While many VARs have begun transitioning from traditional resale to managed services, some companies that began as managed service providers are seeing the need to extend their expertise in the opposite direction, occasionally functioning as resellers in order to meet the full need of their customers.
Turkey Systems, Frankfort, Ind., is a classic example. Starting out as a managed service provider in July of last year, this IT consulting company and its founder offers a variety of services such as help desk support, network design and hosting solutions. Key vendor partners and platforms include Cisco, Spiceworks and Linux.
But within the first few months, company founder James Stoll noticed that many of his customers were not focused exclusively on managed services or the cloud. Most still had the need for equipment on their premises to support at least some of their business applications. Since Turkey Systems was exclusively an MSP in its earlier days, that meant that Stoll would need to share his customers with resellers that would meet the customers' on-premise needs.
This, he decided, was an unacceptable risk.
"It became clear after the first six months that we were losing out on a lot of opportunities because of this exposure to other channel partners, so I got myself into a position where I could be of more help at the customer premises," said Stoll. "This meant that I needed to function as a traditional reseller as much as I needed to be a solid managed service provider. I want to position my company as the only IT resource that my customers would possibly need. So I formed alliances with a number of vendors at the resale level, across the board in terms of technologies. My company made deals with Cisco, Fortinet, Dell and Lenovo."
Stoll leveraged his earlier career experience in the development of resale capabilities so he could support his customers, even if he might not actively promote those capabilities to the market at large.
"I decided that there was no longer any real money in resale," he said. "But I do it because I want to be a one-stop shop for my clients' needs. The benefit to me is that it leads to more business because the customer knows that they can come to me regardless of whether it is a managed service or the purchase of gear. By being able to answer the need on both sides of the equation, I can work more deeply with the customer and establish closer relationships."
Stoll put this strategy into place at the beginning of this year. He recognizes that, under his current strategy, he cannot achieve the scale, and by extension, the discounts, necessary to be truly profitable in resale.
"It's hard to be competitive against larger companies that have greater discounts and economies of scale," he said. "So I don't really make a lot of money at this. I just do it for my customers. I promote it solely to my customers so they know we can do this. I don't promote it widely because I don't want to position myself as a VAR. But by adding a resale component to my business, I can keep my customers happier while fending off competitors from those accounts."
PUBLISHED APRIL 29, 2013