What An Ideal Vendor Management Program Should Look Like To An MSP
By Terry Cole, Cole Informatics
For MSPs, the importance of treading cautiously when getting involved with vendor management programs and agreements is something I’ve learned from experience.
To begin with, there’s a still-too-common practice in which vendors with a history of success in direct enterprise sales will simply repackage their products with minor changes and label the version fit for channel consumption. However, such solutions are often not at all channel-friendly; in most cases, the vendors aren’t even trying to be deceptive, they just truly don’t get it. They don’t understand the MSP business model and what it takes to provide meaningful value within an MSP-vendor relationship.
Developing the depth of understanding required to be a great partner to MSPs isn’t something a vendor can do overnight. I believe it’s actually all but necessary for a vendor to have started out as an MSP-friendly organization, or to launch a new product from scratch after first soliciting advice on how to correctly design it from an MSP-friendly perspective. Far beyond taking a product and making a couple of changes, successful channel or MSP offerings require a fundamental understanding and empathy for the entrepreneurial spirit that most MSPs represent, and all that comes with it.
At many MSPs (including our own), the CEO is often either the company’s owner or has an equity interest. In most cases, they’ve invested a big part or his or her life into the business. Buying behavior in the MSP world is actually fairly B2C-esque in nature: Customers have a close and intimate relationship with their providers because, in many cases, the MSP is their IT department and a vital extension of their own company and operations. Customers will come and go as in any business, but for MSPs, beginning to work for a client is akin to an individual being hired for the skillset they can deliver — and ending a business relationship can feel like getting fired.
Due to this close relationship with customers, a vendor product is only suitable for MSPs to use if it’s designed to be very much the MSP’s own tool, such that end clients would likely never consider it a product at all (but simply part of their managed provider’s capabilities). In other words, the vendor needs to be invisible.
MSP-friendly vendor products must be offered in a true as-a-service manner and designed to fully enable the MSP to be the one delivering value to the client. In practice, this means the vendor is uninvolved with (client) support, billing, license allocation, or any other client-visible activities. In a sense, vendors must have no ego in serving MSPs, nor any illusions that the end client is theirs and not their MSP partner’s. This is why white labeling by vendors is an ideal offering for MSPs. For example, Beachhead Solutions, Mailprotector, and Breach Secure Now! are security vendors I’ve worked with because they’ve always been certain to ensure that all the glory earned by its device security product goes to us as an MSP, at least as far as our clients are concerned.
A sure way for vendors to alienate themselves from MSPs is to offer “channel” products that insist on direct contact with end clients or include challenging limitations that demonstrate a lack of awareness of the MSP business model. Vendors also need to be careful not to compete with their own MSP partners, they shouldn’t offer competing products to end clients, and they would do well to refrain from publishing end client pricing that allows an MSP’s clients to price shop or know what an MSP is paying for a product. Unfortunately, there are vendors that will require high up-front expenditures — be it investments in infrastructure, hardware, or human resources — not understanding how incompatible this is with how MSPs operate. Too often, vendors also will require MSPs to purchase licenses in blocks or impose minimums for the number of end clients or dollars spent for licenses.
From my personal experience, I just recently had prospective vendor tell me I’d be required to sign an agreement that would exclude me from using products from any competitor of theirs for 12 months. I happened to like the people and the product in question, but there’s no possible way I’d ever sign such a thing, and I hope my fellow MSPs don’t find themselves in the unfortunate positions that agreements like this could put their businesses into. These sorts of restrictions and attempts at a kind of vendor lock-in only suggest to me that perhaps those vendors aren’t properly focused on evolving and improving their platforms to continue earning my business and treating me as a proper partner.
When vendors have put themselves in a position to genuinely understand MSP needs and build products that make it seamless for MSPs to provide direct value to their clients, that’s when their channel offerings get interesting.
About The Author
Terry Cole is the Founder of Cole Informatics, an IT professional services and support company in West and Middle Tennessee.