Going head-to-head with other managed service providers forces a business owner to continually monitor their portfolio of offerings, track customer satisfaction levels, and keep an eye on the costs of delivering those services. While those factors are enough to keep anyone awake at night, there are other competitors that can pose a greater threat: the big-named vendors with a direct sale division. While many of the names on this list are companies with an active channel program, if the rules of engagement don’t specifically minimize the chances of channel conflict over a significant period of time, the potential risk is a real concern.
With the explosion of cloud services, the walls between the manufacturer, partner and end users are rapidly blurring. For example, as solution providers move their clients from traditional software to web-based solutions hosted by Microsoft, Google and other organizations, a larger amount of client account information is being shared. Not every vendor collects this data, but MSPs must remain diligent when signing partnership agreements with new manufacturers to ensure they aren’t opening their client rolodex to those companies’ direct sales forces.
As these vendors offer new ways to decrease capital expenditures through virtualization and cloud computing offerings, it can create a dilemma for their management teams. With the reduced hardware revenue with this transition in technology, should they invest more in their direct marketing and sales organizations to realize higher profits, or create new channel programs that are a win-win for each company? While most seem to be hedging their bet by enhancing their indirect partners, who knows what will happen as the hardware sales continue to decline and software sales move away from cap-ex.
While channel conflict appears to have declined over the past few years for a number of possible reasons, the economic and stockholder pressures facing a number of organizations could reverse that trend rapidly. When the stock is down and revenue estimates are tough to hit, executives have been known to make changes that are detrimental to their channel partners. That’s why MSPs need to carefully control their accounts, ensuring they are the conduit for all information, including client details and network details.
That concern is also a good reason to contract with independent help desk and support service organizations to increase your footprint, rather than relying on the large vendors to supplement your needs. By working with GMS Live Expert and similar help desk/NOC providers, you gain flexibility and the ability to expand your customer support without handing over control of your accounts. I consider “don’t put all your eggs in one basket,” to be one of the best pieces of advice for any business. No business wants one client to control their destiny, as the loss of that customer could be devastating.
In the same manner, partnering almost exclusively with one comprehensive technology company (such as HP, IBM, or Microsoft) for hardware and support services could leave you in the same situation. Each has a substantial direct sales and service team and, if they ever decide to “cut the middleman,” and compete with their channel, it could devastate a number of MSPs. Is this all doom and gloom, predicting an outcome that may never happen? Perhaps, but we all buy house insurance knowing the chances are very small of a fire or earthquake. Savvy service providers keep their options open and create long-term growth plans with options for each of their vendors and suppliers, reviewing the strategy of these companies to ensure channel conflict won’t be a problem. Have the tough discussions with your business partner representatives and review all documents, consulting an attorney to review all new contracts and for any major revisions.
MSP Help desk and NOC services are extremely important as an MSP business grows, ensuring 24/7 and complementary support is available to meet the needs of their clients. The organizations that offer these services must be trusted partners, as those calling in provide account information and details that a competitor would love to have. Rather than handing that responsibility to a vendor with a direct sales force (a potential competitor), a better option is to engage with a company specializing in help desk or NOC services, without a potential conflict of interest. Not only are those smaller organizations easier to manage (from a contract and account perspective), they are typically more experienced at servicing SMB customers than the big guys. With a history of enterprise support and sales, the large tech companies aren’t always equipped to deal with the typical channel client. Not only do the technology needs vary for smaller businesses, but the technical skill levels of callers can differ significantly. An office manager at a small financial firm does not typically have the technical aptitude of an enterprise company’s network administrator, and the language barrier alone could lead to disgruntled clients.
The intent of this article isn’t to disparage the big technology vendors, but to serve as a mental check for MSPs looking at their outsource service options. At the end of the day, the best asset for an IT services business is their book of accounts and the relationships they manage. Based on that value, it’s more important than ever before to consider who you hand that information off to.