Research Report Informs MSPs on CSP Cloud Brokerage Model Concerns

Managed services providers are urged to review Vendor control and access to customers in CSP Cloud Brokerage Model Agreement terms.

Asigra Inc., a leading cloud backup, recovery and restore software provider since 1986, has announced the availability of a new report by Enterprise Strategy Group (ESG) titled, “Trends in Creating MSP Value – A 2020 View.” The report informs managed services professionals on the issues of the Cloud Brokerage Model and how healthy channel relationships lead to greater profitability and long-term growth.

“The global managed services market is projected to continue to increase at an 11.5% CAGR from 2019 through 2024, and to reach $US319B by that year,” said Kevin Rhone, ESG Channel Acceleration Practice Director. “Progressive, effective partnering strategies are needed to capture this opportunity, and forward-looking tech vendors recognize that leading partners have a new set of priorities and challenges when serving their customers while maintaining profitability in the transformed world of IT. The best are taking steps to deliver more value from and through their relationships.”

Implementing a healthy business model is at the heart of any business strategy and this is true throughout the managed services space. Since the expansion of this market began, new technologies and solution delivery models have entered the scene to help managed service providers capitalize on the ongoing industry interest of cloud-based IT solutions. While many of these models are advantageous, one in particular – the Cloud Brokerage Model – presents greater risks than benefits to the profit and value minded MSP.

“Over the past several years, the cloud solution provider (CSP) Cloud Brokerage Model, where the partner acts more as a reseller than a true MSP, has made steady gains in the partner community,” stated the report. “It makes the transformation from reselling products to a services-led model easier for VARs with fewer barriers to entry and reduces time-to-market and monetary investments, specifically around setting up a data center capability and investing in technical skills and depth. As a result, many partners have embraced this option as a way to begin their transformation.”

“While MSPs may simplify their transition by adopting a CSP approach, they will now have given up control over very important considerations such as creating differentiation around technical, market, and application specializations; cultivating, expanding, and protecting the customer base around this differentiation; setting the branding, terms, and levels of unique as-a-service offerings,” added Rhone.

Instead of the Cloud Brokerage Model, experts propose a channel-healthy model where the MSP becomes the CSP. There are several advantages of this approach, including:

  • Complete control over price/margins
  • Direction of all communications with clients
  • The protection of customer contacts
  • Greater control over the value of the business
  • Higher purchase price upon the sale of the MSP business

“MSPs are beginning to rethink their vendor relationships as they discover the financial and control pitfalls of the Cloud Brokerage Model,” said Eran Farajun, Executive Vice President, Asigra. “The problems start with recurring revenue declines and end with customer depletion. If involved in a business model where your customers are required to sign a separate licensing agreement, this should be a red flag that your customers are slowly being transferred to your technology provider’s control.”

The ESG report “Trends in Creating MSP Value – A 2020 View” is available for download here:

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About Asigra

Trusted since 1986, Asigra provides organizations around the world the ability to quickly recover their data from anywhere through a global network of IT service providers who deliver Cloud Backup V14 as either public, private and/or hybrid solutions. As the industry’s most comprehensive data protection platform for servers, virtual machines, endpoint devices, databases and applications, SaaS and IaaS based applications, Asigra lowers the total cost of ownership, reduces recovery time objectives, and eliminates silos of backup data by providing a single consolidated repository with 100% recovery assurance. The company has been recognized as a Gartner Cool Vendor and included in the Gartner Magic Quadrant for Enterprise Backup and Recovery Software since 2010. More information on Asigra can be found at