Procurement as a Service Gains Traction with MSPs

It seems the more IT services you provide to customers, the more they want
you to sell them hardware and software. That is what many managed services
providers find as they gain the trust of their customers.

But some MSPs have little to no interest in messing with product procurement,
which is time-consuming and generates razor-thin margins. After all, the MSP
model centers on delivering services remotely as a continuum and getting paid
on a regular basis, be it monthly or quarterly, for it.

For MSPs that would rather not deal with one-off product deals, there is Axis
Business Solutions, a Portsmouth, N.H.,
business that handles product procurement and logistics for IT channel
companies. Axis, which calls its model procurement as a service, or PAAS,
has focused its recruitment efforts over the past year on MSPs.

The efforts are paying off. Joe Paquet, Axis vice president of alliances, says
the company is signing up an average of two partners monthly, and the total of
MSP partners has topped 30.

Paquet says MSPs are the best prospects for Axis’ services because they prefer
to focus on their core service offerings.

“When we deliver our message to MSPs, it really resonates,” he says. The
message revolves around eliminating the costs associated with the process of
procuring technology from suppliers such as distributors and vendors.

The slumping economy also is playing a role in the recruitment, as
budget-conscious companies look for ways to control overhead costs, says
Paquet. “Part of our conversation with them now is related to the economic conditions,”
he says.

But the economy is only a piece of it. Procurement as a service just happens to
fit in nicely with the managed services model and with the channel’s ongoing
efforts to automate its operations.

Paquet says the Axis service is integrated with the PSA
(professional services automation) software of ConnectWise and, soon, Autotask.
Both vendors’ automation technology also integrates with the platforms MSPs use
to remotely monitor and manage their customers’ IT assets.

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That means the software MSPs are using to run their own businesses now also
allows them to initiate the Axis procurement process.

Axis handles product research, order fulfillment, invoicing, accounts
receivables, shipping and product returns for MSPs such as Denver-based Allen
Technology Advising, which Axis signed up last week, and Greystone Technology
Group, also in Denver, a partner
since November.

Procurement is best handled by people employed specifically to do it, but MSPs
typically hire high-priced technicians and engineers to focus on delivering
services. Assigning them to procurement, therefore, is costly and ultimately
results in little to no profit from product sales. Yet, Axis can make a profit because
that is all the company does, and as such, the process becomes more efficient
and cost-effective.

Dave Sobel, CEO of Axis partner Evolve
Technologies, of Fairfax, Va., says handing off procurement to Axis has reduced
the time it takes to give customers quotes for product purchases from days to
hours. Evolve’s engineers, he says, were only too glad to shed the procurement
burden.

“We’re in the services business,” he says. “I always wanted to be in the
services business, and product was something I had to do rather than something
I wanted to do. Now I don’t do procurement anymore.”

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Putting a quote together, he says, can cost Evolve as much as $300 just in
labor. Over time, you put enough quotes together and the costs add up.

Evolve’s partnership with Axis predates the current economic downturn, but
Sobel says having the partnership helps get through the leaner times.

Paquet says MSPs can use the Axis partnership as a competitive advantage. Axis
partners can tell customers that because they have a partner handling product
procurement, they are better able to focus on delivering services.