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MSP label tainted, pipelines in flux and other VAR takeaways

The “managed service provider” moniker that used to be golden has actually become a deterrent to business, according to the channel advisory board.

“We dropped the MSP label–it turned into a dirty word,” said board member Kevin McDonald, vice president of Alvaka Networks.

The reason? Too many VARs claimed to be MSPs but aren’t really cutting the mustard.  Some may have been monitoring their customers but were “not monitoring the right things,” said 6Connect CIO Pete Sclafani.

Prospective customers were paying whatever it was per month to get 24X7 services but were not really getting the services, Sclafani said. “There’s been a real shift to: ‘let’s do this right,” he said.

McDonald said Alvaka’s “IT Hostage Rescue” service goes into companies  as a clean up crew to fix things that the MSP of record should never have let happen in the first place.

Another takeaway from this quarter’s meeting was that sales pipelines appear to be bucking up. One attendee said his company’s pipeline was the most robust its been since 2007.  

“We’re crazy busy and have signed a bunch of clients but it’s weird spending…We’re pitching monthly recurring or quarterly recurring revenue deals but many clients want to pre-pay–some up to three years’ worth. They want to allocate the spending now and although we pitch it as opex, they’re almost treating it as capex,” he said. Capital expenditures are accounted for differently than operational expenditures which are typically incremental and easier to get approved.

McDonald said that trend may be due to changes in the tax laws that let companies reap advantages from this up-front spend.  While he hasn’t seen customers wanting to prepay years in advance, customers are much less hesitant to ink large IT deals than in the past year or so, he said.

Jill Steinberg, president of Miami-based Value Computing, which specializes in retail POS solutions, said her business is like “a seesaw.” Deals flow fast some weeks and then die off. “It’s up and down,” she said.

Finally, mobile devices are still an object of fascination. And while Windows 7 phone seems a big improvement over prevoius windows tries, the fact that the major carriers are taking their time to release phones will hurt adoption, said George Brown, CEO of Database Solutions. “It sounds to us like evangelism is way in front of reality,” he said.

Sclafani wants to see what the application developer situation is like before taking a hard look. Android phones are of interest because of the huge supply of apps. Compared to Apple’s iPhone, the Android world is more releaxed and transparent to developers, he said. “There’s a lot of talent out there that cross pollinates. ”

6Connect is working on an iPad application that brings data center command and control functions to that device and Sclafani expects more IT tasks will come to that device. The iPad displays an “amazing, interactive dashboard,” he noted.

Check out the channel advisory board’s calls from last year’s fourth quarter and its predictions for the  current year.

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