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What It Really Means To Be An MSP

Editor&'s Note: Following is the first in an occasional series of guest commentaries about the challenges of becoming a managed service provider.

Editor&'s Note: Following is the first in an occasional series of guest commentaries about the challenges of becoming a managed service provider.

Managed service providers are to technology what HMOs are to medicine: They provide predictable costs, aggregated services and preventative care to the patient, while offering simplified management, predictable profits and purchasing power to the provider.

While network specialists—the equivalent of emergency room doctors—still profit through heroic repair activities, the MSP is proactively focused on preventing viruses, system failures and health problems.

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>> KEVIN MCDONALD is vice president of Alvaka Networks, Huntington Beach, Calif., a CRN Editorial Cabinet member that is transitioning to the MSP model. HIs contact information is kmcdonald@alvaka.net.

Managed services aren&'t just about pre-billing on a monthly basis, they are a guarantee of stability for a reasonable cost. A true MSP should be focused on the success of its client&'s business as a whole and not simply on its network. That means being a part of business planning and strategic discussions about how to positively impact the customer&'s bottom line.

The imperative is clear: Businesses need 24x7 monitoring, a strategy for patching vulnerabilities, access to accurate and up-to-date documentation, facilities for resource planning and disaster recovery, compliance support and managed security. IT departments are becoming business units with P&L responsibility; they need real budgets, future road maps, stability and accountability for losses.

Some of you will resist the managed services movement, arguing it will cut into your service revenue. To this I say that managed services certainly are designed to decrease reactive support, but this does not have to mean a negative impact on profitability. Customers that are happy are more likely to increase their engagement. If the MSP knows when a client&'s network needs more bandwidth, increased disk space, system upgrades and so on before the competition does, it is more likely to prevent unforeseen issues and win the deal. Only under the MSP model are the goals of the service provider and the client brought into alignment. If you run a traditional IT services firm, failures sustain your organization. If your clients are too healthy, you lose service revenue. In the MSP model, if your client is happy, so are you. You get paid for preventing the issues in the first place.

Historically, it has been a challenge for on-site service and hardware providers to stay on top of customer needs. An MSP has a constant finger on the customer&'s pulse. It is empowered to predict needs, consult on future and new technologies and be a truly trusted adviser.

MSPs are the eyes and ears of business managers. If an MSP does its job, it stands to enjoy recurring profit, an exponential increase in project and service revenue, and sales of new and beneficial products. There is huge benefit in limiting conversations with customers to how good things have been, how improvements can be achieved and what the future offers. In fact, the most difficult job of any successful MSP is to maintain its relevance in the face of consistent stability and problem-free technology.

In this series, we&'ll delve into operational issues such as whether you should build your own data center or partner with a vendor, the financial implications of switching to a recurring revenue stream, human resources challenges and the customer&'s perspective. Alvaka Networks speaks from nearly 14 years of experience in profitably delivering proactive and advanced network support.

CRN welcomes letters on current news issues and guest commentaries from solution providers. Please limit your comments to no more than 550 words. Your letters or columns may be abridged for space considerations. Send suggestions to CRN Editor Heather Clancy at hclancy@cmp.com.

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