Master Agents' Changing Role Part 1

By Khali Henderson

Editor’s Note:
This is Part 1 of a five-part article, Master Agents Revisited. Other parts of the article are:

Part 1 – Introduction

Telecommunications services master agencies are no strangers to change. Their model has evolved over two decades from earning the best carrier commissions for delivering the highest volume to providing significant pre- and post-sales support, including personnel and systems, to its subagents and suppliers. In so doing they have secured their places as the “value-added distributors” of telecom services; they are sought after by both carriers are sales agents to make the job of selling telecommunications services easier and, ideally, more profitable.

While there are exceptions, most master agencies stick to their knitting, leaving the IT and communications hardware/software distribution to the “pick, pack and ship” distributors like Ingram Micro and Synnex. The emergence of service-based delivery models for IT and communications hardware/software, however, has changed the game. Now master agencies with their years of experience selling telco services subscriptions in a recurring revenue model seem tailor-made as distributors for cloud and managed services.

This hypothesis already is being tested  by carrier suppliers that have added cloud and managed services to their own portfolios for sale through existing indirect sales channels. Telecom-focused pure plays (think cloud communications providers) also are aligning themselves with master agencies to jump-start their sales engines. And, IT-focused managed services providers and cloud service providers also are evaluating and engaging cautiously and in varying degrees these middlemen as distribution partners. After all, master agencies aren’t the only game in town; IT channel veterans behind many of these emerging businesses are comfortable contracting with IT distributors or resellers directly. Master agencies’ expertise in connectivity required for both managed and cloud services may give them an edge in the ongoing battle to offer end-to-end solutions, but is it enough to counter their present lack of IT domain expertise? Can the MSP or cloud provider shore up those gaps at least in the interim? How will this play out long-term?

There are many unanswered questions, but ultimately, it boils down to this: As IT and communications technologies converge with cloud and managed service delivery, will master agencies continue to play a role and, if so, what, if anything, must they do to master it?

In an attempt to find answers, Channel Partners interviewed more than two dozen representatives from all the stakeholders in the supply chain: service providers (carriers, MSPs and cloud services providers), master agencies and subagents. This special report will share their perspectives, but first, let’s highlight some conclusions of the overall respondent pool:

None of these conclusions is unexpected, but the ramifications for master agencies, specifically, and for the converging IT/communications channel, generally, could be significant. Which master agencies will take on the challenge? How will this impact competition between master agencies to win subagents, including sought-after VARs? Will these cloud-ready master agencies find new competition in traditional VADs, which also are selling cloud and managed services?

“I think the master agency space is at a crossroads. Many will adopt technologies like cloud services and to some extent various degrees of managed services,” said Brad Miehl, president and CEO of master agency MicroCorp. “However, there is a paradigm shift in how telco and IT services are now sold and managed throughout all segments of the business market. As this shift is occurring, it is creating fear, uncertainty and doubt in the mindset of the channel both IT and telecom and it is impacting the mindsets of their respective customers. These customers are looking for comprehensive solutions from companies than can manage their communications ecosystem. This is where the opportunity lies.”

Part 2 – Master Agents’ Plans