Throughout my years of experience in channel building, management and development I have come across the good, the bad and the really, really ugly in vendors of all shapes and sizes. Some of them sell routers designed to work with cable/DSL modems, when you actually have full T1’s coming into your offices. Others develop Microsoft licensing schemes bordering on the insane, not to mention illegal (a legal liability). But there are plenty of vendors out there who are really, really good at what they do; from analysis and design to procurement or delivery and installation, to the ongoing management. There are gems in the haystack. But how do we determine who’s who and more importantly, how do we decrease the impact on your bottom line profitability and efficiency, resulting from a potentially bad decision?

Do you get new vendors on a referral basis? Perhaps your rolodex goes back through 20 years of industry experience and that is enough to fulfill your needs… Well, however you accomplish this task today, this world is changing at a new rate of speed.

First, let’s look at the different type of vendors that exist today. There exist the hardware and software “value-added” resellers or VAR’s, also known as box-pushers (such as CDW, Insight, PC Connection, etc.). Then there exist the IT management shops who will help the SMB customer manage its Exchange network or remote connectivity environments (such as All Covered on a national scale or the thousand other shops built like it around the country). Additionally, there are CLEC’s spread across the country (not often known by name, they will resell blocks of phone minutes at a discounted price). Then we get into the “managed service” providers, or MSP’s. This is where the water gets muddied and the quality of service you will receive can take your business to new, previously unimaginable levels, or embarrass and throw your company’s technology (and consequently business environment) into a brick wall. Let’s try to avoid this scenario, shall we?

Michael Vizard, from eWeek’s Channel Insider, helps to navigate the unknown of the MSP world for channel partners (i.e. the VAR’s, IT shops, CLEC’s and of course MSP’s) in his recent column entitled, “A Managed Services Means to an End.” While making some rather good points about what is most important, this article is of course written for the traditional VAR or “solution provider” and their desires to move into the managed services space; primarily because without additional channels of revenue they will die by their own hand of horribly low hardware and software margins.

Let me stop here for a bit and explain a couple of things about how the VAR channel works (and additionally what most every other channel is modeled after). First tier is the manufacturer. Second is the distributor (Ingram, Tech Data, Synnex, D&D, etc.). Third are the VAR’s (and at times the IT management shops). By the time you get to the third level (from whom most companies will purchase their hardware and software, telecommunications services, etc.) there is little difference in service or price. It essentially comes down to your sales rep’s ability to manipulate the process as best he can. There is a constant fight to keep declining margins from toppling their strung-out sales’ forces and therefore they need to diversify into other offerings whenever possible. Buyer beware…

This is where, as Vizard points out, VAR’s can use a platform (such as Silverback, N-Able or Level Platforms) to create packaged, managed services for remote management, design, backup and recovery, etc. However, due to the nature of their business structure, VAR’s cannot accomplish this task or actually sell ANY of these services without SKU’s. So, the feared “C-word” or “commodity” comes into play here as it always has in this environment. In other words, if you have sku’s, than anyone can sell it, thereby reducing the increased competition and reducing any possible margins which once existed for them. While trying to diversify their portfolio of services, these “channel companies” are creating another commodity channel which will self-destruct, just like the rest of them.

As you can imagine, this is becoming a growing problem for companies needing to determine who to use in order to complement or replace their existing capabilities. How will these VAR’s (and other “MSP’s”) complement your business? Do they know your environment? Your competition? Your short and long-term business strategy? These are very valid questions which must be asked every time we venture out for additional help. Why do you think IV is in business?!? The potential savings or chance of disaster makes the stakes very high for all involved. Perhaps we can be considered a Channel Broker, as I mentioned yesterday, but as long as that definition is defined without concrete walls; because, to quote a fairly famous musician from the last 60 years, “The times they are a-changin’”.