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Gartner's Pingree's observation largely matches the experience of Prevalent Networks, a Warren, N.J.-based MSP and consulting company, which morphed from a value-added resale company towards a stronger managed services footing over a six-year period. Their customers, according to managing director Jonathan Dambrot, have become much more interested in discussing managed security services than they were during the early days of the transition.
"I think you're looking at the second genesis of the solution provider," said Dambrot. "The first genesis occurred eight to 10 years ago when companies like ConnectWise provided the infrastructure to manage a managed environment. So, solutions providers on the cutting-edge made that transition and started managed support practices and then began to extend into other service areas. That was MSP 1.0. Now, MSP 2.0 is about organizations that can deliver an application as a service that means solution providers with a vertical market expertise, or a horizontal expertise across a certain portfolio, can be highly successful delivering technologies as a service. We've streamlined a lot of the processes and eliminated a lot of the complexity around managing the technologies."
Dambrot acknowledges that the transition towards managed security was not an easy one.
"It took a couple of years before we really had a stable services model," he said. "We needed to hire new people to help us develop the services model and develop the operations around them. Fortunately, the core resale and consulting business actually continued to grow, which helped to offset the cost of entering the services space. But, we were able to provide value to our customers on both sides of the business, and that is what helped our service take off."
In addition to adopting the MSP model to support security and compliance, Prevalent Networks also functions as an independent software vendor as a means of adding additional differentiation to their value proposition. Over the course of time, the company learned specific strategies for success, as well as specific strategies to avoid.
"One of the things we learned involves a Trojan Horse mentality," he said. "We typically go in with a smaller deal and let the customers become acclimated and develop some confidence in us. Once that is achieved, they tend to be a lot more amenable to larger-scale deals. Once they start deriving value, we become much more entrenched."
A similarly positive experience is reported by Jacob Braun, president of Waka Digital, a Boston-based managed service provider that has an established niche in regulatory compliance and IT security services for the midmarket and enterprise. Similar to Prevalent, Braun's company also includes an ISV practice.
"It's been an interesting progression," he said. "It's a challenge to look at all the infrastructure and technologies and figure out how they relate to the security piece. A lot of companies don't have the internal resources to do that. But, I think the model works well for security. The benefit to the client is that there is a more seamless approach integrated with the business processes, and that there is a team that is watching it 24/7. Success within managed services depends on both the time commitment and a resource commitment. And, security changes by the minute, so this is especially relevant. However, the transition to managed services is not something that can be done lightly, and it's not something that can be done quickly."