Managed service provider survey shows channel conflict, vendor issues

By Colin Steele, News Writer 25 Apr 2008 | SearchITChannel.com

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The main problems with vendors' MSP partner programs, according to MSPAlliance president Charles Weaver and other managed service providers, are that vendors treat MSPs the same as value-added resellers (VARs) and systems integrators (SIs); they constantly change their MSP partner programs; and more of them are trying to get into the managed services business themselves.

"There [are] so many new vendors coming into the MSP space," Weaver said. "They're taking their existing partner programs, and they cross out the word 'reseller' and write in 'MSP.' That's not flying anymore."

The 2008 Managed Services State of the Industry Report surveyed 142 managed service providers around the world.

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Michael Backers, president and CEO of the Ordovician Group in Cincinnati, Ohio, agreed that lumping MSPs in with other channel partners is not a good strategy. For example, many vendors want to retain ownership of their partners' customers. Many VARs and SIs bristle at the idea, but for MSPs, it is anathema, Backers said. Their job is to look out for their customers' best interests, while vendor priority is pushing products, he said.

"There's an inherent issue there," he added.

Ordovician Group is a global managed service provider whose vendor partners include Cisco Systems, RSA, Checkpoint and Sonicwall.

"Each one's different," Backers said. "That's part of the difficulty in managing your vendor relationships."

Compounding the problem is that those MSP partner programs are always changing for financial reasons or due to personnel changes and other factors.

"They really tend to go quarter by quarter, depending on what their targets are," he said.

Greg Donovan, president and CEO of Alpheon Corp. in Morrisville, N.C., said too much focus on vendors' MSP partner programs can hurt a managed service provider's business. Vendors should be relying on MSPs for their success, not the other way around.

"I don't really get attached to what the vendors do with their MSP programs," he said. "In fact, I really don't care."

Alpheon's vendor partners include Dell, Microsoft, Barracuda, Lenovo and Sonicwall. They all "get" how to run MSP partner programs and trust managed service providers to provide strong services with their products, Donovan said.

The 40% of MSPs who are dissatisfied, on the other hand, are probably looking for vendors to develop managed services for them, Donovan said.

"Never bet your business model on someone else's product," he said. "You have to decide for yourself what you want to do, and from there you go and find vendors who help you deliver what you want to do."

As more vendors start to provide managed services themselves, it is also causing problems -- not just conflict with their MSP partner programs, but also customer confusion. The services that vendors provide are more often than not in the Software as a Service mold, without the strong management component that managed service providers offer, Backers said.

"They don't really provide managed services," he said. "They advertise and market managed services. … But you've got direct sales teams saying, 'Hey, we've got managed services. Come and get it.' It just kind of muddies the water."

And it will be up to managed service providers to clear it, Weaver said.

"This is a service relationship," he said. "It demands intimacy between the provider and the client. The large vendors will never be able to replicate that."

Tags: Service Provider Business Models,  Technology Vendors/OEMs,  VIEW ALL TAGS

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