Today, the demand for hardware, specialized software and other technologies continues to grow, yet past profit margins have been razor thin. If the old saying is true — that every challenge is an opportunity in disguise — this is the chance for value-added resellers to rethink past approaches and focus on becoming a true MSP.
Explanation of VAR and MSP
A value-added reseller (VAR) is a type of IT solutions provider that traditionally focuses on selling third-party products, adds value to the product — usually with additional features, software, integrations, and professional services — and then resells a larger, more valuable
A managed services provider (MSP) can be considered the next generation of a VAR — especially as IT service providers seek to deliver better service but also increase their profits. Today, MSPs tend to play a more consultative role in helping their clients select, understand, manage, and even use a wide variety of complex technology products. This is especially true in cases where the clients’ employees can’t play this role.
In many ways, the timing is perfect. As VARs continue to look for new ways to stabilize their businesses, reduce risk, and increase profits via dependable recurring revenue models, a growing number of them are interested in becoming MSPs. As described above, the MSP model can lead to better financial success; but it also positions VARs for long-term success, since MSPs tend to enjoy a more hands-on, strategic, and advisory relationship with their customers.
Becoming an MSP offers a number of advantages: new and higher recurring revenue, scalability, and the potential to expand and grow their business.
Higher recurring revenue
Instead of attempting to sell products with the VAR approach, MSPs work on a monthly basis for their clients, which immediately flips the switch to a recurring revenue model. By demonstrating more value as a strategic, consultative business partner, they have a real opportunity to secure high fees — especially if they take over much of the client’s IT or cybersecurity responsibilities. All of this can help them increase their revenues and increase total profitability — very welcome metrics for any IT consultant.
Scaling solutions for clients, which leads to higher financial gains
Additionally, it is important to note that MSPs can use a relatively small number of tools to manage many different clients. Thanks to MSP subscription models and licenses, many technology providers and software companies encourage the use of their solutions in an MSP model.
This significantly reduces complexity as well as the cost associated with the use of so many software applications. It also offers economies of scale where the MSP’s cost goes down as it adds more clients — again, critical for strengthening the bottom line.
Business expansion opportunities are higher as an MSP
The combination of the two reasons described above — new revenues in a scalable business model — MSPs may have better opportunity to expand their total book of business. This can occur as the result of the “driving the wedge” model, where MSPs take on more IT responsibilities in a single organization, working with new clients, or both.
How to prepare for the switch from a VAR to an MSP?
It may not be as easy as it seems to immediately make the switch from operating as a traditional VAR to suddenly becoming a true, consultative MSP partner. There are many variables to consider, including the services provided (wide-ranging or niche-focused), evaluating employees, taking advantage of automated tools and other efficiencies, and even communicating with customers and prospects.
They’re all important topics, so let’s take a closer look at each one.
Simplify, simplify, simplify: What services should MSPs offer?
To successfully manage the transition, many VARs would be wise to start slow and begin by offering just one service (especially at first). Some of the most common starting points include backup and disaster recovery, or even a dedicated focus on cybersecurity efforts.
Assess existing team members and expand if needed
Transitioning to a true MSP may require employees with additional skills than what some VARs have in place now. These VARs should thoroughly assess their existing team to refine or augment these competencies. But at the same time, they should consider if they need to expand by adding new employees who may have the experience required to operate in a more strategic, consultative MSP model.
Inform customers and prospects
Any change can be confusing to clients and prospects, so VARs should do all they can to clearly communicate what is happening, any potential impact, and even how this new approach can actually provide valuable benefits to the client.
Initially, VARs may receive objections or pushback related to cost. Yet this is actually an opportunity to showcase the value of their services by clearly demonstrating how the new MSP model can improve the relationship – and results. New MSPs can review past IT bills to show how much the client paid in the past — for example, when something went wrong — and compare those spikes to how the new model will keep things running smoothly for a flat monthly fee.
Focus on an the most effective MSP backup and cybersecurity solutions
It is important for MSPs to find and use the best solutions possible — both in terms of addressing a specific need for clients, but also to help MSPs do it easily, cost-effectively, and at scale.
This is especially important in the niches, such as backup and cybersecurity solutions. Here, MSPs can use a single solution that provides maximum protection for clients but with considerably fewer resources. These types of cybersecurity solutions help MSPs prevent downtime and data loss for clients but give MSPs a single console to manage all their clients without bouncing back and forth between disparate cybersecurity and backup tools.
The perfect solution for starting your MSP business: the Acronis Cyber Protect Cloud
The Acronis Cyber Protect Cloud delivers protection management built specifically for MSPs. This powerful solution integrates data protection, cybersecurity, and endpoint management into a single solution with centralized management.
It’s an important advantage. Using different solutions for data protection and cybersecurity creates complexity and broadens threat vectors. Integration and automation provide unmatched ease for MSPs — reducing complexity while increasing productivity and decreasing operating costs.
Simplify everyday operations: a single pane of glass offers a multi-service, multi-tenant portal so you can easily manage your clients and service management tasks.
The Acronis Cyber Protect Cloud also enables managed service providers to expand their offerings with advanced protection packs. These include:
- Advanced Security — enhance security services with integrated cyber protection that includes full-stack malware prevention. This advanced pack helps MSPs increase their detection rate and response times to the latest cyberthreats — critical for reducing risks to their clients.
- Advanced Backup — enables MSPs to strengthen their overall data protection services by making sure clients never lose data, even between scheduled backups.
- Advanced Disaster Recovery — now MSPs can get their clients back to business in just minutes and ensure immediate data availability after a disaster strikes. The Advanced Disaster Recovery add-on helps make disaster recovery painless and increases efficiency with orchestration, runbooks, and automatic failover.
- Advanced Email Security — block any cyberthreats, including spam, phishing, business email compromise, advanced persistent threats and zero-day attacks — before they reach end users.
- Advanced File Sync and Share — this advanced pack extends the capabilities found in the Acronis Cyber Protect Cloud’s integrated file-sharing capabilities with remote notarization, verification and online signing. It becomes a critical advantage in improving the collaboration and productivity of client teams.
- Advanced Management — enable automated patch management and overall protection management. The Advanced Management add-on is the ideal way to keep clients’ systems up to date while simplifying protection management efforts.
If you’re an IT consultant considering the switch from a VAR business model to an MSP, don’t delay. Discover how Acronis can help with our full line of cybersecurity tools and solutions that are perfect for busy MSPs managing a full portfolio of clients. Best of all, you’ll see how this new approach adds up where it matters most: new revenues and a stronger bottom line.