State of Distribution: Friend Or Foe

Few terms can spawn a heady emulsion of excitement and confusion like "managed services." The nascent model has become to the channel what the Segway was to transportation: Nobody is quite sure what it is, but most agree it will be important, and everyone wants in on the ground floor.

While the channel argues about definitions and pricing models, a new wrinkle in the managed-services milieu emerges. The disties want a piece of the MSP action, and whether they help or challenge VARs in this space could determine just what the managed-services arena ends up looking like.

Thus far, most distributors appear to be allies in the managed-services effort. Across the board, distributors are offering MSP packages that give VARs an inside track on platform and technology bundles that can grease the skids for early managed-services engagements.

"Managed services gets VARs out of the price discussion," says Justin Crotty, the vice president of services at Ingram Micro charged with overseeing next month's consolidation of the distributor's services offerings into a new, separate unit. "The smart VAR today is selling value. The reason VARs are moving up the value chain with managed services is because it's profitable and necessary to stay relevant."

"Managed services are an excellent opportunity for resellers to generate recurring revenue," says Barb Miller, director of government and technical services at Clearwater, Fla.-based Tech Data. "Resellers successfully implementing a managed-services practice benefit from regular monthly payments, better insight into an end-user's operations and enhanced customer service."

But both sides remain keenly aware that a distributor with a comprehensive managed-services offering is one phone call away from being a VAR's competitor. How much trust solution providers place in their distributors at this point rests largely on just how badly and how quickly they want to play in the MSP space.

Sean Lyle, vice president of business development at Phoenix-based Stratera, signed on with Avnet earlier this year to deliver managed services. The program "provides the ability for our clients to leverage technologies they would not otherwise be able to support, to help drive operational and financial performance," Lyle says. "Our ability to build annuity-based revenue streams through our managed-services offerings with Avnet will be a key driver for our growth and profitability."

Lyle says he's confident that Avnet's managed services would never compete with his own. For others who still question the distributor's role as an MSP, Ray Fischer, senior vice president of professional services at Avnet in Tempe, Ariz., says the company's reputation has to speak for itself.

"We have 50 years of not breaking that trust with partners," Fischer says. "You can always usurp a relationship, but it had better be the biggest and last deal you accept."

"Offering an MSP program doesn't mean we change our entire business model," says Gary Gammon, vice president of marketing at Bell Microproducts, San Jose, Calif., which has a pilot managed-services program in place and expects to launch a full-blown program with tools from SilverBack Technologies by year's end. "Our business is to support our reseller customers with products and services that drive mutual growth and profitability."

NEXT: How disties will help VARs deliver managed services.

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