As managed service providers (MSPs) evaluate cybersecurity collaboration models, Detroit-based technology services distributor (TSD) GTS is refining its sales strategy for the agent channel.

The technology services distributor is applying experience gained from its previous forays into the IT and cybersecurity software channel to its current business. As vendors and distributors compete for MSPs and their end customers, GTS recently formalized a partnership with professional services automation (PSA) platform provider NinjaOne, offering its sales partners a new software portfolio to sell.

While signing a PSA agreement is noteworthy in itself, the specific terms within the agreement reveal more about GTS's strategic intent—namely, making the procurement process more flexible for MSPs.

The contract grants partners the right to resell NinjaOne products and bill end users directly. This will be a rare case where partners place transactions under their own billing (put-it-on-your-paper) model—CEO Mark Stackpoole estimates that fewer than 10% of GTS partners adopt this approach. For GTS, this is also not the ideal delivery model, as the company prefers to earn commission splits. However, this option builds a competitive moat for the TSD because it provides MSP partners with more choices.

"Whether it's a 5% or 6% resale override, we can allow MSP partners to put the deal on their own paper, or let them have multiple levers they can adjust," Stackpoole said.

MSPs often think differently about billing compared to technology advisors (TAs)—the sub-agents TSDs are most accustomed to working with. Technology advisors typically do not invoice customers directly, instead leaving that function to their vendor partners.

However, billing functionality is a built-in component of the managed services model. MSPs provide customers with a consolidated monthly service bill, bundling the technology stack into a single invoice. Historically, this model has favored resale over agency brokerage because resale allows MSPs to capture more margin points in the transaction and gives them control over the solution. Typically, MSPs procure technology products from distributors, who in turn resell from original equipment manufacturers (OEMs).

GTS has no intention of becoming a reseller, so it will not earn a margin spread on these transactions. But sales partners will still use the contract GTS has with NinjaOne, which keeps GTS relevant in the deal.

"(The MSP) will get a purchase price, say $10, and then they sell it to the customer for $14," Stackpoole said. "NinjaOne is basically rewarding us because we're creating the pipeline for those types of opportunities for them."

Not a 'kick in the knee'

GTS's strategy is rooted in historical experience.

About five years ago, the company partnered with a cloud marketplace provider to gain access to products from software vendors like Proofpoint, but at the time lacked a "put-it-on-your-paper" model. Over a four-month period, more than a hundred partners approached GTS asking about that marketplace provider. GTS encouraged its customers to contact the marketplace provider directly.

Subsequently, the marketplace provider's MSP division began proactively reaching out to GTS's partners, asking if they wanted to shift to a resale model. It was a full-court press, and it was effective.

"By the time we had the resale override set up for MSPs, it was too late," he said. "The damage was done. But with NinjaOne, we've built that mechanism in ahead of time."

GTS also reminds MSPs of the risks of delivering security services themselves. Stackpoole said he has witnessed companies lose customers due to cost concerns after attaching security services to monthly bills.

"Think long and hard before you let costs balloon well past $100," he said. "Because if the C-suite doesn't understand your value, or why the monthly fee went from $80 to $150, you run a high risk of losing that 'meal ticket.'"

MSPs that view cybersecurity as their core business may deem the risk worth taking, but for other MSPs, adopting the agency model is safer. This allows them to avoid losing customers due to price shock while still earning sales commissions.

"You won't make the 24% margin like you would with resale, but you'll make 19%, which is not a 'kick in the knee' (meaning not an unacceptable loss)," Stackpoole said.

Additionally, Stackpoole noted that MSPs can leverage the agency model to transition into the role of technology advisor for technologies they prefer not to manage themselves. "They become the trusted advisor the customer goes to first for all things in that space."