By: Jim Roddy, President & CEO at the RSPA
I’m no Ferdinand Magellan or Vasco da Gama, but I did some exploring recently and found a new discovery for RSPA members. I attended and spoke at the 2023 Channel Partners Conference & Expo, co-located with the MSP Summit, May 1-4 at the Venetian in Las Vegas, immersing myself for a few days in the managed services ecosystem with 7,900+ other attendees.
Here’s my #1 takeaway from the show: Many managed services vendors, who once rejected the retail vertical because it was a strange, new world to them, are now eager to enter our space and have already gained traction in pockets.
That’s the punch line; let me explain how we got here before sharing the full context of what I think this means for our community:
- Historically, managed services didn’t mix with POS systems because point of sale technology was a significant departure from the servers, desktops, and laptops where MSPs make their living through a standardized offering.
- Furthermore, POS systems weren’t always connected to the network that all other IT systems ran on. That didn’t fit the MSP model either where proactive remote network monitoring is key.
- When anyone would mention “POS” to managed services vendors, they first thought “piece of ____” and quickly turned away from what they saw as foreign technology. You might as well have been talking to them about providing services for technology related to a hot air balloon engine.
- But over the past decade, most POS systems have become tethered to the network and the cloud, and many high-initiative retail IT VARs have added some managed services (and recurring revenue) to their suite of offerings.
- Managed services vendors, most of whom are vertical agnostic, are now happy to go along for the ride in retail and increase their own recurring revenue.
That brings us to today, or more specifically the first week of May 2023, when I engaged with dozens of managed services vendors at the Channel Partners show/MSP Summit to gauge their interest in retail IT VARs. More than half the vendors I scouted expressed positive interest and several of them boasted of installations with retailers, grocery stores, and restaurants.
For the past 25 years, 17 of those with channel publication Business Solutions Magazine, I’ve had a view into both sides of the IT channel – the POS/data collection/retail side and the managed services/networking/security side. No offense to us retail folks, but the managed services side is higher tech and their business model usually tracks a few years ahead of our world.
Why was I evangelizing the as-a-Service business model to POS VARs and vendors back in 2013? It wasn’t providence on my part. I had seen MSPs on the other side of the channel realize greater profits and predictable revenue through that model, and I wanted RSPA reseller members to experience the same outcomes.
What does this trend mean for the Retail IT channel in 2023 and beyond?
Just like the POS dealer/reseller model eventually transitioned into the retail IT VAR model, with most solution providers offering merchant services, I believe in time the retail IT VAR model will morph into the managed services model.
Retail IT VARs who don’t offer managed services today will embrace (or be replaced by) the new models of (a) retail IT MSPs and/or (b) Direct Independent Software Developers. DISDs are independently owned and operated SMB solution providers who develop and directly sell their own software (plus hardware and services) to merchants. Many of them are VARs turned ISV/VAR hybrids. I don’t see an avenue down the road where the bulk of the VAR channel can remain highly profitable without offering managed services and/or their own intellectual property through software.
How soon will this transition take place?
I’m not bold enough to put an exact date on this prediction, but I believe I will see the day before my career is over (I’m 53) where the leading VARs in our space shed that label and refer to themselves as retail IT MSPs.
Should retail IT VARs be nervous or is this an opportunity?
The correct answer is both. As mentioned on the main stage at Channel Partners, when change occurs in the business world, there are winners and losers. Let’s focus on the potential upside here so you end up on the right side of this change:
- To embrace managed services, you don’t have to be a pioneer. MSPs and their providers have already cut a path for you. You can learn from them instead of relying solely on learning “the hard way.”
- If you add these services to your offering, the result will be stickier, more satisfied customers and more recurring revenue.
- Wrapping these services around your core offering moves you closer to Total Solution Provider status.
What is the RSPA doing about this trend?
To help our members better understand and embrace managed services, the RSPA recently formed partnerships with two leading organizations in that space: Informa, the group behind Channel Partners, the world’s largest independent channel event, and CompTIA, the leading IT certification provider who has served 75 million+ industry and tech professionals. I talked with representatives from both organizations during my time in Vegas, and they’re eager to further their RSPA relationships.
What should I do about it as a VAR executive?
First realize this transition is a multi-year journey. The successful retail IT MSPs I cited in my presentation “Vertical Opportunities: How Channel Partners Can Build a Successful Retail Practice” didn’t flip a VAR-to-MSP switch.
After you’ve mentally prepared for this marathon, lean on the RSPA, your vendor partners, and your distributors. The RSPA can connect you with several of our members who are well down the MSP path or started as MSPs in other verticals before moving into retail. If they’re not your direct competitor, they’re likely to share best practices with you. You should also register and attend RetailNOW 2023, July 30-Aug. 1, in Orlando. That’s the best place for one-stop shopping and meeting with vendors and distys who can point you in the right direction as well.
Finally, you should try, test, measure, and adapt. I don’t know if cloud services, firewall management, managed antivirus, or security-as-a-service – or all of the above – is where you should start. But start somewhere you think would be best for your customers, and then learn what’s a hit and what’s a miss.
Your job as a leader of your VAR or ISV organization isn’t just to manage day-to-day. You need to lead the team forward even when you don’t know the location of the finish line. Maybe it’s time you did some exploring of your own. I’m happy to lend you my safari hat.
