Managed Services

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att Reise is a proponent of change. As a consultant
INTOôANôô
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at RetroTechs Inc. in Atlanta, Reise is helping to
transform his company from a traditional VAR into a
managed service provider (MSP). The ambitious move should allow
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BRYAN LEISTER
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Tech IQ • Spring 2006
A Microcast Communications Publication
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A Microcast Communications Publication
RetroTechs to generate predictable, recurring revenue and higher profit
margins than a hardware reseller model.
“If [managed services] works out the way I think it will, the
opportunity is going to be huge,” Reise says. He envisions RetroTechs providing “full-blown” services for customers, in which the
IT environment is designed, owned and managed by the service
provider.
Much like RetroTechs, thousands of VARs across the country
are striving to transform themselves into MSPs. And for good reason. Continuing to rely on hardware and software margins alone
to generate healthy profits simply isn’t an option.
Consider the situation for Hewlett-Packard Co.’s hardware
resellers. In HP’s quarter ended April 30, the company’s operating
profit on PCs was a scant 3.6 percent of revenue. HP’s resell-
www.techiqmag.com • Summer 2006 • TechIQ 3%26)#%3
Still, the transformation from VAR
to MSP isn’t easy. Channel industry
experts say the path to becoming an
MSP is filled with challenges (see
“Six Obstacles to Success,” left).
Overcoming those obstacles typically
requires careful planning,
specialized MSP software, training and lots of
3IXô/BSTACLESôTOô3UCCESS
patience.
6!2SôFACEôHALFADOZENôHURDLESôWHENôSEEKINGô
Just ask Marty
TOôBECOMEô-30Sô4HEYôARE
Kaufman, president of
ôô,ACKôOFôREMOTEôMONITORINGôANDôMANAGEMENTô
Accent Computer SoluTECHNOLOGYôFORôNETWORKSôSERVERSôANDôDESKTOPS
tions Inc. The Rancho,
ô-ANUALôORôINEFkCIENTôSERVICEôMANAGEMENT
Cucamonga, Calif.,
company is 18 months
ôô/PERATIONALôBARRIERSôINôBUSINESSôANDôô
into its self-induced MSP
TECHNOLOGYôPROCESSES
makeover. Accent has inôô,ACKôOFôgKNOWôHOWuôWHENôTRYINGôTOôSELLôSERVICESô
troduced new IT services
TOôEXISTINGôANDôPOTENTIALôCLIENTS
such as remote file server
ôô)NEFFECTIVEôMARKETINGôANDôLEADôGENERATIONôô
maintenance, help desk
TACTICSôTHATôDONTôEXPLAINôANô-30SôVALUE
support, desktop manageôô)NABILITYôTOôDEMONSTRATEôTRUEôBUSINESSôVALUEô
ment, patch management
TOôEXISTINGôRESELLERôCLIENTôBASEô
and asset management.
The company has roughly
SOURCE: N-ABLE
450 customers—but
fewer than 10 percent
have managed services contracts in
desktop and notebook lines to Lenovo
place so far.
Group Ltd.
“It’s a long close cycle; it takes
While traditional hardware
forever to make some of these deals
resellers struggle, MSPs expect their
happen,” concedes Kaufman. He even
revenues to grow 19 percent on averadmits that managed services are not
age this year, according to Avinash
always a way to make more money.
Arun, a channel research analyst at
“But your business value grows when
AMI-Partners Inc. in New York.
you do this,” he adds, by increasing
customer loyalty through effective
'ETTINGôSTARTEDô
service offerings.
VARs can offer SMBs a variety of
managed services including informa-30ôENABLER
tion security, storage, e-mail, help
To provide its remote server mandesk support and others (see “Eight
MSP Options,” opposite page). Many
aged services, Accent uses a software
smaller companies, which lack the IT
platform from N-able Technologies
manpower and experience of large
in Ottawa, Ontario, called N-vision.
enterprises, are looking for help from
The software enables companies to put
vendors with expertise in these areas.
“agents” out onto a network that report
In some cases, SMBs might even use
back with updates to a dashboard, from
100 percent managed services rather
which managers can monitor perforthan buy and maintain their own
mance of network devices.
hardware and software.
Kaufman says Accent wouldn’t be
ers often can’t “mark up” PC prices
because of intense pricing competition online and throughout the retail
channel. Cutthroat hardware pricing
was one of the reasons that IBM Corp.
exited the PC market and sold its
TechIQ • Summer 2006 • www.techiqmag.com
able to provide its service without the
software. “I didn’t have a managed
services mentality before N-able,” he
says. “We needed to figure out a way to
provide a better service to [our] clients.”
RetroTechs also relies on an
N-able product to power its transformation into an MSP. The company
is considering offering a variety of
services including network monitoring and management, and security
management, says Reise. RetroTechs
will run service trials with customers—mostly SMBs—over the summer
before launching a commercial offering, Reise says.
/UTSOURCEôEVERYTHING
As MSPs gain traction with customers, it paves the way for small businesses to potentially outsource every
IT function—including hardware—
to channel partners.
Jeff Ross, president of Vergence
Communications Inc., says more
SMBs are in fact moving to a completely managed environment for
services such as network management. Ross for years was a reseller of
data networking equipment, building
a company of about 70 people. He
retired, then saw an opportunity in
the growing converged voice and
data networking and Voice over IP
services market, and formed Vergence in 2003.
The Lincoln Park, N.J., company
is a certified Nortel Networks Inc.
reseller, installing and maintaining
IP-enabled systems. Vergence also remotely manages customers’ IP systems
from its network operations center.
Ross says the company’s services
business has generated 30 percent to
40 percent annual revenue growth,
mainly because of demand from SMBs
that have small IT staffs and need
help with network management.
Vergence uses a hosted business
management software platform from
A Microcast Communications Publication
Autotask Corp., Rensselaer, N.Y.,
that’s designed to help VARs offer
VoIP services. The software enables
Vergence to manage projects, track
interactions with prospects and
customers, run reports on the performance of employees, and calculate
costs, from a dashboard.
Autotask recently added a new
feature to the platform that enables
users to track whether they are
making a profit over the short term
and long term on a particular client;
which services are covered under a
service agreement and which should
be billed separately, and other aspects
of managed services offerings.
refined and enhanced its
%IGHTô-30ô/PTIONS
data centers, and zeroed
in on mostly small and
-ANAGEDôSERVICEôPROVIDERSôTYPICALLYôFOCUSôONôONEô
midsize companies. Mi8’s
ORôMOREôOFôTHEôFOLLOWINGôCOREôCAPABILITIES
latest offerings include
ô3ECURITYôkREWALLôMONITORINGôEXAMPLEô6ERI3IGNô
wireless access for devices
ôô3TORAGEôHOSTEDôSTORAGEôANDôBACKUPôOFôô
such as BlackBerrys and
COMPANYôRECORDSDOCUMENTSô3YMANTEC
Treos, archiving for reguôô#OLLABORATIONôHOSTEDôEMAILô7EBôCONFERENC
latory compliance, security
INGôSCHEDULINGôCALENDARINGô-Iô7EB%X
scanning and collaborative
services based on Winôô.ETWORKôMANAGEMENTôROUTERôSWITCHôREMOTEô
dows SharePoint.
INFRASTRUCTUREôMAINTENANCEôWIDELYôAVAILABLE
Demand for such
ô3ERVERôANDô0#ôLEASINGôWIDELYôAVAILABLE
services is strong. Mi8’s
ôô!SSETôMANAGEMENTô4RACKINGôHARDWAREôANDô
revenue has grown more
SOFTWAREôWITHINôANôORGANIZATIONô%VERDREAM
than 50 percent per year
ôô0RODUCTIVITYôAPPLICATIONSôHOSTEDôDESKTOPôAPPSô
since 2003, and growth is
'OOGLEô-ICROSOFT
actually expected to accel)NBOXôOPPORTUNITY
erate this year, says Patrick
ôô(ELPôDESKôSERVICESôTROUBLEôTICKETSôISSUEôô
Another company, Mi8 Corp. in
Fetterman, president of
RESOLUTIONô#OMPU#OM
New York, pioneered the market
Mi8. SMBs represent about
for hosted and managed Microsoft
two-thirds of Mi8’s client
based Level Platforms claims that
Exchange services. But this is no
base, Fetterman says, and many of
nearly 1,500 solution providers use
overnight success story.
these companies are likely to lean
its Managed Workplace environment
During the late 1990s, Mi8’s
heavily on managed services.
to monitor and troubleshoot cuse-mail services sometimes delivered
tomer networks.
#RITICALôMASS
sluggish performance, according to
Other VARs leverage Billerica,
VARs that are still weighing their
testing conducted at the time by
Mass.-based Silverback Technologies’
MSP options have plenty of partners
TechIQ’s editors. Working closely
software to detect health and security
from which to choose. In addiwith Microsoft, Mi8 continually
problems; monitor and report on
tion to N-able, potential
CPU, disk and memory usage, and
partners include Kaseya,
scan for patches and vulnerabilities.
3OFTWAREô,ICENSINGôTHEô-30ô7AY Klir Technology, Level
Platforms and SilverBack
3OMEôEARLYô-30SôFAILEDôBECAUSEôTRADITIONALôSOFT
Technologies.
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San Francisco-based
Mainstream technology companies—
ANDôTHEIRôCUSTOMERSô
Kaseya is touring the
from Google to Microsoft to Yahoo!—
&ORôINSTANCEôTRADITIONALôEMAILôSOFTWAREôLICENSESô
country in August and
have also joined the MSP march with
REQUIREôCUSTOMERSôTOôPAYôPERSERVERôANDôPERô
September, delivering
their own hosted applications. While
CLIENTôFEESôCOVERINGôTHEôLIFEôOFôTHEôSOFTWAREô"UTôô
MSP training workshops
Microsoft revamps Office for the Web,
INôTHEô-30ôWORLDôCUSTOMERSôPREFERôAôSIMPLEô
to VARs and resellers.
Google is beta testing hosted spreadMONTHLYôSUBSCRIPTIONôFEEô
Meanwhile, many
sheets and other applications.
-ICROSOFTô/RACLEôANDôOTHERôSOFTWAREôVENDORSô
resellers are embracAs more SMBs seek services they
HAVEôINôRECENTôYEARSôINTRODUCEDôSOFTWAREôLICENSINGô
ing Seattle-based Klir
need to keep their applications and
MODELSôTOôSUPPORTô-30Sô&ORôINSTANCEô-ICROSOFTô
Technology’s IT analytics
networks running effectively, expect a
NOWôCHARGESô-30SôSPECIkCôMONTHLYôPERUSERôFEESô
platform to monitor the
growing numbers of resellers to join
FORô%XCHANGEô3ERVERô4HISôALLOWSô-30SôTOôAC
real-time performance of
the MSP march.
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customers’ applications,
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—Staff Reports networks and servers.
For its part, OttawaTOFQBOñIFSFKDñFKñ*>PP>MBNR>ñ->OHñ+6
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