Asigra Inc. announced that executive vice president Eran Farajun is presenting on the need for MSPs to build healthy channel relationships with their vendors at the ChannelNEXT Conference in Ontario, Canada from June 10th and 11th. The presentation, titled “Are MSPs Getting Taken for a Ride?” explores the current CSP/MSP relationship and why it is both appealing and misleading to partners.

Over the past several years, the cloud solution provider (CSP) cloud brokerage model has made steady gains under the belief that the approach makes doing business easier, requiring fewer barriers to entry and reducing time and monetary investments. What is not often revealed is that while MSPs may reduce their workloads, they will now have much less control over very important considerations. This includes the ability to set pricing and margins, which limits their competitive positioning in the market.

Another negative aspect of the cloud brokerage model is that CSPs often require partners to provide the names of their customers and take the liberty of forming direct financial relationships with them. Inevitably, the CSP will contact these customers and upsell them on additional products and services that the MSP could have provided, resulting in friction between them and the partner. CSPs may also leverage their financial relationships with the customer base to lock MSPs into undesirable situations that put the MSP’s valuation at risk should they decide to switch vendors.

Farajun’s presentation and guidance at ChannelNEXT will center on the need for channel healthy vendor-partner relationships that not only deliver compelling ease of management and profitability but support partner self-determination to set their own prices and margins, while increasing customer ownership and valuation over time. The impetus behind this is the economic reality that the channel must remain a strong, well-capitalized community to ensure the long-term viability of both vendors and partners.

Instead of the CSP-MSP model, Farajun proposes a Channel-healthy model where the MSP becomes the CSP. There are several advantages of this approach, including:

  • Complete control over price/margins
  • Direction of all communications with clients
  • The protection of customer contacts
  • Greater control over the value of the business
  • Higher purchase price upon the sale of the MSP business

“Increasingly, MSPs are reconsidering cloud brokerage models and the threat they pose to the control of their business,” said Hal Schwartz, President, Data Storage Corporation. “The problem starts with the erosion of revenues and ends with the loss of customer ownership. CSPs employing this model require end-customers to sign a licensing agreement that is separate from the MSP — weakening the customer relationship and transferring a large
portion of control.”

The chosen venue for this presentation is the ChannelNEXT conference in Alliston, Ontario, Canada at the Nottawasaga Resort. This conference focuses on best business practices for the IT channel and provides innovative sessions on business development. Channel executives attending the event learn how to build sustainable and predictable recurring revenue using powerful and profitable new IT solutions in a range of areas. Vendors and distributors participate in conference presentations and exhibits to showcase new IT strategies and solutions to capitalize emerging market opportunities.

“Channel only does not mean channel healthy and MSPs conducting a review of their vendors should consider whether CSP policies support the health of their organization,” said Eran Farajun, executive vice president for Asigra. “The guidance we are providing at ChannelNEXT is to become your own CSP in order to control one’s own destiny.”