Picking a security vendor for your managed service business should be about business model alignment, not product cost. If you’re a seasoned managed service provider (MSP), you are already very familiar with the benefits of the pay-as-you-go business model. In fact, it’s most likely how you sell your services to your customers. But, have you ever stopped to consider if all your partners are aligned with your business model?
Many security vendors that claim to cater to the MSP market likely don’t facilitate licensing in a way that aligns with your business model. They also may impose purchase restrictions on you, which can have a direct impact on your productivity and profitability. It’s imperative to partner with a security vendor that closely aligns with your business model and how you bill your customers.
Avoid pre-purchasing in bulk
In the “pre-purchase in bulk” model, the security vendor may insist that you pre-purchase a block of licenses up front. The risks of this model are:
Avoid term commitments
In the “term commitments” model, the security vendor requires committing to specific terms, such as one, two or three years. The risks of this model are:
Avoid minimum spending requirements
Some vendors impose minimum annual spend requirements, for instance requiring you to spend $100,000 per year just to participate in the program. The risks of this are:
Find vendors that “get it”
Conversely, security vendors that “get it” and cater to MSP partners offer a licensing model that directly aligns with the pay-as-you-go business model. In addition to providing self-provisioning licensing tools that give you complete control over license creation, management and termination, you will also get the following benefits:
Maximization of cash flow
In a true pay-as-you-go program, licenses are consumed during a time period, a month for instance, and then you are responsible for paying for the use of those licenses in arrears, or after they have been consumed. This ensures that as a MSP, you are only paying for exactly what you were able to get, and you are paying after the service or license has already been consumed.
Depending on how you are billing your customers, there is the possibility of always having a positive cash-flow when it comes to your standardized security solution. For instance, if you bill your customers at the beginning of the month and then pay your vendor at the end of the month, you’ll never have to dip into your own cash.
Minimization of upfront investment
Minimizing your upfront investment is a benefit that is easier to quantify. In a true pay-as-you-go program, you don’t have to pre-purchase any licenses or make any significant investments to get started. You’ve already invested in RMM and PSA tools, rent/real estate, employees, hardware, software, etc. Why should you have to effectively finance your security vendor by making a significant up-front purchase just so you can offer your customers a comprehensive security solution to protect their businesses and yours?
Flexibility is a benefit that can’t easily be offered by most security vendors because most lack any kind of tool that gives you complete control over license provisioning and management. With a vendor like Trend Micro that provides a licensing management tool, not only do you eliminate renewals and all the associated costs (tracking renewal dates, generating invoices, requesting quotes, mailing checks, etc.), but you can instantly provision licenses as well as increase and decrease seat counts on-demand. This ensures that you are utilizing exactly the number of licenses you need–no more, no less.
Multiple recurring revenue stream opportunities
An established security vendor like Trend Micro offers a number of different security products that can be leveraged by an MSP to create multiple recurring revenue streams. As technology changes and customers shift from on-premise solutions to the cloud, you need a vendor who can offer products to keep your customers protected. Many security vendors that dabble in the MSP space are one trick ponies that can only protect endpoints or email but not both. This means the MSP ends up spending more money, and eating in to slim profit margins, cobbling solutions together from multiple vendors, and missing out on any cost savings from standardization.
To sum it all up, choosing a security vendor to partner with is a much bigger decision than the cost of the product. It’s critical that you choose a partner that aligns with your business model to maximize productivity and profitability, and one that can help you grow your business.