A year ago, the typical VAR would require a fair amount of explanation and persuasion when being pitched on the merits of managed services.
Not anymore, said Peter Sandiford, CEO of LPI Level Platforms Inc., an Ottawa-based provider of managed-services software for VARs and system integrators.
“Everybody gets it,” Sandiford said. “When we entered the market, we spent a lot of time talking to customers about why this was a good thing to do. We dont do that now.”
More VARs are making the transition from the traditional model of product sales and reactive services to managed services.
The appeal of managed services to the VAR is the opportunity to bill customers monthly, as opposed to the more traditional feast-or-famine model of invoicing per project.
Through managed services, a VAR takes over part or all of a customers IT department to manage it remotely, in what Sandiford termed a proactive services model.
Level Platforms software, Managed Workplace, lets VARs and integrators monitor their customers computing environments over the Web.
Users track customer networks through a dashboard that provides performance reporting and real-time alerts, as well as an inventory of assets such as hardware, software, networking devices and patches.
Since launching the product in May 2004, Sandiford said the company has recruited 500 channel partners to use Managed Workplace as their managed-services platform. Level Platforms wants to boost that number to 10,000 over the next two years, he said.
“Weve had a fantastic response to our product. Just think, weve been in the market only a year,” Sandiford said.
Level Platforms isnt the only successful player, either. Its main rival, Nable Technologies Inc., also based in Ottawa, is targeting VARs and integrators for its remote network monitoring technology.
“Weve always targeted those partners because theyve got those existing relationships with customers that dont have IT groups,” said Nables product manager, Rob Bissett.
Nable claims to have signed up more than 600 resellers during the last couple of years, including a number of MSPs (management service providers).
Level Platforms is counting on two strategic partnerships to help it reach its target growth rate.
One is a distribution agreement with Ingram Micro Inc., of Santa Ana, Calif., and the other involves the worlds largest software company, Microsoft Corp., of Redmond, Wash.
The software company is integrating Managed Workplace with its Microsoft CRM, a customer relationship management solution aimed at the SMB (small and midsize business) market.
With the integration of the products, VARs and integrators can provide managed services and identify new service opportunities without having to leave the Microsoft CRM interface.
“The integration of Managed Workplace will provide CRM users with a wide range of information needed to make faster and more effective business decisions,” said Lori Vangerud, channel development manager for CRM at Microsoft.
Microsoft Certified Partners receive CRM as part of their partner agreements. When they buy a Managed Workplace license, they get a Microsoft CRM connector that allows Managed Workplace to run as part of CRM, allowing CRM to function as their single customer management platform, said Sandiford. “Each product can operate independently, but with both integrated, it operates effectively as a single integrated application,” he said.
Level Platforms developed Managed Workplace on Microsofts .Net platform, so the integration was natural, said Sandiford.
Managed Workplace was developed with the SMB market in mind, and more than 90 percent of the computing environments in that market run on a Microsoft platform.
“The real sweet spot here is the 10- to 150-desktop space,” Sandiford said. Companies in this space have no CIO or even IT people, and typically they defer to a VAR for technical direction.
Among VARs making transitions to managed services is Mytech Partners Inc., in Minneapolis, which is using Managed Workplace for 10 customers, said Nathan Austin, company president. Mytech started using the product about five months ago and is in the midst of an effort to grow its managed-services business, Austin said.
Austin and Mytech CEO Lis Sildenberg said they opted for the Level Platforms technology because of the low cost. Level Platforms charges a $60-per-site monthly fee, which the Mytech executives found attractive, Sildenberg said.
Managed services account for 30 percent of Mytechs revenue, and the rest of the revenue comes from the companys traditional business of installations and network design, said Sildenberg. His goal, he said, is to reverse that mix.
“This market is really starting to play out,” Sildenberg said.
The opportunity for managed services in the SMB market, said Level Platforms Sandiford, is nothing short of enormous.
Of 2 million SMBs in the United States that could potentially take advantage of remote IT services, less than 5 percent are estimated to have entered a managed-services contract with a VAR or integrator.
VARs and integrators, Sandiford said, traditionally have had chaotic service agreements with customers under which the customer will call a VAR or integrator who did an installation at the site whenever it has a break/fix situation.
With a managed-services contract, Nables Bissett said, the agreement becomes formal and allows for preventive maintenance.
Sandiford said Level Platforms was originally an MSP. The company decided to go the software development route after identifying a need for managed services in the SMB space.
Pedro Pereira is a contributing editor for The Channel Insider. He covered the channel from 1996 to 2001, took a break, and now hes back. He can be reached at [email protected]