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MSP vs Traditional IT Channel

MSP vs Traditional IT Channel – who will win?
The buzzword of the moment among every IT vendor and major cloud provider is ‘MSP’ or Managed Service Provider. During briefings we constantly hear that “the MSP is important”, “we must get to the MSPs” – and the marketing departments must be going insane when they hear that dreaded term.

The term MSP is nothing new and has been around since the early days of the Internet.  Commonly an MSP is defined as a service-led organisation that manages either on-premise or off-premise IT services and solutions for an end-user client.  So why is the MSP heralded as the path to cloud enlightenment?[pullquote]So why is the MSP heralded as the path to cloud enlightenment?[/pullquote]

  1. MSPs hold end-user local relationships that every major vendor wishes to leverage.
  2. The ‘management’ element of an MSPs business model is seen as key to unlocking cloud services and applications.
  3. MSPs are considered to be ‘mature’ in terms of business model and service consumption / subscription based billing.
  4. It’s the latest marketing buzzword (in the supply chain at least) – similar to Big Data and Cloud Computing.

Let’s all smell the coffee, wake up for a minute and summarise this situation:  Every MSP is currently in a position where every vendor is courting them, IT distributors are romancing them, and suddenly they have become what a pair of Prada shoes are to my wife (essential apparently?).

Q. So where does that leave the traditional “sell-to” IT supplier / Value-add Reseller (VAR)?
A. In a much stronger position than the MSP!

The question to those MSP’s that have made a significant CapEx outlay on hardware is how do you reconcile your model moving forward?

What?! I hear you cry…  Well, sorry IT industry, I am sure you’re all now shaking your fists in anger at the above statement in strong disagreement (and sorry marketing people for disrupting your pretty meaningless PowerPoint charts).  But allow me to qualify why I am making such an outlandish statement: Many MSP’s are in the situation whereas they have invested in large volumes of hosted infrastructure and colocation trying to compete with Amazon (AWS) on cost and retention.  Admittedly, there are exceptions to this generally based on the MSP attaining a high level of technical competency and vertically aligned focus.  The traditional VAR/Reseller/Channel non-cloud MSP (have you taken off the vendor labeled hair shirts and looked to the cloud for salvation yet?) is in a much stronger position.

The reason for this is simple, “transactional” sales and less of a desire to “retain” control of every aspect of the IT solution has its advantages for both vendors and customers.  The traditional IT reseller also has the benefit of hindsight and vendor choice.  Let’s all face facts: cloud computing in whatever form it takes – whether Software, Infrastructure or Platform computing – is here and has ‘crossed the chasm’.  The question to those MSP’s that have made a significant CapEx outlay on hardware is how do you reconcile your model moving forward?  For an example of where the cloud is bypassing the IT channel, go to your admin panel on your Microsoft SQL Server and look at the backup options, note where it says “Backup to cloud” …hmmm. And of course that cloud is Microsoft’s Azure.

For an example of where the cloud is bypassing the IT channel, go to your admin panel on your Microsoft SQL Server …note where it says “Backup to cloud”.

Many major vendor software suites are incorporating direct touch end-user strategies where cloud is concerned; could there be an option one day for a button on VMware instances offering a direct “Send to VCHS Cloud” option… probably, and soon.  The million pound question is do you embrace, differentiate or compete?  In today’s IT landscape, you cannot compete in terms of marketing budgets, system developers or sales resources.  But then the larger an organisation is the harder it can fall, especially in this transaction-orientated world of cloud.  So for both the IT reseller and MSP you hold the key in the most crucial area of all: CUSTOMERS.  And how do you ensure your customers don’t pass you by? Simple! Talk to them, and be the eyes and ears of the latest developments …and above all get investigating an API brokerage solution now.  We all lament the loss of local shops to large faceless supermarket chains that offer lower costs benchmark against each other and capture all your spending habits on loyalty cards (yawn).  Personally I much preferred a local shop with personality not some industrialised horse meat purveyor.  The point I am making above is that a faceless control panel with lower costs will never replace that personal service and handshake over  a cup of coffee.  And in terms of support, no vendor in this world is capable of providing mass levels of IT support and personal service in the mid-market, make no mistake about that.

Q. Where does the IT VAR or the MSP fit in then?
A. Simple, “Hybrid, Hybrid, Hybrid, Hybrid”.[pullquote]…how do you ensure your customers don’t pass you by?  Talk to them, and be the eyes and ears of the latest developments …and above all get investigating an API brokerage solution now.[/pullquote]

Customers don’t want “server sprawl” “shadow IT” or undocumented or uncontrolled services. Control the use of the cloud using plugins or APIs; bring the billing together under one roof, and above all negotiate with your vendors or distributors to get credit easing and leverage what is available in terms of resources.

Q. How can you ensure you’re on the right strategy?
A. Speak to the consultants at Compare the Cloud, and we’ll help you get on the straight and narrow (path to success)! @comparethecloud or ask@comparethecloud.net.