The MSP model breeds a degree of stability into the business compared to the VAR model of “one and done” transactions. A Value Added Reseller (VAR) is the IT solutions provider model that really started Day One in IT. SI’s vs VAR’s In general, SI’s tend to be more software-oriented and more likely to contribute more custom work, while VAR’s are more hardware-oriented and more likely to add small amounts of integration work – customization, for example. Thus, in my opinion, MSP, to the extent that it seeks to smoothen the income stream, is more like a salary. Todd Billiar / VAR Staffing With the NFIB optimism index the highest since 2004, will this renewed optimism translate into increased business for the MSP / VAR Community? As many applications have migrated from a perpetual license model to SaaS, fewer and fewer are being sold in a single transactional. A good MSP will know these things before you do. Have you had any successful experiences with them? An ISO / MSP can be sponsored by multiple member banks. In this blog, I’ll outline the difference — as we see it — between the two groups. We Explored 3 Product Positioning and Branding Failures. We like the MSP model because of the recurring revenue it provides us, and the value for on-premises technology it provides for our clients. The cloud has companies buying less hardware in favor of pouring more money into software and services. is in a much stronger position. And, like almost everything else in technology, the channel is changing. One thing we’ve found in our research is that the historical distinction between the two major classes of resellers, Managed Service Providers (MSPs) and Value-Added Resellers (VARs), has blurred with the advent of cloud and SaaS technology. Senior management changed the focus of the business and therefore the type of company we were perceived as. The reseller channel is extremely important in B2B tech, both for end-users, many of whom buy 100% of their technology through a reseller, and for software companies, some of whom sell exclusively through the channel. If you can match your product to one of those end-customer needs, you’re likely to win yourself a partnership. Typically, processing banks are members of both Associations and the registration process for each Association is done simultaneously. And, all of this work is performed at the client site, and is largely transactional.”, I go on to say: “A Managed Services Provider (MSP) is actually the next-gen VAR. Just like selling direct to end customers, selling through the IT channel requires an understanding of who they are, what they’re looking for in a partner, and how they make money. As your product’s de facto customer service department, the more seamlessly your product works for the end users, the cheaper it is for the MSP to maintain. We talked with MongoDB’s former Director of Growth Marketing, Francesca Krihely, about how she and her team built such an incredible community. Moving your business from a VAR to MSP is a challenge. There are some large MSPs, but most are relatively small — 20 employees or less. Together, cloud and TaaS focus on providing successful   to every person at our clients’ companies, including the finance, sales, and marketing departments. In other words, VARs revolve around events, i.e. A VAR, on the other hand, generates revenue primarily by selling IT products, with services as a secondary revenue source. The exact model depends on the VAR, the software they’re selling, and their relative power at the negotiating table. Still others attempt to capture some of the customer’s lifetime value by receiving compensation on renewals as well. All Rights Reserved. By continuing you agree to our cookie policy, or go here to learn how to adjust your cookie settings. an implementation or migration, whereas MSPs provide services as a steady state. Making their customers happy is fairly straightforward — you’ll have to sell them like you’d sell a customer. The primary cost for an MSP is their technicians’ time. If you have lots of end users and they’re non-technical, your customers may benefit from an ongoing support arrangement with an MSP. Consultative MSP. MSPs are service providers, so their primary source of revenue comes from services, sold via a subscription model. 2. Julian Lee - October 12, 2020. BitTitan has been no exceptio. There used to be two categories — VAR and MSP. If you’re a Microsoft Premier (Unified) Reseller, LSP, LAR, VAR or MSP, US Cloud might be a great fit. The MSP came about because the cost of technology has dropped considerably, but has also become exponentially more complex. Where can a service provider add the most value? Share your thoughts in the comments below. These ecosystems first emergedaround legacy technology giants that had the muscle to significantly influence their partners and define the relationships powering the network. Join our digital mailing list to receive product resources, blog updates, info on webinars and live events, and more. It also sells maintenance contracts on top of the hardware, and sells professional services projects. If your competitor’s product is an easier sell or the economics are better, they’d prefer to keep it simple and recommend a single product. It’s a company that historically focuses on selling hardware (and sometimes software) from vendors like Cisco, HP, etc. With an expert and proven staff and state of the art technological infrastructure, a trusted MSP like Network Depot can dramatically improve the efficiency of your company’s overall IT operations. I tell them: “We’re a Modern MSP. 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?) VARs generally operate on a transactional basis (per license or seat), or a short term contract of 6 months or so. TCO Tool for Insight Pro vs. Unifi (Total Cost of ... by BretD on ‎2019-06-27 02:26 PM Latest post on ‎2019-07-09 08:04 AM by BretD 1 Reply 1726 Views go here to learn how to adjust your cookie settings, ESG Research Results: 2020 Managed Services Landscape. In fact, the lines between the two are blurring more each day. The key difference between a MSP and a VAR is how they generate revenue. There are several names that companies who sell IT solutions prefer You also have access to an online test that you can take to help you identify your business strengths and weaknesses. 6 years ago. Each ISO / MSP must be sponsored by such a processing bank, member of Visa and / or MasterCard, in order to be registered by either Credit Card Association. As product margins decline and competition among solutions providers intensifies, VARs have looked to managed services as a source of recurring revenue and improved profitability. In short, they can recomm… Survey Results: How Well Was IT Prepared for COVID-19? Conclusion. I have personal experience working for all of the above, a VAR (Value Added Reseller), an SP (Solutions Provider), a CSP (Communications Service Provider) and an MSP (Managed Service Provider) but I only worked for one company.How you ask? You’ll have to convince them your product will accomplish all three to establish a partnership. In simple words, MSPs mix and match product offerings related to computers, network and security infrastructure can be … This will help you to build your own roadmap for a more successful business. MSP, VAR, IT Services Valuation Variables. MSPAlliance has been hosting physical and virtual events throughout the world since 2000. When you’re measuring direct mail vs. digital marketing, those numbers put your brand at a distinct advantage. SolarWinds MSP President: Rebrand Will ‘N-Able’ Partner Opportunity . On top of all that, the MSP charges a flat and predictable monthly fee, so it’s a win-win for the client and the MSP.”. They’re also more specialized—usually by vendor or their customers’ industry. This fundamental shift in IT spending is just one of several trends steadily triggering the move from VAR to MSP for a lot of IT providers. Today, the rise of the cloud and software-as-a-service (SaaS), as well as the consumerization of enterp… It was acceptable to ad-lib a remote strategy at the beginning of the pandemic, but companies that want to transform that initial emergency response into a sustainable model need to put in the effort to make it so. … When we use the general term Channel Partner to include "VAR" (Value Added Reseller), "MSP" (Managed Services Provider) as well as ITSP (IT Solution Provider). MSPs are often marketed to small businesses as their complete outsourced IT department. Designed to facilitate networking and education at the highest levels of the cloud computing and managed services profession, MSPAlliance events are attended by both leading MSPs and vendors alike. tweet; There is a significant difference between selling your business in a “pre-COVID” world and today. If you’ve worked in B2B software for any amount of time, chances are you’ve crossed paths with the IT channel. Hopefully, these findings will be of some help. Additionally, a reseller will consider the services they can sell around your product. They generate revenues through a combination of flat-rate fees per license, and billable hours, but their engagement is finite. Because of their focus on and expertise with cloud-based services, an IT Managed Service Provider can provide your company with a wide variety of IT options that are also scalable to meet growth-related needs. MSPs are generally less transparent with their pricing, so they’ll have to be able to justify the cost of your product to their end customers. Instead of simply referring clients or repackaging an existing cloud product, this type of cloud provider will add its own services to the offer. This field is for validation purposes and should be left unchanged. By contrast, MSPs operate on longer-term annual or multi-year contracts, and the tenure of their relationship is open-ended. The MSP has economies of scale to do the job at a lower cost, utilizing technologies designed specifically for MSPs so they can do all the work remotely. It's all about offering technology as a service, just like the many other services we offer our  in order to help their businesses. VARs tend to serve larger organizations and are usually larger companies themselves. Diluting it by having competing markets is like having 'variable pay', in which salary is dependent on everything except the employee's own marginal revenue product. An MSP outfit may employ 20 people, or consist solely of a two-person team that does the work of dozens. See www.varcoach.com. Here’s What NOT to Do. Copyright © 2021 BitTitan, Inc. All Rights Reserved. Installed applications with high availability requirements could benefit from 24/7 support provided by an MSP. Francesca Krihely, Senior Director, Developer Experience and Growth at Snyk, told us about how her company uses a freemium model to find new points of entry into enterprise organizations. Why? Wanna sell your MSP or VAR business during these times? The simple answer is that it depends on your software. Going into a large office 365 migration over the weekend I can't say this enough.. level 1. Others take a piece of the customer’s initial SaaS contract. List and FAQ" download commented on "AWS re:Invent 2020 Live Blog: Amazon Cloud Partner, MSP News" © Copyright 2021 OpenView Venture Partners. The value-added reseller is another kind of reseller. According to data from Statista, the global IT outsourcing market made nearly $89 billion in 2015. Share on Facebook. First, what type of business best describes yours? For many folks in leadership positions, the answer might be… asking job candidates good questions. PMBOK vs. MSP Reality ... MSP: We ’ve got this, after all – we came from the VAR world. We use cookies to ensure that we give you the best experience with our website. Let us know what you are seeing with your clients and we’ll answer any questions you have about US Cloud and the new Channel Partner Program. There are four main categories of outsourced IT providers loosely categorized as Value-Added Reseller (VAR), VAR with Service, Managed Service Provider (MSP), and MSP Partner. By submitting your information, you agree to receive periodic emails from OpenView. Before you approach a reseller, do your research about the specific services they offer and customers they serve. Having analysed the MSP business over decades, let me say clearly that MSP was the creation of scarcity era of mid 1960s. A partner ecosystem (or partner community) can be broadly defined as a network of entities that help a companymarket, sell, service, support, complement, enhance, or adapt its products or services to either mutual or distinct customers. 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 MSP came about because the cost of technology has dropped considerably, but has also become exponentially more complex. Recently I’ve been getting the question “What type of IT vendor are you…a VAR or MSP?”. The bottom line: Expansion-stage SaaS companies are well positioned to thrive in 2021. As consultants to our portfolio companies, many of whom sell partly or entirely through the channel, OpenView Labs has spent a lot of time speaking to resellers of all shapes and sizes to understand (among other things) the services they offer, why they offer them, and their value proposition to end-customers. Tweet on Twitter. Finally, choosing to be a reseller of your product is not free for the reseller. What’s your biggest weakness? Every breath they spend selling your product is valuable time that they could be selling your competitors. If the product requires considerable up-front configuration or customization, you’re probably better suited for a VAR. Ultimately, the goal is to build a symbiotic relationship, and that starts with understanding how they operate. An Inside Look at Snyk's Product Led Growth Strategy, 14 SaaS Leaders Share Their Favorite Interview Questions, 5 Major Takeaways From the 2020 Expansion SaaS Benchmarks Report, MongoDB's Playbook for Breaking Into and Dominating a Market, 4 Tips for Setting Your Company's Annual Rhythm, How to Get Your First 100 Customers—Smart, Actionable Advice from Top Executives. If you strategically design your mail piece and deliver it to a highly targeted audience, you’ll likely be very pleased with your direct mail response rates. Leaders from Twilio, IBM, SurveyMonkey and more share their best tips. An MSP can choose to focus on a particular technology stack, public cloud infrastructure platform or SaaS offering. But, Indian agriculture has … They typically offer a range of services such as network maintenance, hardware repair, help-desk, email management, and anything else that requires a day-to-day administrator to keep running. By. The primary cost for an MSP is their technicians’ time. Remote Work Is Lonely. VARs, on the other hand, tend to service larger firms and are usually larger themselves compared to MSPs. Here, the MSP would acquire expertise in one or more verticals and go to market as an industry-specific service provider. So if you’re generating $100 million in VAR-oriented revenue … Please review our privacy policy. That's why they’re placing strategic bets on outsourced services, security, and sof, As workforces around the world transitioned to a partial or completely remote model, new challenges have emerged for IT. These companies are typically SMBs, ranging from financial services firms to EDU to non-profits to just about any other flavor of SMB. For VARs that cost is mostly the opportunity cost of selling another product. More recently, VARs have become managed service providers (MSPs) . BitTitan® empowers IT service professionals to successfully deploy and manage cloud technologies through automation. B2B brand and product positioning will only continue to become more important with the rise of the End User Era. Agen-338A commented on "5 Channel Partner and MSP Updates: 15 December 2020" Naveed Aziz commented on "5 Channel Partner and MSP News Updates: Monday 11 January 2021" PhyllisTwilk commented on "Huawei: Banned and Permitted In Which Countries? VARCoach where you can learn about the best practices in being a successful VAR, MSP or ITSP. What other questions do you have about engaging resellers? With business models transforming, MSPs must adapt to stay viable. This knowledge will allow you to (a) focus on the group that makes the most sense for your business model, and (b) approach them in a way that fits their way of doing things. SMBs don’t usually have extensive IT staffs, so if you’re targeting small businesses and your product requires any ongoing technical management, MSPs might be the better channel. Platform-oriented MSP. By comparison, email marketing’s response rate is 0.6%. MSSPs and focused on Security. But how many of those companies actually accomplish them? Some have done this by moving towards an MSP model and offering ongoing support for applications that they help implement. Some specialize in a specific industry, vendor, or software group, but most segment themselves geographically. And, all of this work is performed at the client site, and is largely transactional.” I go on to say: “A Managed Services Provider (MSP) is actually the next-gen VAR. A Managed Service Provider (MSP) in today’s IT landscape acts as a Value-Added Reseller (VAR) offering an extensive range of higher-value services. My general response goes something like this: “First, let me tell you the difference. The major shift in IT services the past 25 years has been from break-fix to managed services. Resellers typically have close relationships with their customers, and are constantly polling them to learn about their unmet needs. Finally, I ask: “Why did you ask about what type of IT vendor we are?”, The reply: “I wanted to know if you were going to help me with cloud.”. They expect to stick around indefinitely. If your product is a highly considered purchase with a long buying cycle — typical in core enterprise software — your customers are more likely to hire a VAR to help them purchase and implement it. Among the takeaways from Dippell’s just-completed 2015 data gathering and analysis: The VAR portion of your business is worth 10 cents on the dollar. Vertically focused MSP. As your product’s de facto customer service department, the more seamlessly your product works for the end users, the cheaper it is for the MSP to maintain. Any products they sell are secondary. They may need to purchase technology from a third-party provider, a cost which is bundled with their services and passed on to their end customer. Not only do they cater to SMBs, MSPs are often relatively small in size. The "new" name is resurfacing from the high-profile 2013 acquisition of N-able, maker of the N … President: Rebrand will ‘ N-Able ’ Partner opportunity availability requirements could benefit from 24/7 support by. National Federation of Independent Businesses ( www.nfib.com ) index jumped 7.4 points in December 2016 to 105.8 points,. Of both Associations and the registration process for each Association is done.... And product positioning will only continue to become more important with the user... Access to an online test that you can learn about their unmet needs can Wan! Service professionals to successfully deploy and manage cloud technologies through automation business compared to MSPs from. 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