Building Your Vendor Stack as a Managed Service Provider
Building your vendor stack is one of the more crucial decisions a Managed Service Provider (MSP) business owner makes that will have a long-term impact on service delivery, profitability and overall customer satisfaction.
Table of Contents
The ‘vendor stack’ is the group of key vendor companies that you build your MSP business around. The vendor stack directly impacts the MSP’s service delivery capabilities, efficiencies and the end-user customer experience.
While there are many vendors and service providers that provide a great technology, determining which of these to include in your vendor stack should be a careful and intentional process by the MSP CEO. It is important to determine which are a best fit for your customers, and your own internal organization and culture. Know that these vendor partners and providers will influence your business in many other ways as well.
There are many factors that the MSP should consider when determining their vendor stack. The MSP should weight each of these factors to their own liking in order to develop a more formal approach for this selection process.
Right Fit for Customers
Does the vendor solution fit the target demographic of the MSP’s target customer? Does this solution fit the size, complexity and pricing for your target customer? Does it represent opportunities for additional MRR? All of these are key questions to answer in order to determine if this vendor solution will be a ‘right fit’ for your customers.
While the MSP CEO would desire to always sell the best and most comprehensive solution, the target customer may not have an appetite for paying a premium for enterprise features, when their needs are more simplistic. In other words, your ideal customer may not need a Mercedes Benz when a Honda may do just fine.
Integration & Automation
The typical MSP business today interacts with and leverages many vendors in the support of their customer base. Given the myriad of platforms the MSP’s staff is required to know and support can be substantial resulting in blind spots in the management of these platforms.
The MSP should lean towards having all vendors integrated through a ‘single pane of glass’, or central management console. This creates efficiencies in managing each of these vendors as it pertains to centralizing alert notifications, service ticketing and may mitigate training needs.
Training & Certification
Vendor training is a key component when evaluating which platforms to adopt and deploy with your MSP. While the vendor platform may appear to be a right fit for your customers, you also need to make sure it is a right fit for your support staff. Time and again I have witnessed MSP’s implement a vendor platform only to encounter failure and disappointment, mostly as a result of the MSP’s own internal staff not having adequate training from the vendor.
Many vendors require a minimal commitment from the MSP to achieve specific technical and sales certifications. These certifications can be costly and time consuming. Smaller MSPs may find it difficult to allocate the technical staff required to achieve these certifications. Many other MSP’s I know are reluctant to make the investment in these certifications for fear the newly certified staff person will walk out the door for another higher-paying job. These are common challenges for all MSPs.
If you have ever encountered poor technical support during the course of troubleshooting a vendor solution, you know what I’m talking about. This is singularly one of the most helpless and somewhat embarrassing situations that could occur in the life of an MSP.
Understand and evaluate the vendor’s technical support abilities. Is it phone, or web only? What is the response time? Do you have a dedicated account manager? Is the cost per incident or included? All of the same questions your customers ask you…
In the MSP world, if your customer is experiencing an issue, their experience will be on display for all to see. The actions and support of your vendor partner will be viewed as an extension of your MSP; your reputation is on the line.
Another determining factor of selecting vendor partners is looking at how they go about selling their solutions. Do they only sale through the channel and partners like you? Or do they also sale direct? Does the vendor support deal registration? Do they provide complimentary not-for-resale licenses for your own internal use These and other factors are considerations that determine if this vendor is a good fit your MSP.
The MSP CEO should always conduct due diligence on a vendor they are considering. This is especially important for the smaller vendors that are not publicly traded. Due diligence should include evaluating the vendor’s financial stability and corporate governance. The MSP CEO wants to avoid a vendor that could go out of business suddenly or experience a security breach that envelopes your customers. It’s happened….
Sales & Marketing Channel Program
Sales and marketing are key components of every vendors’ channel program. Today, the vendor is developing digital marketing collateral that can be easily distributed and syndicated by MSPs. Other components of a good channel program include customizable collateral, lead generation, Marketing Development Funds (MDF) and other co-marketing opportunities and events.
These sales and marketing resources can be a big benefit to the MSP. Especially if the vendor is providing collateral that is directly targeted at the MSP’s target customer. As the MSP is seeking to gain more traction in social marketing and social selling, a vendor can be instrumental in providing content for the MSP to socialize.
Commitment of Resources
Lastly, the MSP CEO must commit time and resources to each vendor. As alluded to earlier in this discussion, dedicated resources allow the MSP to master the vendor’s technology and gain the leverage it was intended to provide. The MSP should also make the effort to engage the vendor and their channel reps in an effort to strengthen the relationship.
Map and out and determine which vendors are the most important to your service delivery. Many MSP business owners may be challenged with assigning and committing resources for every vendor in their stack. Prioritize your vendors and identify which ones have the biggest impact and make sure you commit sufficient resources to be successful.
In conclusion, the ‘vendor stack’ reflects the intimate partnerships that the MSP has committed their time and resources to. These partnerships have a direct and indirect impact on the quality of the MSP’s service levels and customer satisfaction. Choose wisely and appropriately.
Written by Tommy Wald