Secrets of a perfect MSP partner program

In the MSP world, vendors should also focus incentives on usage rather than monthly spend alone, Moses says.

This is clearly the line being taken by Microsoft. For cloud products like Office 365, Microsoft partners must now ensure customers achieve ‘active usage’ in order to access funding support – it increased this threshold from 15 percent to 30 percent in July.

VMware has created a service provider program that wraps around its vCloud Air platform. This hybrid cloud offering, based on vSphere and hosted in Telstra’s data centre, allows MSPs to extend their data centre and scale out without adding fixed assets.

The vendor has cut the red tape for partners shifting from transactional sales into the MSP program, says Geoff Waters, VMware’s global vice president for the services provider channel. “There’s a simple amendment to the base contract, but [MSPs] don’t have to go through a ton of net-new components. It’s pay-as-you-go – there’s a 12-month commitment, a rolling scale discounting model so the more you commit, the bigger the discount you get.”

Dan McLean, director of cloud and service provider sales, says that by providing application programming interface (API) training, VMware helps MSPs shave costs through automation. The program also includes standard features such as three MSP support teams, marketing collateral and lead generation through outbound telesales and its partner referral portal vcloudproviders.vmware.com.

Virtualisation backup vendor Veeam separates its partner programs into two: the traditional ProPartner model; and a Veeam Cloud Provider (VCP) for MSPs, especially those who offer backup and disaster recovery as-a-service.

Don Williams, Veeam’s Australia & New Zealand vice president, says: “Our solution is straightforward – just one licence per virtual machine and there’s no capacity-based items that restrict a lot of MSPs.”

Peter Bender, Veeam’s ANZ channel and alliances manager, adds: “On VCP we don’t have rebates but we have a good buy price. We do a lot of joint marketing with cloud partners.”

One Veeam partner is Sydney-based MSP Nexon. Co-founder Barry Assaf was crafting Nexon’s Agile Business Cloud platform based around Cisco, NetApp and Palo Alto (for server, storage and security, respectively), but lacked the last piece.

“We were looking for a solution that would give us backup and disaster recovery [but] we couldn’t find anyone in the cloud,” Assaf says. Rejecting a $300,000 investment from a storage vendor, he chose Veeam.

“The technical team was impressed with the capability and how easy it was to deploy.” For Assaf, it was more than a nice thing to have; 70 percent of his customers have strict regulatory requirements and all demand rapid recovery.

Assaf adds that channel programs built for resellers don’t necessarily suit service providers. “We need vendor and financial models to scale and drive outcomes. Usually, they put very high barriers in for us [while] we have revenue and customer satisfaction targets to meet. That’s challenging when this is a new revenue-generating part of our business and we have to provide a vision for our customers.”

The hardware suppliers

Perhaps the biggest evolution is happening among the hardware vendors, as their channel partners increasingly kit out private clouds based on data centre infrastructure, rather than simply resell servers, storage and networking gear.

Lenovo, for instance, launched its MSP program earlier this year, following its acquisition of the System X hardware line from IBM. The program includes discounted equipment, cash flow support and business development funds to speed up the transition.

Netgear also has a fresh focus on MSPs through its Business Central IT management platform, which enables MSPs to securely manage customers’ wireless networks through the cloud.

Netgear territory sales manager Domenic Torre says the portal brings enterprise management features to small businesses and their MSPs, and Netgear is training its resellers in managed services.

Vendor support is vital for Netgear partner Synergy Managed Services, says director Michael Bailey. “We’re looking for a vendor that has a vision for where the technology is going, and Australian support, and where the technology works in a managed structure as well.”

He says Netgear helped the MSP by loaning products to test in a prospect’s environment, but most hardware vendors are yet to bridge the gap between upfront capital costs and the limitations faced by MSPs in an annuity payment world. “I’d like to see vendors take on hardware-as-a-service as a monthly fee. That would be utopia for us.”

Sydney MSP Oriel is a major Australian partner of many tier one vendors, including HP, VMware, Cisco and Microsoft. The company’s founder, Jake Wynne, has seen hardware vendors attempt to move from transactional models to ‘as-a-service’ models – with limited success.

Wynne, who sold his business to publicly listed BigAir late last year, told CRN that vendors are “having difficulty themselves trying to come from a run-rate business to being annuity based”. Vendors need to align the pricing model with the way customers want to invest – on a consumption basis. Structuring a capex sale on a lease agreement is not enough.

“That’s no good. I can do that myself. What you want to look at is pay-as-you-go. Put something on the floor for free, work out a way where we can get the revenue for it and work out a percentage split. Then there’s some commitment on both sides.

“The marketplace is still immature because everybody’s still doing capex [but] from a vendor perspective, they’re starting to realise they have to make this new switch… Vendors are realising they have to start a proper pay-as-you-go model where it’s not just a device worth $100,000 amortised over three years.”

But vendors are quarterly revenue-driven – “the long-term annuity revenue model does not fare well in this environment”, adds Wynne.

Compounding this challenge for vendors, says Wynne, is the fact that in a service provider channel, customers – and hence the MSPs that supply them – are less fixated on brand preference. With their buyers caring less about what the private cloud is built on, MSPs will gravitate towards vendors that can help with things like consumption billing, monitoring and metered usage.

Best practice for MSP partner programs