This article was published in the March 1, 2019 edition of Channel Executive Magazine.
Q | Many distributors and some channel vendors are adopting a “marketplace” approach to the solutions they sell through channel partners, particularly in the rapidly expanding cloud services space (Ingram Micro and ConnectWise provide good examples). How are channel-dependent IT service providers responding to the marketplace concept?
A | THIS ALL DEPENDS ON THE MSP. Some love the marketplace idea, especially through a partner like ConnectWise, as it allows them to leverage larger scale than they will have on their own. This translates into more offerings, as the MSP potentially does not have to meet sales and/or training requirements from each potential partner, as well as better pricing than they may be able to gain on their own. Larger MSPs don’t tend to gravitate toward these marketplaces in the same way. They are often able to obtain the pricing levels they require based on commitments or volume, and they have the technical expertise in-house to be able to work with a specific vendor partner directly. Where I see a blending of the two is with the distribution marketplaces. Distribution has incentive to drive volume in terms of sales and the number of engaged partners, to maximize their own margins. In turn, MSPs procuring through distribution may find it easier to work through this channel than it would be in a direct relationship. There may also be incentives to the MSP in terms of distributor support and training made available to them.
Q | What potential new business or additional solution set opportunities do you anticipate leveraging as a result of the host of new applications coming available to the channel through marketplaces?
A | I SEE MORE MSPs LAYERING IN ADDITIONAL SECURITY SERVICES to their offerings through these marketplaces. AV/AM and email spam filtering have long been staples of these marketplaces. I’m starting to see more security-focused services like web filtering gaining traction here as well. As MSPs try to offer more security-focused services, without necessarily declaring themselves an MSSP, I’m starting to see more security-centric offerings in the marketplaces. As MSPs become more security-focused, these marketplaces are uniquely positioned to help smaller MSPs embrace these technologies to help their clients.
Q | What organizational or managerial adjustments must IT service providers consider as the “marketplace” tech acquisition/distribution model takes hold?
A | I’M NOT SEEING MUCH NEED FOR ADJUSTMENT IN THIS AREA, outside of the core procurement function. This is just another channel through which these acquisitions are made. That said, a marketplace through an organization like ConnectWise holds a unique advantage for their customers as they often bundle in the integrations required to account for the usage of the various marketplace services that address usage, billing, and reporting. Regardless of how these technologies are procured, the MSP must be able to accurately account for utilization, for both costing and sales pricing, as well as reporting, to show the customer the value of paying for these services.