Tolar Systems Blog
Confused by IT Service Providers? Choosing Between an MSP or VAR
Business owners today have many choices when it comes to where they get their IT services. This article will discuss two of those options for IT services—managed service providers, also called MSPs, and value-added resellers or VARs.
The Teams: MSP vs. VAR
When it comes to IT service firms, there are a lot of business models out there. And because many of the service providers in the industry are known by acronyms, the various choices can sound a bit like alphabet soup to the uninitiated: MSP, VAR, MSSP, SI. There are so many unfamiliar choices that it can be difficult for many business owners and managers to understand their options and choose one approach over the other.
Two of the most popular choices are MSPs and VARs. But what are they, and what makes one IT service option better than another? Briefly:
- An MSP remotely manages a company’s IT infrastructure and/or end-user systems, typically proactively and through a subscription model. MSPs offer different pricing systems, such as per-device, per-user or all-inclusive. It's estimated that about 40 percent of small businesses utilize MSPs to manage their IT services.
- A VAR resells software, hardware and networking products, and "adds value" by packaging them with features or services that they provide. Those products are then sold as turn-key business solutions. Although they have added value to the original product, the majority of VAR firms are focused first on product sales with services as a secondary income source.
MSPs and VARs are Not the Same
The key difference between a MSP and a VAR is how they generate revenue. MSPs are service providers, so their primary source of revenue comes from services, sold via a subscription model. Any products they sell are secondary. A VAR, on the other hand, generates revenue primarily by selling IT products, with services as a secondary revenue source.
Their different revenue models mean there's a noticeable difference between MSPs and VARs when it comes to their level of engagement with their clients. A good MSP seeks to partner with their customers and establish long-term relationships. A VAR, on the other hand, generally operates on a more transactional basis. Contracts are shorter duration; once your product or service that the VAR has contracted to install is in place, the transaction is complete. With an MSP, your relationship continues over a longer period because they are typically managing an entire business process, such as managing IT, delivering a service that is provided every month, year after year.
Small business owners may find that they have trouble getting the attention of VAR firms, because VARs tend to serve larger organizations. MSPs may specialize in a specific industry, vendor, or software type, but for the most part their specialty is functioning as a complete outsourced IT department for small to medium sized businesses.
Because the services are provided monthly, an MSP seeks to maintain a relationship with you over time; that means they'll pay close attention to whether or not you're satisfied with the services you're receiving. For VARs, they are looking for the next opportunity to sell you a product—a product that they could also be selling to your competition.
Choose What’s Best for Your Small Business
Working with a MSP is usually a better choice for small businesses because you will receive services that ensure you get the most out of your IT investments, not just software and a short-term relationship.
If you are the customer of a MSP, you’ll get access to all of their services, not just those that pertain to the specific product you purchased, which means more bang for your buck. These services may also include product or service resale, making them a one-stop-shop when it comes to your IT needs. In the end, a MSP is a long-term relationship that serves the best interest of your business and positions you for growth.