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Q&A: How MSPs can offload, profit and grow with distribution

Escape the burden of financing, billing, collecting and more

September 14, 2022

Q&A: How MSPs can offload, profit and grow with distribution
The industry reports are in—most managed service providers (MSPs) prefer partnering with a proven, third-party financer. But not all distributors are MSP-forward. It’s critical for VARs to find financial solutions that are primed for managed service models.
 
MSP financial solutions are built for achieving recurring revenue while solving problems for end users. This is achieved—repeatably and predictably—by delivering the latest tech to your customers now, while freeing them up to make affordable payments over time.
 
We asked our financing experts to break down the advantages that come with MSPs working with a distributor.
 
MSP/distribution Q&A
 
Why are MSPs turning to distribution to grow their businesses?
A proven, robust distributor offers MSPs a single resource that has everything. Starting with vendor line cards, the strategy goes beyond tailored solutions and becomes about value-added services.
 
Distributors help MSPs supplement “as a service” solutions from the finance side. This delivers more financial flexibility. The old worries suddenly aren’t there—in terms of the pressure to have cash on hand or lines of credit to finance services to end users. The distributor should do the heavy lifting, so MSPs can focus on services and product implementation.
 
When is the best time for VARs to evolve to an MSP model?
Organizations that are in high growth mode—or about to experience growth—are great candidates. The distribution channel adds value that’s critical to support them in areas such as product sales, since MSPs primarily focus on services.
 
What does Ingram Micro do for MSPs?
Ingram Micro, as a distributor, does everything covered here because of great resources, financing and scalability. We also train staff for this unique, profitable sales motion. Ingram Micro MSPs experience:
 
  • Enhanced partner enablement
  • Discovery execution
  • Consultation strategies
  • Training for sales
  • Integration within quoting platforms
 
What do you see MSPs doing right these days?
If an MSP is really thriving by selling solutions “as a service,” they’re doing so with quoting platforms that offer financing on hardware and beyond. It’s a way to generate new, healthy recurring revenue. This really takes the pressure off MSPs in terms of needing that big, upfront sale. Also, successful MSPs are looked at as trusted advisors—not box pushers—who overcome challenges for their customers.
 
What are MSPs who might not be thriving doing wrong?
Some are funding “as a service” models themselves. This not only limits their own cash flow, but it increases their company debt. They must purchase solutions upfront … pay their sales reps … and then wait for the client to pay (or not pay). So, if their volume increases—which is supposed to be a good thing—more cash is tied up and the snowballing debt can cripple them. Successful MSPs offload the burden of financing, billing and collecting to a proven distributor.
 
What stops regular VARs from evolving to an MSP model?
It’s difficult for a company to change the mindset of their salesforce. They must evolve from an out-of-the-box, transactional sales motion to a recurring revenue model. (Again, Ingram Micro trains sales staff for MSP.) We encourage hesitant VARs to dip their toes in the MSP model—they don’t have to jump in headfirst.
 
Any other MSP advantages?
Recurring revenue is gold to an acquiring company. For example, if an MSP wants to sell their business, and the acquiring company sees that 80% of their revenue is in recurring motion, it’s favorable for both parties. This model leads to predictable profitability and a greater business valuation.
 
Anything else to add about the benefit of being an Ingram Micro MSP?
We’re creating an “MSP 100” partner list. It will provide white glove service to help these MSPs navigate the channel through distribution. You’ll be hearing more about this exciting benefit soon.
 
Download the MSP playbook