MSP Ecosystems Start to Come of Age
An interesting phenomenon is starting to take shape in the managed services category that has some long term implications for resellers in the channel.
Managed service providers (MSPs) are increasingly partnering with software vendors to deliver more products as a service. For instance, instead of the customer buying backup and recovery software, the customer relies on a service provided by the MSP. In most of these cases the relationship between the MSP and the vendor is exclusive, so the days when a solution might sell one backup and recovery application to one customer and another one to a different customer are fading away in favor of driving all the business to one vendor.
Case in point is Modular Data Protection Services (DPS), which via an alliance with the Intel Hybrid Cloud group, 6fusion and the consulting firm MSPexcellence created a Modular 360° Partner Program through which MSPs can deliver a variety of data protection services.
Modular DPS CEO Eric Strong says the this effort is designed to help MPSs lower the cost of adding more services, while also providing the incentives needed to invest in rolling out those services.
Similarly, N-able Technologies has a relationship with CA Technologies via which it makes available backup and replication software to MSPs that resell its services,
As time marches on these types of arrangement are going to be the rule rather than the exception. As the number of customers relying on managed and cloud computing services steadily increases, the route to market for software products fundamentally changes. Instead of selling software that is installed by each individual customer, the software is delivered via service providers that usually charge a monthly fee.
Debates over how those MSPs should be compensated and charged for using that software are as old as the MSP model itself. But as MSPs continue to gain ground, software vendors are suddenly competing more aggressively to get that business. Initially, many software vendors tended to not want to create special channel pricing and programs, but now it is increasing common for vendors of all sizes to have service provider programs. What’s changed is that in the wake of the downturn and the growing appreciation for software-as-a-service (SaaS) delivery models, software vendors are now much more inclined to work with service providers.
While most MSPs are not particular large, there are now enough of them that collectively they represent a significant element of the channel. In the near future, there should also be a fair amount of consolidation across the MSP channel, which should leave fewer, larger companies that will have more influence over a broader swath of customers.
The MSP channel has been maturing for more than a decade now, and there are probably still more classic resellers than MSPs in the channel. But times eventually do change. Thanks to the advent of cloud computing, customers are more amenable to the whole IT services concept. Whether it’s a cloud service or a managed service doesn’t even seem to matter. All many of them know is that it’s become increasingly more cost effective for them to leverage IT as a service they don’t have to manage.