Those of you who know me or who have read my content in the past will know I am very pro-MSP. My LinkedIn profile is /chris-tate-msp, my Twitter handle is @TotallyMSP and my personal, although somewhat neglected, blog is Totally MSP.
After a conversation with a colleague recently, it occurred to me that we often use terms that we don’t fully define. Reread the first paragraph and you’ll see exactly what I mean. While I’m sure most of you reading this probably know what I mean, we tend to make assumptions like this all the time.
So, what is an MSP? Well, it’s a Managed Services Provider, but what is one of those? There is no standard definition really, and the same applies VAR, or Value Added Reseller. I thought today was as good a day as any to take a high level look at the types of organizations we deal with in our community and what makes them different.
In simple terms, what we refer to as the IT channel is made up of: Distributors, Resellers, VARs & Retailers, MSPs, and Vendors (OEMs).
Let’s start with distributors – they purchase the product or service from the manufacturer. They then sell it on to the VAR or MSP. It’s usually a very transactional deal, there is little value added at this stage.
There are distributors who hold stock of physical products, distributors who purely work with SaaS products and some who do both. One of the reasons they exist in the market is to augment the vendors’ sales teams (Local language, time zone, etc.).
Value Added Resellers (VAR)
VARs will generally purchase the product(s) or service(s) from the original manufacturer or a distributor. This could be anything really, hardware, software, cloud service etc. Then, rather than just selling it on, they will add additional value. This is usually done by adding on extra products or services. This could be consultancy, deployment services, or even ongoing support for the bundled solutions. (This adding on of value is what differentiates VARs from a pure reseller).
So far, this seems pretty similar to MSPs, but the ongoing engagement is different. The product or service is sold to the client, but it’s usually reacting to client demand.
VARs are less interested in standardizing their client offerings, nor are they generally as focused on additional services such as general service desk support, patch management, or any of the other relationship stuff. They are a business much like a retail shop – they sell commodities to their customers.
There is clearly a place for VARs, they can often open the door to much larger end-user opportunities than MSPs. This is because these end-user businesses often have their own IT departments and, while they may need the VAR to help procure and deploy the solution, these customers don’t need all of the proactive ongoing services that the MSP can offer.
Managed Services Providers (MSP)
If you’re reading this, and you’re not related to me, then well done! You are probably very aware of what an MSP does. Put very simply, MSPs offer IT services to small to medium sized enterprises (SMEs). Around 70% of SMEs are planning to outsource their IT provisioning and security to MSPs.
Like VARs, they will purchase the product of service from the manufacturer or distributor and then resell it to their clients.
MSPs generally offer their services on a fixed fee basis. We discussed that previously in this blog on MSP pricing. This means that it is important for MSPs to standardize on products or services that can be automated while reducing ongoing support costs to help with overall MSP profitability. The fewer products the MSP engineers have to train and stay up-to-date on, the more easily they can support those products.This ultimately leads to a more efficient and profitable MSP.
Do Names Matter?
So, what does this all mean? Well, ultimately, not much. There is a place for VARs and MSPs in our community and the lines are blurry at the best of times.
If I was pressed to talk about the main differences, I’d say it’s down to the ongoing relationships. MSPs will often have deeper relationships with their clients, who are usually SMEs, than VARs who are often dealing with larger end user organizations.
There is a place for both, of course, and at JumpCloud we work really well with both VARs and MSPs and are able to assist both to offer JumpCloud to their clients.
So, as with many things in life, try to see past the label and you will benefit in the long term.
Let me know your thoughts on the JumpCloud Community.