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They spent the money because developing a proactive managed services business that bills customers on a regular basis can break the uncertain cycle of project-based work and build bases of long-term recurring revenue. But much of the money went right down the drain, lost on products and programs that were either overhyped or just plain unsuitable for the needs of solution providers.
Now, it's payoff time.
After losing many partners to competitors in 2006, MSP product vendors such as LPI Level Platforms, N-able Technologies, Zenith Infotech, Kaseya and SilverBack Technologies finally are investing in improved partner support, simplified products and sharper technical training. Distributors Ingram Micro and Bell Microproducts, which each introduced hosted MSP offerings in late 2006, are shelling out cash to ensure top-notch partner support. And smaller MSP product vendors that gained a foothold in 2006 see this year as a chance to lure MSPs looking for alternatives.
"This is the year for getting serious," said Laura Steward, founder and owner of Guardian Angel Computer Services, Norwalk, Conn.
Steward watched nearly $100,000 vanish along with countless unbillable engineering hours when in mid-2006 she hit the reset button, cut her losses and switched from an MSP platform comprising separate remote monitoring, security and storage products to a hosted all-in-one MSP platform from Zenith. The capabilities of some of the products she dumped had been oversold to her, she said, and others were poorly supported by their vendors. In the end, Steward came away with a firsthand account of the irrational exuberance that typified the 2006 MSP market.
"The market grew really fast, and that created headaches for everybody," Steward said. "But no money spent is bad money spent if you learn something." Still, those lessons can be awfully expensive, as dozens of newly formed MSPs learned when they decided to switch vendors during the second half of 2006.
Vince Cirelli, technical manager at ACS Services, a veteran solution provider in Easton, Mass., but a fledgling MSP, struggled almost half the year trying to jump-start a $30,000 MSP platform from N-able. "We spent literally four to five months trying to get it installed on the very first server. We never got it installed."
Jim Millican, president of Ashton Technology Solutions, a solution provider in Cleveland, just laid out several thousand dollars for a new Microsoft platform, even though he's still paying off a contract to LPI until February. "I have an engineer with probably 1,500 hours dedicated just to making our LPI product work reliably, efficiently, and give us the info we need, and it still doesn't," he said.
Another Cleveland-based solution provider, Eric Clemens, CEO of Acroment Technologies, switched to an MSP product from Kaseya after practically losing his shirt trying to utilize a low-cost, hosted MSP platform from a vendor he'd rather not name. "I spent thousands of dollars on labor and time trying to develop our MSP offering, even though the cost of software was very low," he said.
The time has come for MSP vendors to get serious about making life easier for partners, and that effort has finally begun in earnest, said Peter Sandiford, CEO of LPI, Ottawa. "I think that all the products—and we hear this about everybody, even about ourselves—have been hard to use," he said. "They are just not that easy. So clearly there is an opportunity to make things even simpler, and you'll see us move in that direction."
Opening The Checkbook
Inexperienced tech support at Zenith drove Barry Monies crazy. The president and CEO of Computronix, Stamford, Conn., recalls constantly having to follow up to make sure the simplest tasks were completed. In one instance, Zenith struggled to perform an overnight data backup and finally ended up rebooting a customer's system as its employees walked into work. So Monies fired Zenith and moved to Kaseya.
Zenith, Warrendale, Pa., has housed most of its network operations center (NOC) in India, making it possible to deliver remote support for PCs, servers and storage devices at rock-bottom prices as low as $2.25 per PC per month, according to Zenith CEO Akash Saraf.
"But," Monies said, "there was a language problem between us and Zenith tech support, and there was little or no personalization. And in the end we spent more time checking their work than we would have had we done it ourselves."