Transition from VAR to MSP A Publication of the CA Service Provider Center of Excellence
transition from VAR to MSP There is NO magic potion! There is no instant transformation This is a process that will take time Budget 3-6 months Do not abandon your past Build on your strengths Approach this as starting a new business Identify an internal champion to run this new venture Identify target market Identify services delivered Develop Service Catalog Determine pricing Develop GTM strategy Hire a new sales force for this business
revenue streams Monthly Recurring Revenue (MRR) Revenue that is attained from core service offerings that are delivered on an ongoing basis Server management Network management Workstation management Non-Recurring Revenue (NRR) Revenue that is attained from one time events that are clearly defined and delivered Server implementation Workstation install Printer install App install Product Hardware & software
VAR to MSP revenue transition 100% 90% 80% 70% Revenue % 60% 50% 40% MRR Product NRR 30% 20% 10% 0% 1 2 3 4 5 6 7 8 9 10 Time
MSP maturity model MATURITY IT Perceived as a Cost IT Perceived as an Investment MSP AUTOMATED Customer YOU SHOULD DO THIS PROACTIVE MSP HELP ME WITH Deliver High Value Services (e.g., cloud offerings) High Availability Process Adoption (ITIL) Process Improvement RESPONSIVE Customer I SEE I NEED TO FIX THIS Remote Monitoring Management Service Desk Remote Monitoring Management Potential for Higher Revenue per Employee REACTIVE FIX THIS! React to issues Billed block of time Block of Time Scheduled Data Protection Health Check Planning Service Offering Perception
managed services adoption There isn t a single transition plan from VAR to MSP Buying a hammer doesn t make you a carpenter VAR derives 100% of revenue from product and professional services A successful VAR should continue to run the VAR business Grow the business to include MRR to become a MSP Focus on adding net new MRR Transactional Sales Reps are not successful at MRR sales Consider new sales reps for Managed Services with a services-centric compensation plan Incent existing sales reps to find Managed Services business A pure play MSP is a SaaS provider Only a handful of pure play MSPs exist in the market Everyone else is a hybrid of some sort MSP is a trusted advisor
managed services adoption (cont d) 1. Implement a Professional Services Automation (PSA) solution Ticketing RMM integration Billing Contract management SLA management Reporting 2. Nimsoft Monitoring Start with core infrastructure Extend to end user devices (e.g., PC, mobile, printer) 3. Demonstrate value Reporting 4. Extend higher value offerings into customers For example: back-up disaster recovery, application support/optimization 5. Optimize delivery with automation 6. Continuously repeat steps 3-5
sales & marketing Hires new sales reps for managed services Understands selling the value, not a product Comfortable with longer sales cycle Able to manage and nurture multiple opportunities at one time Understands relationship management and selling the relationship Go-to-Market Train on new services Launch new services Report Continuously repeat and refine steps above
starting the MSP business Identify an internal champion to run this new venture Appoint leadership must be member of the executive team Empower individual to make all decisions necessary to be successful Identify target market Start with 1 vertical or 1 discrete service offering For example: Serve the healthcare industry For example: Provide business continuity services for all customers Identify services delivered Develop Service Catalog Determine pricing Develop GTM strategy Hire a new sales force for this business
MSP landscape Most MSPs grew up reselling hardware, and many still do Thousands of MSPs are less than $2M in annual revenue Hundreds of MSPs are in the $5M to $50M range Thousands Number of MSPs Hundreds Tens Nimsoft Sweet Spot <$2M $5M $50M $250M $500M $1B Annual Revenues
MSP focus Core promise Provide the highest level of IT support possible Trusted advisor for customer technology solutions MSP executive focus 25% Business development pursuit of new customers 25% Customer satisfaction maintain existing customers 25% Demonstrating value proposition 25% Recruiting, developing and retaining talent Business Development Recruit, Develop, & Retain Talent MSP Executive Focus Customer Satisfaction Demonstrating Value
MSP enablement support needs Effective product solutions are table stakes. Nimsoft understands that MSPs place a high importance around enablement support Tech Support Technical training and best practices Reference architecture / migration strategies Support s deep understanding of the SP business model Business/ Consulting Support Business strategy workshops & deep dives Business model alignment Market intelligence Sales & Marketing Support Sales & marketing in-a-box collateral, execution plans and strategies Online access to tools & resources Alignment of technical and GTM deployment activities