As AI reshapes managed service provider staffing strategies, Summit Holdings is pitching a “labor-first" MSP-as-a-Service offering. The white-label back-office model announced earlier this month comes on the heels of its acquisition of security and network operations center provider NOCDOC.
Summit provides back-office support for MSPs, value-added resellers, technology service distributors and other partners that customize the offerings and brand them as their own.
Summit Co-founder and CEO Juan Fernandez frames the model as an operational layer that startups use to get off the ground and mature companies use to scale.
“We can do as much or as little as they need, and custom-tailor those opportunities to be able to deliver that success,” Fernandez told Channel Dive.
The company is introducing the model to a notoriously labor-intensive MSP industry.
“For a managed service provider, labor is 75 to 80% of their cost of goods… so getting their labor cost under control as they scale their business is the most important thing for them to deliver sufficient gross margin and profitability for the business,” Service Leadership EVP and General Manager Peter Kujawa said.
Summit's new platform upends traditional outsourcing plays.
MSPs can build on top of most platforms but only for tier one or tier two support, Fernandez said. Summit isn’t capping the level of support it will provide, nor will it be going offshore.
The model’s 100% U.S.-based workforce is a sticking point for Summit. Fernandez said MSPs and VARs that contracted from the Philippines, Pakistan, Mexico and other countries didn’t always achieve the cost benefits they hoped for.
“It's still expensive, but it wasn't necessarily the outcome that the customer really wanted.”
It could also be a pain for partners to hide their outsourcing partners while still using their labor. Fernandez said MSP clients haven’t been shy about their relationship with his company.
“This is where we co-sell. We put on their banner. We do QBRs with them. And then some of them are like, ‘I can be proud of this relationship that I don't need to be hiding you now,’” he said. “I started to see last year that this was going to fly, because they started being proud of their partnership with us, and they had previous partnerships that they would never admit to.”
Outsourcing use cases
Different partner profiles are emerging for the model. First, MSP and VAR entrepreneurs are using it to get up and running fast.
“We work with them to figure out what they want it to look like, and then we turn it on,” Fernandez said. “This is the moment where we are creating and restimulating the entrepreneurial ecosystem [sic], because now we can reduce the time to revenue and drastically to profitability.”
MSPs with $1 million to $5 million in annual revenue are using parts of the platform — for example, the SOC and the NOC, but not the service desk. Larger MSPs are often switching away from an offshore workforce.
And private equity-backed firms are leaning on the platforms as they thin their teams in advance of their next transaction. Others are moving all their business to MSP-aaS.
“They just raw stand up an MSP on top of us,” Fernandez said.
There’s another market developing for the platform: TSDs. This type of distributor and the technology advisors that roll up underneath it typically do not provide hands-on services and are dependent on their vendor partners to support the client. As some of the leading vendors in the TSD world retreat from services, Summit and other services-oriented firms could step in to fill the gap.
“The TSDs were like, 'We've been waiting for something like this for a long time, and we need this.” It's not attached to a vendor. They may have NOC services or SOC services, but you've got to sell some service with that. This is the first time that it comes clean across the board, where you can just tie on any connection,” Fernandez said.
Fernandez is positioning MSP-aaS as a counterweight to AI-driven shifts in staffing, as MSPs rush to augment and replace technicians with AI. AI’s promise to automate the jobs of tier one and tier two technicians has caused some MSPs to salivate.
Fernandez wants to attack those costs but keep the people, betting that end users want humans on the other end of the support ticket.
“This was my attempt at keeping that little sign up that says, ‘We still have human people here,’” he said. “We'll be here for a while, until there's a world that wants to talk in nothing but computer language, and we just look at each other and make clicking sounds.”
