Ingram Micro Symantec Backup Exec System Recovery 2010
Summer 2010
Channel Advisor    

In This Issue
Pondering the cloud
Unlock a new door
Learning to go digital
UC grows up
Real strength of SaaS
MSPs gain critical mass
Sales & Marketing Advisor

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MSPs Gain Critical Mass

Solution providers lend new insight into tackling the business model.

by Tam Harbert

The channel is nearing a milestone.

Almost half of all solution providers now call themselves managed service providers (MSPs), according to a recent CompTIA survey. Illustrating this trend is the fact that in just three years, Ingram Micro's Seismic managed services portfolio has seen its user ranks swell to more than 1,500 partners, making it one of Ingram Micro's fastest growing businesses, says Jason Beal, director of services sales in Ingram Micro's Services Division.

As the managed services business model nears 50-percent saturation, the Channel Advisor asked several MSPs to share some lessons about getting into the business.

Customers like an MSP's predictable billing model, but it takes getting used to for MSPs who have been booking fixed engagements for years, says Greg Onoprijenko, president of E-ternity Business Continuity Consultants Inc., a solution provider that switched to managed services two and a half years ago. Rather than one-time consulting projects, E-ternity offers a suite of services, including its own disaster-recovery and businesscontinuity planning, plus data recovery, remote monitoring and management, and security services through Ingram Micro's Seismic.

"We're sacrificing those big up-front capital deals, but spreading that same $100,000 over three years," says Onoprijenko. E-ternity was fortunate in that the company had already adopted a managed services model before the recession hit. "It was the saving grace for us," he says.

The Enduring MSP Formula
  • PROS: A stable, recurring-revenue business
  • CONS: Not every employee makes the change
  • BOTTOM LINE: Just do it

MasterIT, which offers remote monitoring and management, help desk (powered by Synergy, through Ingram Micro's Seismic), business continuity and hardware as a service, initially charged clients a substantial fee for a detailed assessment of their IT infrastructure and current software and telecommunications providers, says J. Michael Drake, chairman and CEO. But customers balked. Today, MasterIT offers a 90-day trial program that includes the cost of a less detailed assessment in the monthly fee.

It's one thing to take on all of a customer's IT work, but quite another to be a strategic partner. Patrick Ciccarelli, president and CEO of Varsity Technologies, learned the difference the hard way. When he shifted to managed services in 2007, he quickly built a healthy client base. "We had big clients paying us $10,000 to $12,000 a month," he says. "We were keeping things running, fixing things, but after awhile these clients started to ask, ‘What exactly are we paying for?'" Ciccarelli didn't have a good answer. "We lost managed services clients because we weren't managing them," he says. "We thought we could just sit back and they would write us a check every month."

All of the MSPs interviewed agreed that the managed services model requires different skill sets.

"It's very difficult to convert an oldmodel staff," says Onoprijenko. "We hired fresh salespeople with little or no industry background and taught them the new model from scratch."

A year after Varsity Technologies launched its MSP offering, the economy sank. But now the company has bounced back from its 2008 losses and is on course for the most profitable year in its 15-year history, says Ciccarelli.


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