RMM Meets IDaaS: Why MSPs are the New VARs

Last week Centrify announced that AVG Technologies selected Centrify’s integrated cloud-based identity management (IDaaS) and enterprise mobility management (EMM) solution for the AVG CloudCare service.

Keep Calm

The partnership marks a significant opportunity for small- and medium-sized businesses (SMBs) that are increasingly looking to adopt cloud and mobile apps for business purposes, but don’t have the time or resources available to manage the IT challenges and complexity this transition entails. This is also a huge opportunity for managed service providers (MSPs) who are implementing and managing IT services on SMBs’ behalf, while also playing a consultative role with respect to IT opportunities and challenges.

This is particularly interesting to me as I was involved in a similar deal to incorporate backup into the cloud when I ran the Arcserve business. Now, the market is moving to higher-valued IT Management, and Identity and Mobility certainly qualify.

That said, I’d like to provide some perspectives on what’s happening in the market, from both a technological and go-to-market standpoint.

Technology:

The IT Management market that was once dominated by enterprise vendors like HP, BMC and CA Technologies is quickly shifting to the cloud. No surprise there. The shift is taking place more rapidly in the SMB market, where customers have little to no IT experience and are very happy to relegate those functions to the cloud.

In terms of applications, first there was email, then came backup, antivirus, patch management, and the list goes on.

If we broadly segment this market as enterprise, mid-market and SMB, vendors such as ServiceNow and SolarWinds are positioned for the enterprise, and companies such as N-Able and Kaseya are positioned for the SMB. Across the board, these vendors typically start with smaller customers, and then move to larger ones, especially as general demand has increased for business apps like Salesforce. This evolution model will unfold with IT Management as well.

GTM:

Traditionally, companies purchase software from VARs. The obvious exceptions are large companies that buy directly from software vendors. With this model, vendors can leverage a variety of distribution channels to reach all markets in all geographies.

By definition, VARs add value by installing and configuring software; globally, there are thousands of VARs that specialize in vertical software sectors. Gross revenues, split between the software vendor and the distributor/reseller network, are as much as 60 percent and higher. Historically, this network has been critical for the selling and servicing of software and hardware worldwide.

However, the cloud lets customers buy directly from vendors. And while this is great for simple applications, IT Management software usually requires at least some level of integration and consulting services.

In particular, user identity integration for SaaS apps still requires consultation, especially for configuring roles and access management policies; provisioning users into these apps for day-one access; distributing apps to users’ mobile devices; and ongoing security and management of users’ mobile devices (IAM and EMM).

This could seem like the end of the road for VARs. That is, unless they transform into MSPs. At the end of the day, value is measured in trust, consulting and general know-how. VARs that want to survive simply have to adapt what they do best to the cloud paradigm. Right now, this means identifying customers on their way to the figurative stratosphere and stepping in to facilitate the journey.

The vehicle is Remote Monitoring and Management (RMM).

RMM is IT Management-as-a-Service. RMM vendors serve as launch pads to the cloud. AVG is one such vendor that has pulled together a set of RMM services and enabled MSPs to maintain profitable business models. For one thing, RMMs such as AVG are no strangers to the concept of remotely optimizing processes and are well aware of the associated cost savings. MSPs also benefit from a recurring revenue model.

So why is this significant?

Having VARs graduate to MSPs is important because it provides another route to market for infrastructure SaaS (like IDaaS). In this case, Centrify enables MSPs to deliver IDaaS to their customers via an OEM partnership with AVG. According to LabTech, Managed Services is one of the fastest-growing segments in IT services. They predict US revenues alone to grow from $34 billion in 2013 to $51 billion in 2017.

For us, this is a big opportunity.