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Over the last few years, there has been a new trend in the market where companies are willing to pay for managed services. This new trend is attracting a lot of VARs (Value-Added Resellers).
Key Takeaways:
- Transitioning from VAR to MSP requires restructuring offerings toward recurring services and managed support.
- Building operational capabilities for service delivery differentiates MSPs from traditionalVARs.
- Success metrics shift from one-time sales to subscription retention and service quality.
- MSPs need robust pricing models that reflect ongoing value rather than product transactions.
- Training and certification enable teams to deliver consistent service outcomes.
As more businesses adopt managed services, many VARs are considering a transition toward the MSP model. Moving from VAR to MSP requires changes to service offerings, operations, pricing, sales, and customer relationships.
VARs that rely heavily on product sales may face pressure from product margins and one-time transactions. An MSP model instead centers on ongoing services and support. This difference is one reason some VARs consider transitioning to managed services.
VARs may also consider adding managed services when they want to expand beyond product-led and project-based engagements. If you plan to move from VAR to MSP, this guide covers the key steps involved in the transition.
Understanding the Difference Between VAR and MSP
Many VARs already provide services such as integration, installation, and support, which can provide a foundation for moving toward managed services. The key change is shifting from primarily project or product-based engagements toward ongoing management and support.
What is a VAR (Value-Added Reseller)?
A VAR is a company that purchases technology products from manufacturers or distributors and enhances them by adding value before reselling to end customers. The added value may include:
- Bundling hardware or application software with specialized services
- Customizing technology solutions to meet specific business requirements
- Offering integration, installation, and support services
Key characteristics of VARs:
- Typically focus on technology products, but may also provide software and related services
- Work with a wide range of technology vendors
- Provide customized solutions based on client needs
- Often involved in project-based delivery rather than ongoing support
What is an MSP (Managed Service Provider)?
An MSP provides proactive, continuous management and support for a client’s IT environment. Rather than selling products as a one-time transaction, MSPs offer subscription-based services that help businesses optimize and secure their IT infrastructure.
Key services offered by MSPs:
- Continuous monitoring and maintenance of IT systems
- Managing cloud computing resources and SaaS platforms
- Ensuring information security, compliance, and data protection
- Delivering technical support and IT consulting
- Implementing IT methodologies and frameworks for operational efficiency
Other important MSP traits:
- Focus on long-term service relationships, not just product sales
- Provide hands-on, daily management of IT infrastructure
- Provide extensive knowledge of system performance, cybersecurity, and network operations
These differences are useful when planning the transition, particularly when identifying which existing services, customers, and capabilities can be adapted to an ongoing managed service model.
Key Differences at a Glance
| Feature | VAR | MSP |
|---|---|---|
| Primary Focus | Product sales with value-added services | Ongoing IT management and support services |
| Engagement Model | Project-based | Subscription or contract-based |
| Tech Stack | Broad (hardware/software) | Narrow, specialized |
| Services Offered | Custom integration, installation | Monitoring, security, cloud computing, etc. |
| Security & Compliance | Limited | Integral part of offerings (information security) |
| Role in IT Infrastructure | Minimal after delivery | Active, continuous involvement |
While both VARs and MSPs support business IT needs, the main difference relevant to a transition is how services are delivered. VARs often center on product sales and project-based services, while MSPs focus on ongoing management and support.
If you want a broader comparison of the two business models, read What is the Difference between VARs and MSPs?.
Advantages of Becoming an MSP
Transitioning to an MSP model can change how a VAR generates revenue, delivers services, and works with customers. Instead of relying primarily on individual product or project sales, you can build ongoing service relationships with customers. Some of the key advantages include:
- Recurring Revenue: MSPs commonly use subscription-based models, which can create a recurring revenue stream instead of relying primarily on one-time product transactions.
- Scalability: An MSP model allows you to expand your customer base and managed service offerings over time.
- Proactive Role: MSPs take an ongoing role in managing and supporting a customer’s IT infrastructure, helping address issues before they become larger problems.
- Long-term Client Relationships: By providing ongoing services and support, MSPs can build stronger, longer-term relationships with customers and create opportunities for continued business.
Transitioning from VAR to MSP: How to Manage?
If you also want a recurring income stream and to grow your business, it is best to transition to an MSP.
However, you must plan and execute everything carefully to ensure a smooth and successful transition. Here are some tips to help you manage this transition smoothly:
1. Review Current Business Processes
Before you dive into the world of MSPs, you must assess and review your current business process. As mentioned, VARs focus more on selling technology products, while MSPs provide proactive management and support services for technology products and infrastructure.
As a business, you need to identify any areas that require any changes or find new areas necessary to align with MSP services. This process needs careful administration as it involves developing new service level agreements (SLAs), service delivery frameworks, pricing models, and customer support processes.
2. Don’t Go Overboard with Services
Many VARs tend to make the mistake of getting overboard with their services. If you are transitioning to an MSP, you should start slow and begin by offering just one service.
These services can be disaster recovery, data backup, or cybersecurity. The goal is to keep it simplified at first and then expand gradually.
Pro Tips:
• Start with pilot managed services before full transition to build proof points and refine processes.
3. Map Out a Dedicated Plan
Transitioning from a VAR to an MSP is a significant change. It requires careful planning, so you must create a detailed plan outlining the steps, timelines, and resources needed to transition.
It is important to note that you should also maintain a steady line of communication to keep customers, employees, and vendors informed of the changes, as it can be confusing for them.
4. Train Your Employees and Expand (If Necessary)
Transitioning to an MSP requires employees with different skills than a VAR business. The entire core of an MSP depends on the service that employees from the company can offer.
Hence, it becomes vital to train your employees on the new service delivery model and ensure they have the necessary skills and knowledge to deliver MSP services. This includes technical training, customer service training, and communication training.
In some cases, you might need to hire more employees to provide your services.
5. Establish New Partnerships
While MSPs work with limited vendors and partners, you must identify the correct ones. When partnering with new vendors, it is crucial to remember that your new vendors and partners have the resources that will support your MSP services.
6. Inform the Customers
Your business will go through many changes when you transition to an MSP. This transition can be confusing for many customers. You might also face pushback related to the revised costs.
This is where communication comes into play. You need to communicate the transition to your customers, highlighting the benefits of the new MSP services. You can also justify the new cost by highlighting the benefits of your new services.
7. Monitor the Journey
In the world of a data-driven market, it is not wise to just go with your instincts. If you are transitioning from a VAR to an MSP, monitoring the entire progress throughout the transition is vital.
It will help make the necessary adjustments. You need to track customer feedback, service delivery metrics, and financial performance to monitor your transition journey.
Pro Tips:
• Track churn and Net Revenue Retention (NRR) as core MSP success metrics post-transition.
Final Thoughts
Transitioning from VAR to MSP can help you get new and higher recurring revenue. It also offers more scalability and the potential to expand and grow your business. With the right steps, you can easily transition to an MSP. Make sure to offer quality services with educated and skilled teams.
If you’re a VAR looking to evolve into an MSP, VARStreet can be your growth partner. With its powerful platform for quoting, eCommerce, CRM, and procurement automation, VARStreet enables you to deliver MSP-level services while streamlining your existing operations. Whether you’re offering bundled solutions, managing renewals, or enhancing service delivery, VARStreet equips you with the tools you need to scale efficiently and serve your clients better.
Start your transition with VARStreet and unlock new opportunities for recurring revenue and long-term growth.
FAQs
What should a VAR change first when transitioning to an MSP?
Start by reviewing your current business processes, services, customers, team capabilities, and support model. This assessment helps identify what needs to change before introducing managed services.
Can a VAR transition existing customers to managed services?
Yes. Existing customers can be evaluated for managed service opportunities based on their current technology environment, support needs, and fit with the services you plan to offer. Customer communication is an important part of the transition.
How should a VAR approach customers about the transition to managed services?
Communicate what is changing, explain the new services and ongoing support they provide, and clearly explain any changes to pricing. The goal is to give customers a clear understanding of what they will receive.
Do VARs need to train employees when transitioning to an MSP?
Training may be necessary because managed services can require different skills and responsibilities. The existing article recommends technical, customer service, and communication training.
What are the biggest considerations when transitioning from VAR to MSP?
Key considerations include reviewing current processes, choosing an initial service offering, planning the transition, preparing the team, evaluating vendors and partners, communicating with customers, and monitoring service and financial performance.
