Distributor MSP Programs: Will VARs Take The Managed Services Plunge?

If distributors build a managed services program, will you follow?

Several solution providers now sitting on the managed services sidelines said brand-new distribution initiatives that promise robust offerings, competitive prices and minimal investment will lead them to answer yes.

In particular, members of Ingram Micro's VentureTech Network pointed to that distributor's exclusive alliance with MSP platform vendor LPI Level Platforms, announced last week at the VentureTech Fall Invitational in Palm Desert, Calif.

To date, most MSP practices have required financial investments of up to $100,000, but a two-tier model through distribution could be a magnet for VARs that have not entered the managed services space, said Greg Starr, COO of IT Works, a Houston-based Ingram Micro VentureTech member.

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"[Ingram-LPI] takes away a lot of the fear, uncertainty and doubt of moving into managed services," Starr said. "One of the biggest problems is the entry-point cost to get into this thing and all the headaches that come with it. There are so many tools out there nowadays, and you have to go out and find best-of-breed, put it together and then there is an enormous learning curve. What Ingram is doing for VARs that are not early adopters is huge. Ingram is taking away a lot of headaches."

Ingram's MSP offering—the Seismic Platform and Virtual Services Warehouse—is truly aimed at bringing managed services to the masses and could have the widest ramifications, solution providers said.

But Ingram Micro is not alone. Also last week, Bell Microproducts unveiled a partnership with LPI rival SilverBack Technologies. And there's more: Arrow Electronics' MOCA division this week plans to take the wraps off a partnership with Sun Microsystems to sell managed services. Access Distribution, Synnex and Tech Data also have managed service initiatives under way.

Ingram Micro's MSP initiative will be more than just an exclusive deal to resell LPI's Managed Workplace remote monitoring and management (RMM) software to its VAR partners as a hosted Software-as-a-Service, said Justin Crotty, vice president of services for Ingram's North American Services Division, Santa Ana, Calif. To help partners succeed, a comprehensive database of MSP best practices will also be part of the program.

The Seismic Platform and Virtual Services Warehouse will become "a robust services offering that VARs can provision and deliver to their end-user customers," Crotty said.

Ingram plans to partner with other vendors over the next few years to add more hosted, resalable managed services such as antivirus and spam filtering, remote storage backup and recovery, and e-mail messaging management, he said.

The expansion of all these services will complement Ingram's existing field IT services programs such as IMOnsite. Launched in August, IMOnsite is a hosted professional services automation (PSA) offering from Ingram delivered through an exclusive agreement with PSA vendor Autotask, Rensselaer, N.Y. IMOnsite gives solution providers a portal to help them locate and hire IT field-service subcontractors from the 750-member-strong Ingram Micro Service Network.

NEXT: Can distributors add value as managed services middlemen?

Distributors have offered managed services for several years with varying degrees of success, depending on whom you ask. For that reason, some solution providers question how much value a distributor can truly add as an MSP middleman.

"One of the issues here is tech support," said Darren McBride, president of Sierra Computers, Reno, Nev. "If Ingram is in the middle of that, they better be able to support that product on a very detailed level. The whole reason Level Platforms was able to get a lot of market share away from N-able was that Level Platforms came in at a price point that has let resellers bootstrap into managed services one customer at a time. They took the market away. I think there will be an audience for this, but it's been a very competitive market."

No one should doubt Ingram's—or any distributor's—ability to create a mammoth and competitive MSP offering, said Adam Gray, CTO of Novacoast, an MSP and IT services provider in Santa Barbara, Calif. But the distributor's size and breadth of resources could become the very things that make Ingram misfire, he said. "Can Ingram get into managed services? Yes," Gray said. "Can they pull it off? Probably not."

Gavin Garbutt, president and CEO of N-able, said that Ingram's move with the low-cost RMM offering could accelerate the commoditization of managed services. To counter this, MSPs should leverage their creativity and individuality, and focus more intently on value-added services that larger players will have a difficult time replicating.

"The big players are going to drive down margins," Garbutt said. "The more things commoditize, the more things look the same," and there's the opportunity for the smaller MSPs.

For Bell Micro solution providers, meanwhile, there are two MSP options: one in which the distributor hosts the infrastructure and delivers end-user-network reports to solution providers, and a second initiative in which it helps solution providers build their own MSP practices, said Gary Gammon, vice president of marketing at Bell Micro, San Jose, Calif.

"Looking at the planning we do with customers, we felt we could provide a value-add on top of their core business. Managed services are a key opportunity going forward to increase penetration with customers and win more business," Gammon said.

"We selected SilverBack because we feel their technology and the way they approach the market is the most comprehensive solution for our marketplace," he explained. "The history of Bell Micro is storage solutions for customers. We want to expand services offerings. We wanted a service that VARs can offer if they don't have the capital, or are not able to build a NOC themselves, and have a way in which they can take more ownership of the program over time."

Gammon recognizes that solution providers could work directly with SilverBack, but he hopes Bell Micro's initiative to front the infrastructure costs—and provide a one-stop shop for other products and services—will prove enticing.

NEXT: VARs on distributors' managed services offerings.

Bell Micro has a greenfield here as most of its solution providers haven't invested in their own initiatives, Gammon said.

"That's why they saw it as an opportunity. Still, there are a lot of questions about it. They're interested in learning more about it," Gammon said. "It's still an undefined market."

Mocha Data, a Minneapolis-based solution provider, has spent the past six to 12 months looking at different MSP offerings without signing a deal, said John Conlin, vice president of sales.

Now that he can lean on Bell Micro for support and guidance, his decision may be made, he said.

"The thing we like about their program is we can offer a number of different possibilities to customers," Conlin said. "We can help them dip their toe, then their foot, then jump in. It's truly a crawl, walk, run scenario. That's a very attractive piece for our customers and for Mocha Data.

"This is something we can resell like other products. They already have a couple of data centers. We wouldn't have to build that out as a reseller," he added.

Like other distributors, MOCA believes most of its solution provider customers are ripe to offer managed services—with a little help.

"It's an idea of leveraging Sun's engineering talent through the reseller to support these end users," said Rich Severa, president of MOCA. "Sun is absolutely attempting to enrich the value proposition for the resellers. There's a lot of challenges selling servers, storage, software or break/fix maintenance contracts. This can enhance profits by continuing to leverage Sun's brand."

Two solution providers attending the VentureTech Network Fall Invitational agreed that they would take a closer look at managed services now that Ingram has beefed up its offering.

"We were just about to pull the trigger [on an MSP partner]," said Charles Warner, executive vice president of Secant Technologies, Kalamazoo, Mich. However, now that Ingram has partnered with LPI, "we have to rethink everything."

Lincoln Computer Services, a Hicksville, N.Y.-based solution provider, shut down its managed services practice after taking a big hit post-9/11.

Sales rep Shawn Reilly recently signed up directly with Level Platforms before knowing about the new Ingram relationship.

"We will see what happens now," he said. "We have a good relationship with Ingram Micro. It's hard for a small VAR to get into managed services. We may potentially invest in our own NOC, or we may use Ingram Micro."

JENNIFER LAWINSKI, STEVEN BURKE and JOSEPH F. KOVAR contributed to this story.

NEXT: Distributors catching managed services fever.


Distributors large and small have caught managed services fever. Here's a rundown of some new and recent managed services moves by distributors.

Ingram Micro
• Oct. 2006: Ingram Micro enters into an exclusive alliance with MSP platform vendor LPI Level Platforms as part of an effort to make the distributor's managed services ambitions a reality.

MOCA, Arrow Electronics
• Oct. 2006: MOCA this week plans to unveil its new Sun Microsystems managed services portfolio through a partnership with the manufacturer. Key features include: 24x7 remote monitoring services provided remotely on a selective basis or as part of broad management services relationship.

Bell Microproducts
• Oct. 2006: Bell Microproducts launches MSP program that allows solution providers to monitor any networked device 24x7 through a partnership with SilverBack Technologies.

• May 2005: Launched Avnet Managed Technologies, a business unit to provide professional and managed services to small and midsize businesses through solution providers.

Tech Data
• Aug. 2006: Tech Data signed deal with MSP InnovationTech to resell hosted remote monitoring and management services through the distributor's TDOnCall program.

Services include NetWatch, which provides rudimentary device monitoring, and NetManage, which offers more proactive managed services such as software updates, security patches, firewall maintenance, network performance enhancement and device configuration.

Access Distribution
• July 2006: Access Distribution is reselling a hosted MSP platform from Klir Technologies, a node-monitoring solution that reads and reports on the performance of applications, network bandwidth, servers and other devices.

• July 2005: Synnex's MicroLite Portal is a secure, Web-based dashboard portal that enables VARs to provide managed services to their clients without making a significant up-front capital investment.

VARs get access to automated and realtime reports designed to monitor and manage a full range of technologies for their customers, from servers to network and security devices to e-mail applications. Among the benefits of the portal offering are vulnerability, security and network management alerts along with a service request status snapshot.

NEXT: A look at MSP platform pricing.


Competition has lowered the cost of MSP platforms in general, but feature sets, hosted offerings and volume discounts preserve a wide chasm of price ranges.

LPI Level Platforms
Maintains low $5 to $60 license costs, but raised up-front costs this year by several thousands of dollars.

N-able Technologies
Added $70 per site hosted service in August to its lineup of offerings that can run into the tens of thousands of dollars.

SilverBack Technologies
Maintains a price range between about $10,000 and $76,500, and says competition overlooks hidden costs.

Starts for about $2,000 for a 100-user seat license, which costs about $12,000 after 18 months. Stepped up direct sales in July.

One of many new, disruptive vendors attacking the MSP market. Began offering unlimited free 30-day trials to MSPs, which can pay less than $2,000 and be up and running in an SMB.