As managed service providers evaluate cybersecurity partnership models, GTS has fine-tuned its pitch for the agency route-to-market.
The Detroit-based technology services distributor is applying hard-won lessons from its foray into the IT and cybersecurity software channel, as vendors and distributors vie for MSPs and their clients. The firm recently cemented a partnership with professional services automation platform provider NinjaOne, giving its sales partners a new software stack to sell.
While signing a PSA is notable, the agreement's details reveal a strategic vision as GTS moves to make procurement more flexible for MSPs.
The contract empowers partners to resell NinjaOne and bill end users directly. It would be a rare instance in which a partner would put the deal on its own paper — CEO Mark Stackpoole estimates that fewer than 10% of GTS partners would do so. It’s also not an ideal delivery model for GTS, which would prefer to take a piece of the commission. However, the option creates a moat for TSD by giving MSP partners options.
“Whether it's a 5% override or a 6% override, we can allow our MSP partners to put it on their own paper or have multi-levers that they can pull,” Stackpoole said.
MSPs often think about billing differently than technology advisors — the sub-agents TSDs are most accustomed to working with. TAs generally don’t invoice customers; they leave that function to their vendor partners.
Invoicing, however, is built into the managed services model. MSPs give clients a monthly services bill and bundle their tech stack into a single invoice. Historically, the model favors resale over brokerage, which gives them more points in the deal and puts them in control of the solution. Often, MSPs purchase tech from a distributor that is reselling it from the OEM.
GTS has no interest in becoming a reseller, so it won’t be getting a margin on those deals. But the sales partner will still use GTS’ contract with NinjaOne, which keeps GTS relevant.
“[The MSP] would get a buy rate, let's call it 10 bucks, and then they sell it to their client for 14 bucks,” Stackpoole said. “NinjaOne is then just basically rewarding us for facilitating a pipeline of those types of opportunities for them.”
Not a kick in the knee
The GTS strategy is anchored in historical precedent.
When the firm partnered with a cloud marketplace provider about five years ago to get access to software vendors such Proofpoint, it lacked the put-it-on-your-paper model. Over the course of four months, more than a hundred partners inquired with GTS about the marketplace provider. GTS encouraged its clients to make direct contact.
Then the marketplace provider’s MSP division started reaching out to GTS’ partners to see if they wanted to switch to resale. It was a full court press, and it was highly effective.
“By the time we built an override for MSPs, it was too late,” he said. “The damage had already been done. But with NinjaOne, we have it built in.”
GTS warns MSPs that owning security comes with risks. Stackpoole said he has seen numerous companies tack security on their monthly bills and lose clients because of the cost.
“Think long and hard before you allow the cost to bloat up much more past $100,” he said. “Because if the C-suite doesn't understand who you are and why you went from $80 to $150 a month, you're at high risk of losing your meal ticket.”
MSPs who view cybersecurity as a core offering might find the risk worthwhile, but for others it’s better to use the agency model. They prevent client sticker shock while still collecting sales commissions.
“You're not making the 24% you would have if you rebilled it, but you're making 19% and that's not a kick in the knee,” Stackpoole said.
Moreover, MSPs can use the agency model to become consultants to their clients for technologies they don’t want to manage, Stackpool said. “They become that first point of contact as a trusted advisor for all these things.”
