed Workplace was developed with the SMB market in mind, and more than 90 percent of the computing environments in that market run on a Microsoft platform.

“The real sweet spot here is the 10- to 150-desktop space,” he said. Companies in this space have no CIO or even IT people, and typically they defer to a VAR for technical direction.

Click here to read more about VARs making transitions to managed services.

One such VAR is Mytech Partners in Minneapolis, which is using Managed Workplace for 10 customers, said company President Nathan Austin.

The company started using the product about four months ago and is in the midst of an effort to grow its managed services business, he said.

Austin and Mytech CEO Lis Sildenberg said they opted for the Level Platforms technology because of the low cost.

Level Platforms charges a $60 per-site monthly fee, which the Mytech executives found very attractive, Sildenberg said.

Managed services accounts for 30 percent of Mytech’s revenue, and the other 70 percent is the company’s traditional business of installations and network design, said Sildenberg. His goal, he said, is to reverse that mix.

“This market is really starting to play out,” he said.

The opportunity for managed services in the SMB market, said Sandiford, is nothing short of enormous.

Of 2 million SMBs in the United States that could potentially take advantage of remote IT services, not even 5 percent as of yet have entered a managed services contract with a VAR or integrator.

VARs and integrators, he said, traditionally have had “chaotic” service agreements with customers under which the customer will call a VAR or integrator who did an installation at the site whenever they have a break/fix situation.

With a managed services contract, Bissett said, the agreement becomes formal and allows for preventive maintenance.

Sandiford said Level Platforms originally was a managed service provider. The company decided to go the software development route after identifying a need for managed services in the SMB space.