Making An MSP Play

The two reseller giants are slated to announce a deal this week with managed service provider (MSP) platform vendor Silverback Technologies, Billerica, Mass.

Under the pact, CDW, a $6 billion direct marketer reseller known for its aggressive pricing, and ASAP, a $1.5 billion large account reseller (LAR), will outsource MSP duties exclusively to two select Elite Partners of Silverback.

With a mouse click, CDW customers buying a SonicWall TZ firewall can add to their shopping cart 90 days of unlimited managed services, including remote configuration, monitoring, alerts and software upgrades for an additional $199 over the $1,749 cost of the device. The managed services, called QuickStart, are delivered solely by Network Partners, a $5 million-per-year solution provider and MSP in Richardson, Texas, which began the deal with CDW in May.

As many as a half-dozen orders hit each day, and Network Partners expects to grow its MSP business by 25 percent over the next year thanks in large part to CDW, said Network Partners President Bill Hood.

CDW owns the customer initially, Hood said, but during the 90-day QuickStart contract Network Partners makes its move to lock the customer into a longer-term MSP relationship. “Our own renewal rates are sold every time we call [the customer] and tell them, ‘Someone tried to break into your firewall,&' ” Hood said.

Network Partners gives CDW about a 20 percent discount on its MSP costs, which CDW can mark up further, Hood said. “CDW loves it because they are used to just seeing about 5 percent margins on point products,” he said.

Scott Kranzberg, director of technology services at CDW, said it&'s too early to tell how far CDW will expand its MSP offerings. CDW is not ready to completely replace the vendor support offerings it SKUs with products—such as Hewlett-Packard&'s 9x5 three-incident server support packs—with proactive MSP options, Kranzberg said. Even though Network Partners can manage complete networks, and everything on the CDW site, CDW customers want the option of either MSP or vendor support, Kranzberg said.

CDW&'s point-product mind-set challenged the MSP model, Hood said. Like the one-year vendor support packs CDW SKUs with products, CDW wanted a year&'s billing in advance, whereas Network Partners sought to give customers month-to-month deals. “We had to talk them down to at least a minimum of a quarter at a time,” he said.

Even now, Network Partners will consider financing the cost of a CDW product out of pocket if managed services revenue can be locked in. “That&'s the risk you have to take sometimes,” Hood said.

ASAP will take the new MSP offerings direct to its customers, said Harry Zoberman, senior vice president of marketing at ASAP. He declined to discuss price.

Silverback Elite partner Do IT Smarter, San Diego, will provide the managed service but will stay behind the curtain, as ASAP wants to maintain ownership of customers, he said.

However, ASAP will get a 20 percent discount from the MSP, which ASAP can mark up to 30 percent, said Todd McKendrick, vice president of sales at Do IT Smarter. “Their eyes light up on the revenue opportunity.”

Jim Hare, vice president of worldwide sales at Silverback, said the company wants all 15 of its Elite Partners in similar deals with big volume channel players.