Author: Alistair Mackenzie

Transitioning from VAR to MSP is a big mountain to climb. Cost, headcount and infrastructure barriers are enormous.

And like any epic expedition into unknown territory, you won’t succeed without the right map, the right guide or the right kit.

Predatar helps you easily overcome the barriers by delivering all three.

How does Predatar work?

To help you scale the mountain that is struggling VAR to lucrative MSP we provide three powerful elements: Map, guide and cutting-edge equipment.

Map: The Predatar Evolution Framework

Like a roadmap, our tried and tested framework helps you to find your way in unfamiliar terrain so you can avoid pitfalls and fast-track your progress at every step.

Guide: Leverage our expertise

We’re a channel company, built by the channel. Having been on this journey – and guided others through it – we’re here to help you smoothly transition with our full support.

Technology: A ready-made MSP operating system

You can have the right map and the right guide but without the right equipment, you won’t last long.

Predatar’s real secret weapon is technology that allows you to deliver data protection services at faster speed, greater scale and lower cost.

Our innovative tool set will help you traverse the greatest obstacles to scaling your managed service offering.

In this short 2-minute video, Alistair Mackenzie, Predatar CEO, talks to IBM about our work to help transform its global partner ecosystem

https://www.youtube.com/watch?v=cb15YZNw_5M&feature=youtu.be

In this episode I’m joined by Silverstring CFO, Graeme Titchener, who is on a mission to promote the “quiet men” of the IT channel. As more revenue switches to subscription services, the role of the “cash kings” is changing from back-office guardians to key players in the creation of competitive advantage.

Having steered Silverstring’s transformation from VAR to MSP, Graeme reflects on learnings from a career which began selling “chips and boards” in high volume, through to VAR, then MSP and more recently, SaaS provider. He reflects on a transition from growth by boiler-room sales tactics to growth driven by good customer service and proven outcomes.

Often candid in his speech, Graeme advocates Finance Directors take a much more proactive and visible role in business-model change. Stepping out from the back-office to influence product development, pricing, marketing and even culture creation will be necessary for successful transformation.

Whilst cash is still king, strong risk and liquidity management is essential to realise the vision of often overambitious chief executives. He goes on to detail the tooling and systems required to cope with subscription-based models and the financial pressures associated with balancing short-term cash requirements, with longer term equity value.

Finance is an absolute bedrock to IT channel evolution so this episode of the Predatar Podcast is long overdue. Not just for CFO ears, we recommend any channel executive takes the time to listen to Graeme’s insights.

Enjoy!

The number 11 has special significance. In July 1969 it was the number of the first manned spacecraft to land on the moon, Apollo 11. Arguably one of the most successful teams of all time.

Sports fans follow teams in Soccer, American Football, Hockey and the world’s greatest sport, Cricket, which are all made up of 11 individuals.

With the new Predatar 11 software and transformation services we can turn your business up to 11. This software release is not just about doing more with smart software, it’s also about the team. You may not have eleven in your team yet, but we can help with team building, huddle strategy and service execution, to really leverage your efforts.

To successfully scale, a provider of cloud managed services must create an organisational structure which fosters teaming and collaboration, more so than a traditional value-added reseller. It’s our belief that this lies at the core of why 90% of VARs fail to grab their slice of the $282 billion MSP market.

Regular readers of the Predatar blog recognise our position that success depends on so much more than technology. A successful journey to MSP requires a route map and an experienced guide but having the right kit, or toolbox, is important too. The latest Predatar software toolbox will help to underpin your evolution from VAR to MSP. It’s the MSP operation system around which you can build your team.

Who do you need on your team to be successful and how does Predatar 11 support each person?

Finance Director

A critical role for any business moving from transaction to subscription-based revenues. For the finance team to be your most valued player, they need to be equipped with the tools to accurately monitor the use of labour, assets and subscriptions, on demand to create frequent invoices for pay-per-use clients. Predatar 11 provides the necessary information via the web, or with API access into ERP systems.

Sales Director

As sales directors morph into chief revenue officers, the landscape is shifting to “land and expand” sales models. How do you continue to delight and retain your customers as you grow? For sales people, better customer insights can be the difference between winning and retaining customers, or losing clients. Predatar 11 has even more data points to give sales leaders the customer transparency they crave.

Operations Director

Attracting and retaining the skilled people you need as you scale your business is a top concern for many MSPs. Predatar 11 includes a new wizard feature to make on-boarding of new customers easier and faster. Not only does this mean your finance team are never losing valuable revenue but your service delivery team can focus on customer issues.  We have also expanded the automation for provisioning and decommissioning of virtual machines into backup schedules.

Technical Director

Heads of technology at our MSP partners have demanded greater choice. They are responsible for clearly defining service offerings to make it easy for salespeople to promote. Get this stage wrong and you simply won’t be able to scale your MSP business. We’ve been listening, which is why Predatar 11 now includes support for multiple data protection technology vendors. The new release allows MSPs to create customised service catalogues based on more than one backup software vendor.

Not all data is created equal and some systems demand a higher level of recovery. Aggressive Recovery Time and Recovery Point objectives will be required for business critical or mission critical systems. With Predatar 11, MSPs can design and build tiered service offerings around recovery, from data replication to snapshots to traditional backup. Improvements to the patented Recovery Orchestration feature make it even easier to verify backup jobs, thereby helping to cement customer confidence in your service.

Marketing Director

The hot trend in B2B marketing today is Account Based Marketing (ABM). An iteration of one-to-one bespoke marketing, ABM requires timely and accurate data on each customer to be effective. Broadcast or mass marketing campaigns are out, focused account specific campaigns are in. Predatar 11 can be deployed in minutes but keeps trend data for years. Customer Success teams and Renewals specialists, whether reporting to sales directors or marketing directors, will greatly appreciate the customer insights available in Predatar 11.

Every winning team has not only a great culture but also a proven system. For the MSP wanting to scale its data protection service business, Predatar 11 is a critical addition to any team.

Predatar 11 is available now. For more information please get in touch at https://www.predatar.com/contact-us/

How do you build long term competitive advantage when products and features can be so easily copied?

This podcast episode looks at how to position your company for long-term success. As value-added resellers in the channel evolve to become cloud service providers, they can no longer stand on the shoulders of IT giants. Brand building and marketing become part of the strategy to be considered by any channel CEO.

The services you build become the torch bearers for your brand, helping you to avoid margin erosion from commoditisation and copycat resellers.

In this era, the service you provide is a reflection of your brand and culture. It’s what makes you distinctive and unique.

Whether you are first or late to market, you must take control of your position in a market segment by having a point of view, or a belief about what’s right and wrong. If you don’t, someone else, your prospects or competitors, will position your business for you.

In this episode Al Mackenzie, the CEO of Predatar, is joined by Mark Sampson of Beliyf to discuss branding and positioning for IT Channel companies.

To follow The Predatar Podcast find it with Spotify  or Apple

Re-wiring a business in response to evolving market demands is never going to be an easy feat, even when businesses have the luxury of time and significant cash reserves to draw on.  So, when a business needs to transform at pace because its competition is hot on its heels and it fears missing out, the pressure quickly intensifies.

This is one of the big challenges facing business leaders who are trying to navigate through the rugged terrain of today’s saturated and hyper-competitive IT channel landscape.  Despite best efforts to embark upon this expedition, senior management teams within traditional VAR businesses that are looking to take advantage of the profitable MSP world, are finding it hard to get past first base.

Alistair Mackenzie, CEO of Predatar, discusses with guests Doug Sawers and Mark Sampson, the importance of getting every team member to buy into any channel transformation.

In the 3rd and final part in his series, Predatar’s Alistair Mackenzie considers the top four technological challenges businesses are likely to face when they’re looking to scale their recurring revenue model.

With the increasing drive towards service-led, outcome-based delivery and revenue models, the risk of owning and operating technology is shifting from the consumer to the supplier.  Reducing this risk and fast-tracking evolution to scalable, profitable, service-led technology delivery not only requires the right map and guide, as discussed in the 1^st and 2^nd part of this series, it requires a secret weapon.  Technology that enables businesses to be more competitive and deliver customer delight.

Technology, however, can have its own unique set of challenges – challenges that can hamper MSPs ability to scale quickly and efficiently.  Here are the top four considerations:

Reducing the risk of information security breaches

How do you ensure your customers have access to everything without being able to view another customer’s data?

As an MSP, acting as an agent or intermediary and potentially servicing multiple, different end user customers, a unique set of problems can present themselves – particularly around segmentation.  If you’re a service provider that owns a server for example, and then rents it out to multiple customers, there is a strong chance of cross-pollination.  This is one of the first principles MSPs must consider as part of their technology solution.   Multi-tenancy can reduce the overall cost for each individual customer, but equally there are risks and MSPs must ensure there is robust segmentation.

Fear of missing out

How do you accurately monitor the use of labour, assets and subscriptions without systems and automation?

In the VAR world, you tend to sell upfront for a known quantity of software, hardware or services.  You agree with the customer the solution package, you put a price on it, the customer checks it and you carry out the transaction – simple.

When you’re delivering technology-as-a-service, the usage of a particular asset or resource that you’re providing on behalf of the customer could be changing on a yearly, monthly, weekly, daily or even hourly basis.  Keeping track of this type of usage is almost impossible without robust systems, tools and automation that can provide real time data, as well as historical information if a customer decides to query something.  Or, maybe you have an army of people whose job it is to constantly review, monitor and deliver reports but even then, how scalable is this option?

Avoiding productivity bottlenecks

Managing 200+ customers simultaneously can seem daunting, but this is the reality of many successful MSPs today.  To ensure you remain profitable as you scale, it’s important to recognise what structure you need to avoid productivity bottlenecks.  The only way MSP businesses can achieve the economies of scale is to consider how they can provide technology-as-a-service cheaper than the customer delivering it themselves.  If an MSP has one technical engineer for example, that engineer can be spread across multiple customers.  If you’re having to employ an Engineer for every customer that you onboard, you’re essentially not going to be any cheaper and the economies of scale that you need to attract the customer in the first place will never be realised.

Automated technologies can build operational workflows to help remove the mundane, manual yet essential tasks an MSP must perform on a regular basis such as system checks or network upgrades.  In turn, your team can then focus on other tasks that are centred around delivering the high quality of service and value add that customers are seeking.

Don’t leave customers feeling underwhelmed

Recognising that the customer must be at the heart of everything it does, MSPs are laser focused on customer success and delight.  Failure to deliver excellent customer service will inevitably reduce trust and brand loyalty.  But how can technology help you to improve customer service?

Let’s consider pizzas for a moment.  For anyone who has ordered online through Domino’s, they will tell you that their experience is seamless.  Not only is it quick, Domino’s has used technology to keep its customers completely in the loop of its internal processes – that is, a virtual window into its kitchen and the cooking cycle of their pizza.  This provides complete transparency and instils confidence that Domino’s will deliver.

MSPs who can provide a similar level of transparency will undoubtedly be the ones who thrive and prosper.   The immediacy of data, stats and reports aligned with the agreed KPIs through technology will build trust and confidence with customers.  Over time, utilising the available data and insights across multiple customers, MSPs can also start to predict behavioural patterns and in turn, provide customers with insights and recommendations based on knowledge they may not necessarily have.  This will serve to enhance the long-term customer relationship and place the MSP favourably as a true, trusted advisor.

In the 2nd part of his series, Predatar’s CEO, Alistair Mackenzie takes a closer look at the importance of a strong culture and highlights why Marketing should no longer be viewed as an afterthought.

There’s one thing that a traditional VAR isn’t short of – and that is technical skills.  Ask them about specific vendor technologies and they’ll be able to recite the features and benefits with clockwork precision.  In an MSP world however, this type of knowledge and insight is no longer enough to differentiate.  Service becomes king and everything the MSP business says and does has to be centred around the intended target customer.

Understanding this is key to developing the business plan and unique offering discussed in part 1 of this series.  But, what’s next?  Depending on their individual situation, there are several different paths businesses might take for this type of transformation.  Some businesses may decide to part transform or become 100% MSP, whilst others may decide to spin out a separate business or, if the funds are available, acquire a ready-made business.

Whatever path they take, leaders need to appreciate the invisible force that’s at work – culture.  With any significant business transformation such as this, employees will be keen to understand how it will impact them therefore, as keepers of the culture, CEOs must invest time and effort in internal communications.  Giving employees the opportunity to appreciate how the change matters to them at an individual level will increase the likelihood of them buying in and embracing the future direction of the business.  Otherwise, CEOs risk their strategy being swallowed up by culture.

Happy employees mean happy customers and so, CEOs must give their employees the attention they deserve.  Agree the goal and how the business will act and behave in order to achieve that goal.  Map out how the goal(s) will be communicated and ensure that employees are rewarded for the behaviours that help drive forward the new mission.

Particular consideration needs to be given to the sales team.  If the CEO decides to use the existing sales force, the thorny issue of commission must be addressed within the plan.  The commission paybacks are likely to be very different when operating as an MSP therefore a decision needs to be made as to how the business will compensate the sales team for expected future revenues.  If not addressed, CEOs may face losing their people to a competitor.  My advice – the CEO and Finance Director should look at finding the money to ensure their sales people are suitably incentivised.  Only then will the business guarantee that the team are fully on board and engaged in driving the new vision forward.

Preparing the right skills

It’s worth noting that fundamental changes to the organisational structure should be expected as the structure of a VAR business is very different to that of an MSP.  Product-orientated, the allocation of technical resources within a traditional VAR tends to be front-loaded, i.e. focused on the pre-sale and implementation with customer relationships playing second fiddle to winning the deal.  An MSP business on the other hand is all about service and customer success therefore a high proportion of the upfront resource allocation a business previously had needs to be transferred to its adoption services.  Day 2, post-sale is where the hard work really begins in ensuring that the customer is continuously seeing value from the service the business is delivering.

Businesses then need to identify the people/department/skills needed to be able to deliver ongoing customer success.  Leaders should identify the people that not only have strong technical skills but have an affinity towards good customer service and an understanding of how the technology has an impact on the customer’s business outcomes.  The most obvious and quickest route to market is to skill up your technical team.

Own your Marketing

One of the biggest learning curves for any business transitioning from VAR to MSP is the fact that they can no longer rely standing on the shoulders of their vendor brands in their efforts to be recognised or considered by their customers.  Less about the technology, aspiring MSPs must acknowledge that customers buying into their service will base their decision, not simply on the product, but in the trust and confidence they have in the brand and the team that will deliver a value-added service.

In many cases, PR and Marketing within traditional VAR businesses is non-existent but MSP businesses can ill-afford to ignore the benefits such disciplines can deliver and unless the CEO has time, part of an MSP organisational structure most certainly should include embedding a Marketing Strategist to help the business bring their new technology-as-a-service offering to life.

Look out for the final part of this series where Alistair will outline the ultimate survival guide that will help navigate the rugged terrain of the VAR to MSP expedition.

In the first of a three-part series, Predatar’s CEO, Alistair Mackenzie reflects on the transformation from VAR to MSP, highlighting some of the key milestones and the obvious pitfalls to avoid.

The drive towards more OPEX driven purchases as part of customers’ business transformation strategies is forcing suppliers to rethink their business models to ensure they stay relevant.  Rather than simply providing a host of technologies as part of the traditional reselling business model, customers are demanding greater value and the delivery of specific outcomes, reinforcing the need for suppliers to shift their focus to a managed service offering – either completely or as a complementary part of their existing portfolio.

On your marks, get set – go!

Eager to make the change, channel businesses aren’t short of enthusiasm however, many are finding it hard to get off the starting block or, they’re stalling at the first hurdle.  But why?  It may sound simple but often, it’s because they’re lacking a credible execution plan.  A fundamental first step is appreciating that this type of transformation is akin to starting the business from scratch.  In some respect, it’s harder because of the inertia and traditional habits that have been built over the years of being a VAR business – rewiring those behaviours isn’t easy.

Ten or 20 years ago when the market was buoyant, many business owners may have been in an enviable position where they were able to set up their business without a plan however, today, it’s a very different business landscape – both fast paced and hypercompetitive.  Transforming the business takes energy, effort and planning.  If businesses don’t have a plan, then they’re clearly not serious.

Be real!

But what makes an execution plan credible?  The key is for it to be realistic.  For example, if a business is currently 100% VAR – to say that 50% of the business will be aligned with the MSP model this time next year is probably wishful thinking.  Not unless the business owner has identified some very specific and definitive steps as to how he/she is going to achieve this and answered questions such as:

• Is that % based on switching all existing customers?
• Is the business confident that all those existing customers will want to switch?
• Is it realistic?
• Does the business have the funds and resources in place to make this happen?
• Does the business already have a track record?

With time ticking and competition hot on the heels, the more detailed the business plan is, the more likely owners are to make their dream a reality.

Engineering a solution

Part of any robust plan should also outline the type of MSP service the business wants to deliver.  Successful solutions, products or services, start with good design. Businesses need to draw on their strengths and understand what their niche market is and engineer a service to match. This isn’t about building a solution for everyone – it needs to be centred around a service offering that stands out from the crowd, rather than simply being a me-too product in a crowded space, whether that be a vertical focus, cloud specialisation, or something else.  Other fundamental questions that need to be answered are:

• How do we differentiate our XaaS offer?
• How do we price our XaaS offer?
• What do we put in our XaaS offer and what do we leave out?
• How much of the XaaS offer will be software and how much will be high-value service?
• If providing high-value services, who and how will they be delivered?

All too often, MSPs try to build services that cater for everyone and they think appealing to the biggest possible market is the route to success.  It’s critical that businesses define their target market and establish a position in a field that is crowded.  Heinz may have ’57 varieties’ but can you name more than 5?

Another fundamental part is defining the go-to-market strategy.  How will the business attract new customers and engage them with the unique offering?  Will the business focus on those existing customers or look at targeting new prospects?  More importantly, what will be the makeup of the sales team – will the business use existing sales people and get them to focus on XaaS or will there be a different, extended team?

If the leadership team decides to use the existing sales force, a fundamental part of the plan must address the thorny issue of commission.  Big upfront deals vs. a recurring revenue model – the commission paybacks can be very different therefore, a decision needs to be made as to how it will compensate the sales team for expected future revenues.  My advice to any business?  Find the money to do just that.  Only then will the business guarantee its sales team are fully bought and engaged with the new business model.

Look out for part 2 of this series where Alistair will take a closer look at the importance of a strong culture and highlights why Marketing should no longer be viewed as an afterthought.

In order to thrive, data protection experts, Silverstring recognised that it needed to switch from a product-led to a service-led business model.  Looking back at the early days of the company’s transformation, Silverstring’s Chairman, Alistair Mackenzie highlights the ups and downs and key learnings.

Why did Silverstring decide to change its business model?

We started life 16 years ago and were quite arrogant in thinking that we could compete head to head with the ‘big boys’; the large VARs.  Before long, we were running faster with more stress and less profit – even the most successful VARs were only making 3-4% retained margins.  This wasn’t just about surviving – we wanted to thrive, and our customers were crying out for something new.  ‘Staying safe’ wasn’t an option.

Our business was full of people that had plenty of passion, guts and determination – we had no fear in trying new things and being disruptive.  We wanted to harness that energy, find our niche and then invest all our time and effort into developing the capability. This change in direction ultimately led to the development of the Alchemis Protect^® solution which would help us to maintain relevancy in the fast-paced world of cloud computing.

What were the key hurdles you had to overcome?     

 1. Cash flow fears

Operating as a VAR, it was relatively simple to manage the balance sheet and cash flow of the business and it was a model that the Financial Director was very familiar and comfortable with.  It came as quite a surprise how much the financial position needed to change under the new managed service business model.  It meant writing a clearly defined business plan, mapping out key milestones and identifying the financial investment we needed to commit to, how long we needed to invest for and at what point in the transformation we were likely to start cutting through the cash crunch – if we hadn’t have done this, I don’t think we would have ever got there.

We also underestimated the systems we would need in order to efficiently operate as a managed service business.  Our back-office systems at the time were unsophisticated and ill-equipped to deal with more regular, smaller payments from multiple customers.  We held on to those systems far longer than we should have which is why our transformation took much longer than anticipated.  After much procrastination, we acknowledged that the old systems had to be replaced with a new, more sophisticated ERP system.

2. Sharing the vision

We wanted to move to this model and naively, we expected everyone to jump on board and share our enthusiasm, but naturally, we had employees with different motivations and aspirations.  Unless they had a stake in the business, they were thinking: what’s in it for me?  This was of particular relevance for the sales team who traditionally were used to a commission model that was based on the big transactional deals we had been securing.

3. Breaking Bad Habits

Our whole business model had been centred around transactional selling – the focus being predominantly on a strong pre-sales team and marketing off the back of the ‘giants’ that were the core vendors – in our case, IBM.  We had never really looked hard at our organisational structure – it had simply evolved.  None of our resources, however, were aligned to our new vision of being an effective provider of technology as a service.  We needed to break the organisational structure and re-wire it.

4. Service Engine

The bottom line – we didn’t have a service platform.  Our business model was geared up for face to face site visits.  We didn’t have the tools or the equipment to allow us to be constantly connected to the customer – a fundamental component to delivering a 24/7 data protection managed service business.

5. Hunting mentality vs. customer success

As a VAR, competitiveness to ‘hunt’ for the next big transaction is part of the DNA of your sales people  – an approach that is completely alien to the MSP model which is all about customer success.

Traditionally, we would have big debates or tech-focused workshops analysing different vendors’ technologies – of course, being a technology-based business, this still needed to be part of our strategy.  However, we realised that we needed to spend much more time talking about customer engagement – how to service a customer, the attributes of great customer service vs. bad customer service.  Under an MSP model, it’s all about building long term relationships.

Our VAR world had always been driven by technical prowess, but in a world where information is readily available and free, this is no longer enough to differentiate.  There is certainly an awareness within Silverstring that the organisational structure is key to improving customer service excellence.  Is it fixed?  Not yet.  However, the fact that we have roles such as Culture and Talent Manager means that we’re thinking about it and exploring what’s required.  It’s fair to say that we spend as much time hiring for behavioural skills rather than simply technical capabilities.

Did it take you longer than expected?

It took us three times longer than expected.  Why?  We had never done this before, and we didn’t have anyone giving us advice or guidance on how to tackle this type of transformation, so we really did have to be somewhat agile, embracing and responding to whatever surprises came our way.

What would be the one thing you would do differently if you could start again?

We would dedicate more time to ensuring the leadership team were communicating.  And, I don’t mean telling our people ‘this is what we’re doing, and this is what you need to do’ – I’m talking more about listening, empathising and providing a forum in which concerns can be raised.  Continuously assuring and reassuring throughout the transformation process.  It’s easy to fix system problems, you simply replace it – you need to work far harder at ensuring your vision for the future is not only understood but embraced by the very people who will help you to deliver it.

What’s next for Silverstring?

In a world where information is pervasive, buyers know as much, sometimes more than the sales people, so we’re working harder than ever to become a trusted adviser to our customers.  This means focusing a lot of our attention on using metadata across a variety of customers and industries, applying analytical insights and machine learning to spot patterns, risks and opportunities to save money, that aren’t available through human interaction alone.  It’s all about using technology to provide our customers with greater intelligence.  We are using technology not for technology sake but to deliver a better service to our customers rather than simply being a ‘price check monkey’.

Whenever I’m asked to comment on the unprecedented change and disruption the channel has seen over the past 18 – 24 months, the natural ‘default’ position is to talk about a whole array of things including the ‘as a service’ models, public/private cloud, digital transformation, AI and data analytics. However, having time to reflect, I do wonder if this disruption is simply down to the fact that everything is cyclical, and a generational shift is at play.

The birth of the modern channel

It’s easy to forget how the channel began its journey and what the founding principle was. Indeed, it’s difficult to get any one definitive answer but, having come across an article dating back to 1996 which talked about Novell Inc’s story and its ensuing success, you can clearly see why the reseller business model took off back then. Going up against the big giants that were IBM and Microsoft was never going to be easy and yet, Novell’s record was remarkable – its success due, in no small part to the cultivation of a 25,000-strong reseller channel who would go on to promote their products and deliver complex integration.

IBM quickly took stock of Novell’s approach and the advantage of using the channel – so much so that in the mid-90’s, it decided its new RS/6000 systems would be distributed via the channel rather than going direct. It wasn’t long after that we saw many ex-employees of IBM, particularly within the U.S. market, recognising that there was money to be made and so, a deluge of new companies evolved with the sole focus of becoming IBM product resellers.

This is where it gets interesting and my ‘generation’ theory can be realised. Many of these traditional resellers that started back in the mid-90’s have been in business for the best part of 25 years and are now at a point in their career where they would quite happily cash in their chips. Indeed, recent research from Forrester indicated that a staggering 70% of MSPs are looking for an exit but is this anything to worry about? Does this mean that it will continue to get harder to operate within the channel? Not necessarily – it’s simply down to a generation who are now looking to pass the reins and enjoy their retirement.

Is the reseller model dead?

The short answer is no. If we look at the 90’s where we saw the big boom in the reseller VAR model – a model that worked, everyone understood it, people made money and the vendors, channel partners and customers were all happy. I would argue that this model isn’t fundamentally broken or irrelevant for today’s market – all that is happening is that it’s evolving. Therefore, there is still a need for an ‘agency’ model of some kind that connects buyers to sellers – whether you call it a reseller, VAR or MSP is irrelevant.

The Salesforce business model

Salesforce is a great example of where the channel adds value. The business model is such that everything is delivered from the cloud as a SaaS and physical distribution is not a problem. However, Salesforce still had an issue in that its standard framework doesn’t do everything that the customer needs it to do – CRM system needs to integrate with their ERP system for example. Does Salesforce want to do that? It makes no sense as it will negatively disrupt its business model of high profit margins.

Enter the ecosystem approach. Many channel partners who traditionally sold software, have recognised that there is a greater need, and frankly speaking, opportunities for higher profit margins in being an integrator for Salesforce. And so, Salesforce fostered this idea of an ecosystem rather than a pure reseller channel which is proving to be hugely popular.

It’s for this reason you’re now seeing companies like IBM herding this new evolution that is an ecosystem, rather than a channel. But what does that mean in real terms? Fundamentally, it’s centred around this idea that there is actually no one company, vendor or channel player that can do it all. You need to integrate with lots of different types of companies.

Are we facing an identity crisis?

Although the introduction of the ‘ecosystem’ makes sense for the multi-dimensional market we’re now operating in, it has led to huge confusion. We are always hearing about VARs, MSPs, CSPs, system integrators and digital agents but what does it all mean and are businesses clear on who they are and how they truly fit into this ecosystem. I think, more often than not, it is unclear and therefore, creates an identity problem – a problem that businesses need to overcome if they want to ensure they continue to add value to their customers and safeguard their future.

That said, there will be businesses who are clear which direction of travel they are going. Whether it’s a complete change of business model, for example moving from a VAR to an MSP, or adding capabilities to the current business model, CEOs are always looking for this to happen seamlessly and at pace.

The evolution of GlassHouse Systems (GHS)

Recognising that the traditional VAR market was declining around the globe, the Toronto-based IT infrastructure company was looking for new growth and took the decision to evolve into a managed services business. Founded in 1993, GHS is renowned for its deep technical expertise and is one of the largest IBM VARs in the country with a very diverse range of clients. It now employs 75 staff and has annual revenues of $100m.

Although a cloud managed services business would present strong opportunities for GHS to build sustainable revenues and expand the business, the transition was proving to be a challenge. Eric Walker, Senior VP of Technical Services at GHS explains: “Predatar came in as our catalyst for business transformation offering us business advisory expertise, a unique and tested Evolution Framework and a powerful management technology platform that brought about whole new levels of automation and insight.”

GHS could see that this would enable it to build new revenue streams in managed services, scaling up its own differentiated service offerings without the need for investment in extra headcount. The evolving business was quickly able to deploy the power of the Predatar platform’s automation and advanced, remote-management capabilities to provide co-managed or fully-managed services. Eric believes that the biggest impact of Predatar had undoubtedly been in allowing the business to scale up into managed services without hiring extra staff and incurring heavy new overheads. Eric continues: “The Predatar team used their expertise to demonstrate how a managed services business could be created around our existing skillset in IT and data protection. They helped define the business model so that we can confidently deliver new services that are attractive to the market. The framework they have created is invaluable.”

Pragmatism is key

Let’s be pragmatic here. There’s nothing in this world that will dominate 100% – in the same way that Amazon isn’t going to dominate every part of our life – despite what they say! Life doesn’t work like that. One high profile public scare story could tip the scales, sending customers into a frenzy where we see workload being brought back on premises.

Yes, there is disruption and yes, the channel will still exist. To what degree and in what format – only time will tell. What we can be sure of is that there will still be a need for the traditional resell, customer owned kit but equally, there’s also going to be environments whereby a different business model is required. What businesses must do is evaluate their current model and decide what they need to do, if anything, to ensure that they are set up with their customers requirements in mind. Ultimately, customers don’t care about process or the name you give yourself, whether it is VAR, MSP, CSP or digital agent – what they care about is the value you can deliver.

Accelerating business transformation

Any shift in business model carries some degree of risk, complexity and potential overheads. What is certainly true of today’s IT infrastructure market is that its evolving at speed. If businesses want to stay ahead of the competition, they need to arm themselves with a framework and the technology and processes that allow them to transform their business at pace – only then will they be able to truly reap the revenue rewards this dynamic market offers.