The value-added reseller (VAR) business isn’t what it used to be. Competition on pricing is intense, and profit margins have become thin. As a result, some VARs are looking for ways to diversify their offerings and generate new revenue. For many, that means delivering managed IT services.
Managed service providers (MSPs) deliver the ongoing monitoring of their customers’ IT environment for a monthly fee or MRR (monthly recurring revenue). For VARs that are used to one-time interactions with clients, this is a very different model. As such, the transition over to the proactive business of managed services can seem like a challenge.
Making the move from a VAR to an MSP can be highly beneficial for anyone looking for more stability. MRR ensures there’s money coming in at a predictable rate and reduces the uncertainty that comes along with delivering reactive services. It makes budgeting easier and allows you to plan for the future.
Managed services adoption continues to grow. Half of the respondents to CompTia’s report expect the managed services portion of their business to undergo high growth and comprise three-quarters or more of total annual revenue. Another 45% predicted that managed services dollars are increasing and will make up half or more of their total revenue within the next two years.
So, while VARs face challenges when moving into the managed services market, the business opportunity is worth the effort in the end. If you’re considering transitioning from VAR to MSP, check out our new eBook. We offer proven tips, training resources, tools, and more. Download it today!