Comments on: Dell’s Next Move: A Master MSP Strategy

By: Joe Panettieri

Joe Panettieri — Wed, 30 Jul 2008 22:16:51 +0000

I am meeting some Dell folks at CompTIA Breakaway next week. I’ll be sure to get an update on Dell’s strategy, as well as attendees’ thoughts on scaling their businesses beyond $10M.

By: tdyrsmid

tdyrsmid — Wed, 30 Jul 2008 21:25:23 +0000

This is a very interesting time to be an MSP, that is for sure. With Wall St’s love of recurring revenue, there is no question that the big firms are going to do their best to eat our lunch. What I’m not yet sure of is how successful they are going to be.

In terms of marketing, obviously, they have the power to kill anything that we can do. In terms of locality, I think we’ll always have them beat. What are the ramifications of that? I suspect that means that small MSPs will remain small and will entrench themselves largely on the back of close personal relationships with their customers. Sadly, this approach doesn’t scale very well. So, if you are content to run a <$10M company, the next few years will probably be pretty good. If your ambitions are to rise beyond that, you better figure out a way to raise a ton of money and go on a buying spree. Failing that, I’m not sure if ours is still the business to be in? I would love to hear others thoughts and have you poke holes in my comments.

Trent
http://www.dyrandsystems.com
http://www.trentdyrsmid.com

By: Joe Panettieri

Joe Panettieri — Fri, 27 Jun 2008 14:01:26 +0000

Mike: Good to hear MSPs are extending their geographic reach. But even more impressive to hear they’re actually advertising. Marketing, PR and advertising generally haven’t been strong spots for MSPs and VARs.

By: mcooch

mcooch — Fri, 27 Jun 2008 06:14:14 +0000

That’s certainly the case. I had a conversation with an MSP this week that said that about 75% of the msp advertising in his market is now from companies hq’d outside of his market!

Mike
http://www.everonit.com
http://www.smbitpros.com

By: Joe Panettieri

Joe Panettieri — Wed, 25 Jun 2008 14:22:15 +0000

Mike: I think market saturation is a potential concern down the road. But it’s also a tricky discussion, since in the 1990s, VARs and IT franchises faced their own limitations on geographic reach. With managed services — coupled with on-site support partnerships — the geographic footprint for each MSP increases. In other words, even if Dell limited the number of partners in certain regions, those regions may face competition from distant MSPs located in other geographies.

By: mcooch

mcooch — Wed, 25 Jun 2008 05:55:51 +0000

All very interesting! Clearly the #1 reason to work with Dell in this model is because of their ability to generate leads. That’s certainly a big reason, but unless they limit the number of partners they will have in a market, I’m not sure of the impact it will have on any single partner.

Mike Cooch
http://www.everonit.com
http://www.smbitpros.com

By: Joe Panettieri

Joe Panettieri — Wed, 25 Jun 2008 01:56:40 +0000

Jim, Lane: the independent Master MSP model certainly is a worthy approach, but the vendors (Dell, etc.) have deep pockets to generate marketing hype. The Master MSPs will need to go viral with marketing in order to match the big company noise — or at least stand out from the noise.

By: Jim Van

Jim Van — Wed, 25 Jun 2008 01:50:01 +0000

Ahhh…fond memories from the dotcom bubble….I still have a bursitis-like pain that flares up whenever I’m surrounded by too much hype…. Lane makes an excellent point in that it appears that vendors are trying to deliver MSP services to MSPs without the benefit of an experienced business model. I personally vote for the independent master MSP model, like Do IT Smarter.

It will be interesting to see the impact on the market as IBM, HP, MS, etc. get in on the act. At least we’ll have a client base that’s been exposed to managed services. I have to wonder how we’ll have to switch our approach to clients in regards to educating them about managed services. After all, those of us who remain independent, or at least not participants in the big vendors’ programmes, offer a much different experience than our larger cousins will…..

By: Joe Panettieri

Joe Panettieri — Tue, 24 Jun 2008 12:39:19 +0000

Lane: I think we are going to see similar moves by IBM, HP, Microsoft and others down the road. Cisco is the only company to say definitively that they had no plans to become an MSP.

While I think vendor competition is healthy for the market, I also have a small worry that vendors will repeat the mistakes they made during the hosting craze. Anybody else remember how Intel and others started building co-location sites and hosting sites during the dot-com boom, only to retreat when the boom went bust?

By: Lane Smith

Lane Smith — Tue, 24 Jun 2008 03:09:49 +0000

This strategy sounds similar to Zenith Infotech and Kaseya’s new direction. The big difference is that you have a vendor trying to be an MSP. These two business models are quite different. Also the basis of the Master MSP model is that they are leveraging their experience as a MSP to deliver services to other MSP’s. Does Dell have any experience as an MSP?