Do IT Smarter, owned by ClearPointe, is exiting the Master MSP (managed services provider) business, according to multiple sources. Do IT Smarter recently sent an email to its MSP partners, informing the companies that they had 30 days to move off of Do IT Smarter’s systems. Here’s the update — along with a bigger question: What’s the future of the Master MSP business model?
First, the chatter: Do IT Smarter had a U.S. network of roughly 150 local service provider partners when ClearPointe acquired the company in October 2010. The Do IT Smarter services included a network operations center, help desk services, remote monitoring and McAfee-related email security services.
A recent email to Do IT Smarter’s partners stated the company was ending its MSP services. The email also identified Spam Soap, another McAfee partner, as a potential destination for IT service providers moving off of the Do IT Smarter system. I’ve reached out to ClearPointe for comment and will let readers know if/when the company responds.
Making the Move
Leonard DiMiceli, director of channel sales at Spam Soap, confirmed that Spam Soap has acquired a considerable number of former Do IT Smarter partners in recent weeks. But Spam Soap’s DiMiceli declined to speculate about Do IT Smarter’s business status.
Elsewhere, additional sources say McAfee has mounted a campaign to ensure Do IT Smarter’s email security partners remain on McAfee-developed security software and related services supplied by the channel.
Difficult Market?
Do IT Smarter’s change of direction begs the question: What’s the future of the master MSP business model? In 2008 and 2009, MSPmentor spent considerable time promoting the master MSP concept, wherein a seasoned MSP offers aspiring MSPs and VARs a portfolio of hosted services, tools and training expertise. In theory, master MSPs were designed to help aspiring MSPs to generate monthly recurring revenues.
But in some cases, the master MSP business model has proven challenging. Some master MSPs underestimated the cost and time required to acquire and train VARs as MSPs. Recent master MSP casualties have included MSP Services Network (MSPSN), which closed its doors earlier this year.
Signs of Success
Still, there are some clear signs of success in the master MSP market. One prime example: Virtual Administrator, a master MSP spun out of Network Depot, now services VARs and MSPs in nearly all 50 states… perhaps even all of them. During a luncheon at CompTIA Breakaway this week, Virtual Administrator’s executive team sounded upbeat about business.
Elsewhere, some master MSPs have evolved their businesses. An example includes Cloud Services Depot (formerly SecureMyCompany), which positions itself as s a distributor of managed services software and private-label services for MSPs.
Next Moves
Back to the story at hand: Do IT Smarter, multiple source say, has informed partners that it’s exiting the master MSP industry. The move begs the question: What is ClearPointe’s strategy for Do IT Smarter going forward? If and when we hear from ClearPointe we’ll offer updates.
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Tags: ClearPointe | Cloud Services Depot | Do IT Smarter | Master Managed Services Provider | Master MSP | Virtual Administrator
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What are the main reasons that some master MSPs are either exiting or transitioning business models? Does this primarily pertain to the difficulties associated with effective sales training for VARs and interconnects on hosted services? Or…is there some larger issue such as capital constraints on growth?
Missing in your story is the fact that to their great credit, ClearPointe and DoITSmarter have gone to considerable lengths to ensure business continuity for their former partners. As you may know, DoITSmarter served their partners based on Level Platforms Cloud Edition running in their data center in San Diego.
All DIS Partners have been offered a simple upgrade to the Level Platforms Cloud Edition running at Navisite/Time Warner, including seamless migration of their existing databases all at no additional monthly cost. Most have already successfully completed this migration.
Peter
No reason to think too hard on this. When the MSP sells RMM services on price vs. value and their value-added services there’s not enough margin to go around.
Todd
What Todd said.
While we’re all used to the shifting sands of this profession, I still shake my head at the changes that have taken place over the past year, with some major players selling out to some large, but somewhat outside the profession, businesses, and, of course, the commoditization of the Master MSP segment.
I wouldn’t have expected anything less than a seamless transition for DIS clients, given both the reputation of ClearPointe and also its predecessor, namely the gentleman who brought many of these clients on board to begin with.
It’ll be interesting to see where things stand in Aug of 2012…
Jim Van
Logicomm
http://www.logicomm-inc.com
I also agree with Todd.
While it is sad to see another Master MSP go down, I do wish to point out the positive, namely those MSPs and their clients were not left hanging.
In an environment where many new MSPs are scared to outsource anything for fear of being left holding the bag, we have what sounds like an orderly, seamless shutdown.
Kudos to ClearPointe, Level Platforms, and SpamSoap for making sure the MSPs were taken care of. This can only build confidence in the industry as a whole.
As commoditization and margin erosion continues to occur I see the Master MSP playing an ever important role in managed services for many years to come. Like Jim, I will be very interested to see how things are in a year. For now, I am still hedging my bets and keeping my core products and services internal and direct.
Matthew Adkins
VanGuard Technologies
http://www.vanguardtech.net
Joe,
I would encourage your readers to look at this a little differently. This is a “$40 in a shoe box – Work hard – Sell High” story. Not a “go down in flames”….The business model works quite well.
MSP’s that want to build a business should look to add elements of the “Master MSP” business model to their own business model moving forward. With such a low percentage of SMB and Mid-size businesses that engage a Managed Service Provider there is still a lot of opportunkity for us all.
The diversification and market share is what will get you the financial multiple.
Rodrego@1: My best guess – I think some master MSPs found it too expensive to recruit, onboard and train VARs as MSPs.
Todd@6: I never suggested that Do IT Smarter went down in flames. It’s good to hear that Do IT Smarter and ClearPointe have gone to “considerable lengths” to ensure support for their former partners. I would certainly cover those efforts if Do IT Smarter and ClearPointe had responded to my inquiries. And I continue to welcome a comment from the companies.
-jp
Joe,
Your best guess is probably right (but not all of the problem). COA (Cost of Acquisition) either of customers or partners is critical to an MSPs success. Why? Simple, you get paid a little bit over time. The MSPs COA (total sales and marketing expense) of bringing on board a new customer must be between 9-12 months of margin dollars of that customers revenue to be healthy. At 10k ft the same principle hold true for bringing on “quality” partners and then the hard part which is making them productive.
Todd@mspexcellence.com
Most VARs that I talk to about selling managed services, try to position business value ahead of RMM technologies as their way of avoiding commodity pricing. The problem is that this is counter intuitive to the way VARs have traditionally done business in the past. This issue is also reinforced by master MSPs selling the one size fits all concept of service and technology. The original Do IT Smarter, was at the time, the only master MSP we found, that gave us the flexibility to customize based on client business requirements. Price was not part of their value proposition as they were often more expensive than their competitors, rather it was the relationship with their partners that set them apart. What isn’t clear, at least in the case of Clear Pointe and Do IT Smarter whether this will change. I see the day when business value focused MSPs may be forced to abandon the master MSP concept.
Todd@8: Thanks for sharing some key metrics for readers to weigh.
Howard@9: Agreed. Do IT Smarter never tried to be the low cost guy on the block. And they did a lot of things right over their history. I’ve gathered some key milestones/factoids about Do IT Smarter and will be back soon with a follow-up blog…
-jp
As an outsourced help desk which is one of the key components of the master MSP model, we have noted that most of the players have gone for fixed pricing. This is not sustainable if you get hit hard with noisy end users. As well though when you provide the RMM tool you have some control but not complete. We at GMS LiveExpert offer a more sustainable pricing model which varies on actual usage which I suggest is a more logical price model.
We have also find a similar metric as Todd when we bring on a new MSP though we are finding the COA to be a lot lower than he suggests.
I do applaude the lengths to ensure that customers are taken care of.
Wayne
Wayne,
Thanks for the note. Ironically, I think I spotted GMS LiveExpert as part of a cloud help desk announcement from Parallels (at HostingCon 2011) yesterday. I offered some perspectives on our sister site, TalkinCloud.com, here.
-jp
I found that the benefit of a Master MSP was as a force multiplier for our business. We were able to really accelerate certain programs because of our partnership with a Master MSP. Eventually, many of these services were pulled away from the Master MSP because of the need to develop a core competency in that area to sustain customer satisfaction and maximize profitability on the recurring services. But as we pulled away certain services and looked to bring them in house, we would have gladly tapped our Master MSP for other services if they were available (like the cloud).
I always felt that in order for Master MSP’s to be relevant they need to be breaking new ground. Helpdesk, SPAM filtering, monitoring, those are all commodities now. The cloud is the obvious area for value-add. But there is also a real need for knowledge around applications. I would love to see a Master MSP come along with a suite of services wrapped around line of business applications (Finance, CRM and Document Management), business intelligence and data exchange.
People should stop calling themselves MSPs and start calling themselves DSPs (Digital Solutions Providers). Customers, in the SMB that is, want a partner that can manage their entire digital portfolio.
George: Thanks for the points. If we spot a Master MSP or Master DSP that offers those line of business apps we’ll let you know.
-jp