Getting Their Act Together

"You have to create margins for the reseller. You have to remain anonymous to their customer. You have to have a service that is highly reliable, and you have to continuously create and deploy new products and services to make them competitive," said Clarence Briggs, chairman and CEO of Advanced Internet Technologies (AIT), a Fayetteville, N.C., MSP.

It's as simple as that, said solution providers, which have both craved the services these upstarts provide and struggled to overcome policies that often violated basic rules of how partners should work together.

Darwinian business forces have eliminated many MSPs that required hefty fees to resell their services, solution providers said. Common sense has righted other MSPs that demanded direct contact with the customer base, without the involvement of the solution provider.

Above all else, retaining ownership of the customer account has become paramount to solution providers.

Allen Horman, president of Brunswick, Ga.-based Web and application development firm Netrophia, chose MSP AIT primarily because it encouraged solution providers to private-label services.

"Private-labeling was the biggest reason above all others that we went with AIT," said Horman. "Everyone else wanted us to put their name on everything we did. With AIT it's our logo and we price it the way we want and we sell it the way we want."

AIT, which offers a mix of Internet services such as hosting and managed infrastructure and application services, currently works with almost 10,000 solution providers.

Briggs said AIT's willingness to simply listen is the key reason for its success with the channel. "Our entire business model, our entire architecture, is built around our reseller program, and the reason it's successful is because we ask what they want," Briggs said.

Private-labeling, a rich margin and introducing new services or tools for partners every three months are some of the critical elements a reseller program must have, Briggs said.

"We compete against everyone with Web design, but with AIT we can add new services at $10 each every few months," Harmon said. "When you spread that across your customer base it adds up. And AIT actually listens when we have an idea, whether they're dealing with a Harvard graduate or a high-school dropout."

For LAN Solutions, Vic Kellan, president and CEO of the data management and remote network management provider, sought out MSP Oculan because of its technology. But it was Oculan's "eagerness" to accommodate LAN Solutions that propelled him to bank his company's future on Oculan's services.

LAN Solutions, Fairfax, Va., has four customers signed up for InfraKey, a LAN Solutions-branded remote network and administration service based on Oculan's OpticNerve management appliance, Iris agent software, or EyeLid intrusion-detection appliance. Oculan's overall suite for the SMB market is a network management platform called Cruise Control.

By the end of the year, LAN Solutions' goal is to have 40 InfraKey customers. By combining InfraKey with U.S. Resources, LAN Solutions' sister IT staffing company, the network management provider aims to become the IT department of small and midsize businesses.

"When Oculan came along, we were allowed to reposition our maintenance services that were being squeezed by manufacturer warranties and customers' internal IT staffs to a valuable service for the SMB market that is comparable to what EDS offers at the high end," Kellan said.

Oculan has a 13-step program for partners that it calls Visualize Profit. The Oculan program focuses on successful practices such as kick-off events with training, incentives for sales staff, joint sales calls as well as lessons

on upselling. Oculan even becomes the marketing arm of the partner, putting together press releases and brochures, setting up seminars and taking care of attracting potential customers to these events.

And the services are free, which reflects Oculan's internal message to employees: "Keep it simple, stupid," said Steve Giles, president and CEO of Oculan, Raleigh, N.C.

"If you make it complicated for the partner to do business with you in any way, their comfort level with you will fall off," Giles said. "Your product needs to be simple to use, which is

why the ease-of-use aspect of our product is so important. There also has to be minimal risk in doing business with us, which means giving them the ability to kick the tires and not have to pay, at least initially, for the [Visualize Profit program."

Oculan works with about 80 solution providers, 75 of which have signed on in the past seven months. The company boasts "no channel conflict" with its channel-only strategy, in which partners take its subscription service for infrastructure and security management and wrap the service around their own offerings.

At the top of the list of reasons why solution providers choose not to work with an MSP, or any vendor for that matter, is product complexity and training, according to Giles. Unlike many companies that require partners to receive certification as a Gold, Platinum or so on partner, Oculan requires little training and the setup takes minutes because its products are appliance-based, he said.

"If the product is complicated, that typically means it's also a long process to sell and educate the customer," Giles said. "That is a very oppressive environment for the partner."

Another mistake MSPs and vendors have made was assuming that the Internet was going to be their distribution channel and eliminate the solution provider, AIT's Briggs said.

"Selling hardware online is one thing, but the Internet isn't a suitable vehicle for the services industry," Briggs said. "We host around 190,000 business domains worldwide. And we are the largest private hosting company in the world. And that's because we turned right when everyone turned left and built our focus around partners."