Forging Ahead, Ingram Micro Offers Redefination of ASP Model

While the distributor will continue adding application developers and service providers to its xSP program, it has settled on a mix of managed service, remote monitoring, security and broadband providers aimed at the SMB market. Vendors now in the program include Blue Tie, a developer of messaging and collaboration applications; Exenet, a storage and security provider; Data Systems Worldwide and Netarx, providers of remote monitoring services; NetLedger Oracle Small Business Suite; McAfee; and Sprint.

The program took time to develop because Ingram Micro wanted to ensure in-house sales and technical teams, as well as the vendors, understood how to sell subscription-based services, said Dave Madden, Ingram Micro's category manager of services and wireless. Ingram Micro is the first volume distributor to unveil such a model.

The distributor launched training courses that focus on selling services, not products; tools that help solution providers formulate ROI; and a series of conference calls on new technologies and advanced sales techniques.

"We have to teach them to adjust from making an up-front sale to one that's more complex," Madden said. "The solution providers are selling a 'change' in how the technology is delivered."

Ingram Micro executives, vendors and solution providers realize managed services will be difficult to sell. With large ASPs such as FutureLink, Globix and USinternetworking in bankruptcy, end users are wary. Despite the ASP shakeout, the industry still brought in $1.8 billion in sales last year, up from $986 million in 2000, according to research firm IDC.

"The market needed to flush itself out. Today there are many ASPs that understand they have to provide an application that will serve to end a business' pain," said David Koretz, CEO of Blue Tie, Rochester, N.Y.

Some solution providers are expressing concern about whether a volume-based distributor can successfully sell and manage subscription-based services. Tech Data has been trying to develop similar services for years but has yet to roll out a specific program.

"The jury is still out on Ingram Micro," said Greg Lally, CEO of Synegi, an Irvine, Calif.-based solution provider that has spent years trying to find the right ASP partner. "But Ingram [Micro is a very sophisticated company, and the marketplace is being crushed. So it's a valiant attempt to help the channel squeeze more productivity for less money. Distributors really have to push the envelope to succeed."

So far, the xSP program seems like a good start, said Duane Tursi, president of Netarx, Bingham Farms, Mich. "Ingram [Micro has access to 90,000 solution providers. They allow us to peer into the market and see which solution providers are excelling," he said. "For solution providers to beat this model, they'd have to invest million of dollars to create the services themselves. This is truly about partnering between the vendor, the distributor and the solution provider."