MSPs told to be wary of the CSP model

Managed service providers heading to the ChannelNEXT event in Canada will hear warnings that cloud brokerage models could impact their business in a message that will raise the guard of some on this side of the Atlantic.

Over the past couple of years there has been a growth in the brokerage and cloud service provider models, with the idea being that a customer can source services fairly easily through one of those providers. MSPs have reacted by offering that approach and that is where the warnings spring from.

Eran Farajun, executive vice president at Asigra, is one of the speakers at the Ontaria-based event and is giving a talk, "Are MSPs getting taken for a ride?"

“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 Farajun.

Hal Schwartz, president, Data Storage Corporation, stated that MSPs were starting to change their minds about the offerings they put in front of customers.

"Increasingly, MSPs are reconsidering cloud brokerage models and the threat they pose to the control of their business," he said.

"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," he added.

Farajun is advising MSPs to own the CSP relationship and gain control over price and margins and increase their customer protection by having control over communication with the user.

He added that making sure that the MSP has a firm grip on the customer relationships also translates into higher valuations for those businesses at the point the owners choose to make a sale.