MSPs look to move up the technology stack

Jim Lippie

Thrive Networks' Jim Lippie makes a point on the panel.

Managed service providers, like most other groups of solution providers, are wrestling with exactly what role they should play in the cloud market.

A panel at last week’s N-able Partner Summit in Scottsdale Arizona brought together four managed service providers from around North America and with different focuses and business models, but one common element – in the last year or so, they’ve build cloud into a significant part of their business.

So what have these MSPs-turned-cloud-agents learned along the way?

Justin Cameron of NetServe 365 said that it all comes down to how you communicate your value proposition to the end user, particularly when it comes to potential concerns about losing control of their data.

Kevin Crowe of Calgary-based Long View Systems, echoed that comment, adding that between the full control and higher cost of on-premise and the lower cost but lack of control of a ful software-as-a-service deployment, the idea of Infrastructure-as-a-Service “seems to be resonating” as a happy medium.

Jim Lippie of Staples Network Services (his Thrive Networks was an MSP purchased by Staples to build out that business) said his company got into the cloud in a response to customer requests. But ultimately, he said, they got into the hosted Exchange business out of a very simple motivator: Fear.

“We looked at how much revenue we generate around Exchange, and the thought of that revenue going away keeps me up at night,” he said.

Ted Warner of Connecting Point Greeley out of Colorado said he didn’t know how long his team members spent in the conference room trying to figure out how to make the move into the cloud. “And we haven’t figured this out by any stretch of the imagination,” he said. Still, the company has made its move.

Here’s one challenge that virtually all traditional vendors will face when courting MSPs with cloud-based offerings – having been in the managed services business and seeing a reversal of the non-stop erosion of margins, many are not thrilled at the idea of getting involved with anything that could remotely be considered commoditized. Count Warner amongst those MSPs.

“Maybe we’ve been spoiled as MSPs, but I’m not interested in going back to a 10- or 15-point margin business,” Warner said. “I’m not going to sell BPOS. I’m just not going to do it and get my 12 per cent for the first year and then six per cent after that.”

But is there an opportunity in selling hosted apps? Oh yes. Even Warner is interested, as long as there are ways to keep margins up. “The trick is to take those hosted apps, wrap your services around them and get your margins up,” he said.

Lippie said one huge advantage for MSPs in the cloud is that remote monitoring allows the organization to own the client rather than the engineer who’s on-site owning the client. It’s a small distinction, but potentially a big one.

All on the panel expressed a great interest in third-party aggregators of managed services – whether those are offered by an N-able, an Ingram Micro Seismic or any other member of the communities. Long View’s Crowe likened the opportunity to that seen in the electrical industry, where smaller players have banded together into at the very least informal buying groups to increase their power and scale in the market. The ultimate goal for Crowe is a kind of cloud services catalogue that all members could take tot heir respective client bases, allowing all to offer an extensive array of services while none have to become experts in all of those fields.

“I hope we’re brokering amongst ourselves as a community a year from now,” he said.

Here are some parting shots from each of the panel members on how to get started with Infrastructure-as-a-service:

  • Crowe urges MSPs to work with existing infrastructure players and get educated. “You can test the waters with that, and then make the investment and start circulating around your client base,” he said.
  • Warner suggested reassuring engineers afraid of being put out of work by remote tools and the cloud that “we need them more than ever.” “If this was easy, everyone would do it,” he said of moving to the cloud.
  • Ultimately, Cameron said, the cloud should be just another way of delivering technology in already-familiar territories. “Stick to your core,” he advised. “Stick to what you’re good at.”
  • “You’ve got to make a bet, you have to believe in that bet, and ultimately you’re going to learn,” Lippie advised.