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A bridge too VAR

The expedition from VAR to MSP is not short of challenges but, equipped with the right map, ambitious companies can feel more confident in getting past first base. In the second part of his series, Predatar CEO Alistair Mackenzie takes a closer look at the importance of a strong culture and highlights why marketing should no longer be viewed as an afterthought

There’s one thing that a traditional value-added reseller (VAR) isn’t short of – and that is technical skills. Ask them about specific vendor technologies and they’ll be able to recite the features and benefits with clockwork precision. In a managed service provider (MSP) world, however, this type of knowledge and insight is no longer enough to differentiate. Service becomes king and everything the MSP business says and does has to be centred around the intended target customer.

Understanding this is key to developing the business plan and unique offering discussed in part one of this series. But what’s next? Depending on their individual situation, there are several different paths businesses might take for this type of transformation. Some may decide to part transform or become 100% MSP, while others may decide to spin out a separate business or, if the funds are available, acquire a ready-made business.

Whatever path they take, leaders need to appreciate the invisible force that is at work – culture. With any significant business transformation such as this, employees will be keen to understand how it will impact them. Therefore, as keepers of the culture, CEOs must invest time and effort in internal communications.

Giving employees the opportunity to appreciate how the change matters to them at an individual level will increase the likelihood of them buying into and embracing the future direction of the business. Otherwise, CEOs risk their strategy being swallowed up by culture.

Happy employees mean happy customers, and so CEOs must give their employees the attention they deserve. Agree the goal and how the business will act and behave in order to achieve that goal. Map out how the goal(s) will be communicated and ensure that employees are rewarded for the behaviours that help drive the new mission forward.

Particular consideration needs to be given to the sales team. If the CEO decides to use the existing sales force, the thorny issue of commission must be addressed within the plan. The commission paybacks are likely to be very different when operating as an MSP, so a decision needs to be made as to how the business will compensate the sales team for expected future revenues.

If this is not addressed, CEOs may face losing their people to a competitor. My advice is that the CEO and finance director should look at finding the money to ensure their salespeople are suitably incentivised. Only then will the business guarantee that the team are fully on board and engaged in driving the new vision forward.

Preparing the right skills

It is worth noting that fundamental changes to the organisational structure should be expected, because the structure of a VAR business is very different to that of an MSP. Product-orientated, the allocation of technical resources within a traditional VAR tends to be front-loaded – focused on the pre-sale and implementation, with customer relationships playing second fiddle to winning the deal.

An MSP business, on the other hand, is all about service and customer success, therefore a high proportion of the upfront resource allocation that a business previously had needs to be transferred to its adoption services. Day two, post-sale is where the hard work really begins in ensuring that the customer is continuously seeing value from the service the business is delivering.

Businesses then need to identify the people/department/skills needed to be able to deliver ongoing customer success. Leaders should identify the people that not only have strong technical skills, but have an affinity to good customer service and an understanding of how the technology has an impact on the customer’s business outcomes. The most obvious and quickest route to market is to skill up your technical team.

Own your marketing

One of the biggest learning curves for any business transitioning from VAR to MSP is the fact that they can no longer rely on standing on the shoulders of their vendor brands in their efforts to be recognised or considered by their customers. Less about the technology, aspiring MSPs must acknowledge that customers buying into their service will base their decision, not simply on the product, but in the trust and confidence they have in the brand and the team that will deliver a value-added service.

In many cases, PR and marketing within traditional VAR businesses is non-existent, but MSP businesses can ill afford to ignore the benefits such disciplines can deliver and unless the CEO has time, part of an MSP organisational structure most certainly should include embedding a marketing strategist to help the business bring its new technology-as-a-service offering to life.

Look out for the final part of this series, in which Alistair Mackenzie will outline the ultimate survival guide that will help navigate the rugged terrain of the VAR-to-MSP expedition.

This was last published in May 2019

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