Channel Convergence: MSPs and Telecom Agents Joining Forces?

Blue Line Technologies Inc just announced its acquisition of the managed services operations division of Converged Communications Technologies, a provider of voice and data center cabling services.

The deal will allow Converge Communications to continue focusing on their core business, while Blue Line takes over the IT support services for existing and future clients of Converge.

This merger brings up an interesting topic. The story of telco agents and IT managed services providers joining forces is a long and convoluted one, and has been the subject of many a debate in recent years. Depending on whom you talk to, the convergence trend is either happening and picking up speed, or is barely even a blip.

So where is the actual needle on this thing?

Kaseya’s Jim Lippie

While some say that there are many instances of agent and MSP collaboration, others insist that agents and MSPs occupy different places in the tech universe. According to Jim Lippie, senior vice president of partner development at Kaseya, telcos have dabbled in managed services over the years, but it hasn’t been a pervasive trend. On the flip side, there’s a tremendous opportunity for MSPs to partner with telco agents so that they can sell their services upstream to midmarket enterprise customers.

“Unlike most MSPs, telco agents are great at selling and they have an extensive pool of existing enterprise customer relationships that the MSP can tap into,” said Lippie. “So the marriage between MSPs and telco agents is the best of both worlds — the MSP gets to focus on what it does best, provide top notch IT services, and simultaneously expand its customer base to larger, higher revenue-generating customers, while the telco agent gets new avenues to sell new services to their existing customer base and earn higher commissions.”

This seems like a win-win for both parties, doesn’t it? Considering this, is it safe to say that more MSPs may go down this path as a growth driver for their business?

SolarWinds’ Dave Sobel

It’s interesting to highlight the difference between the two groups, and how those differences are causing experts to regard them as being on one end of the spectrum or the other.

“The fundamental disconnect between the two is that most agents don’t want to really deliver anything to anyone, and most MSPs want to deliver everything to everyone,” said Dave Sobel, senior director of MSP evangelism at SolarWinds, earlier this year. Since these two entities pursue different sales objectives, it might explain why they haven’t converged as one or found ways in which to play nicely together, he adds.

Blue Line president and CEO Jeff Sagraves says that telecom agents want to sell recurring solutions that require very little maintenance. This includes items like phone, internet and email. They sell the service, collect the monthly commissions and do not need to offer a tremendous amount of support. The manpower cost is focused on the sales force. MSPs are much more labor intensive.

According to Sagraves, in the coming years, computing power and internet speeds (5G anyone?) will push the technology stack further away from …

… the client’s location and into the cloud. Once that transition happens, there will be less managed support service needs for clients and more cloud-based services that can be sold by the agents. The technology stack will shift so the client will just need a simple computer and access to the internet. MSPs are not going anywhere, but the client will be more reliant on as-a-service (aaS) offerings via GB+ internet connections which plays more into the telecom agent model.

Blue Line’s Jeff Sagraves

“The way I see this is that the agents and MSPs are not converging as much as racing to see who can capture the aaS services dollars of the clients,” says Sagraves. “The telecom decision-makers are usually not the same decision-makers that select cloud service offerings — simplified as the person choosing QuickBooks in the cloud is not the same person choosing the phone system. The convergence is on who owns those relationships and can better leverage the relationship for that future spend.”

Sagraves goes on to say that today, the MSP organizations hold closer relationships with the application decision-makers and this is why telecom agents covet the MSPs.

Whatever side of the fence you’re on, there certainly seem to be some shifts happening. Perhaps this acquisition is the needle-mover the channel has been looking for.