415: Analyzing the IT Channel, with Andrew Down

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If you have ever worked in B2B software for any amount of time, you have probably stumbled across the IT Channel and didn’t even know it.

Andrew Down, Director of Sales for the IT Channel at Vendasta, never thought of himself as a technical person, but 13 years in the IT industry says otherwise. In this episode, we discuss the MSPs (Managed Service Providers), the VARs (Value Added Resellers), and what the difference is between them. The reseller channel is essential in B2B tech, both for end-users, many who buy 100% of their technology through a reseller, and for software companies, some who sell exclusively through the channel. Like almost everything else in technology, the IT Channel is changing. Fast.

Andrew Down is a Saskatchewan-based business professional and entrepreneur with strong corporate, non-profit, and public sector sales experience. Other experience includes senior leadership, strategic planning, business development, VAR/MSP/IT Channel, marketing, event management, consulting services, and training. Andrew has a Bachelor of Commerce in Marketing from the University of Saskatchewan and has been in the IT industry for over 12 years. He has a passion for empowering businesses to embrace leading-edge technology solutions to improve business operations. Andrew possesses a keen interest in personal and professional development, including networking, non-profit/community engagement, connecting, and continuous learning.

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George: Thanks for joining us on this edition of the “Conquer Local” podcast. I’m excited to introduce a new member of our team. Mr. Andrew Down has joined Vendasta as the director of sales for managed service providers, value added resellers and the IT channel. Andrew and I have known each other for, ah, it’s gotta be close to eight years and we’re going to hear Andrew’s transition from the IT channel to now coming to Vendasta and how we are going to embrace this whole new segment where we’ve been dabbling, We’ve been dragged, we’ve had some guests on the show that speak about the IT channel. But you are going to hear from Andrew what the life of a value added reseller, managed service provider and an IT consultant is all about because that’s what he’s been doing for the past number of years. And we’ll also maybe talk about how this channel or this segment is adjacent to all of the things that we’ve been doing at Vendasta and in “Conquer Local” up to this point. We’re looking forward to speaking to our new director of sales, Andrew Down here on the podcast next.

“Conquer Local” podcast, taking you into a whole new realm this week. We’ve got a great guest joining us. One of the longer sales cycles I’ve ever had, took over five years for me to sell Andrew Down on coming to Vendasta as a director of sales but persistence wears down resistance. And then I don’t even think it was resistance, but ladies and gentlemen, and I’m very pleased to announce Andrew Down, our guest this week on the “Conquer Local” podcast, the new director of sales for the managed service provider, value added reseller and IT channel. Welcome to the show, Andrew.

Andrew: Thanks, George. Great to be here. I hope the five years are worth it.

George: Well, when we first met five years ago you’re working at a Grand & Toy, I believe. And then you got into being a managed service provider here in our local market, beautiful Saskatoon, Saskatchewan, Canada. And I’d love to start off the show with you introducing yourself and giving us a little bit of the resume and what you’ve been doing, and then what you did as a managed service provider, just to put a frame of reference on our discussion today because it’s a very interesting topic and what I believe and I know you believe to be a very interesting opportunity.

Andrew: Sure. Yeah. It’s funny when you mentioned Grand & Toy, I think that goes back eight years. So it’s even longer than maybe we initially thought.

George: God, I’m an even shittier sales person.

Andrew: It’s all right. Almost a decade, but that’s okay. Yeah. I’m just a bit about me, I’m born and raised here in wonderful Saskatoon, high school in the North end at BJM. And I have a commerce degree from Edwards School of Business. The year I convocated was the year it officially switched from College of Commerce to Edwards. So I never know where to say I went but a marketing degree, nonetheless and really right out of U of S I got into kind of by chance into the IT industry. I never considered myself technical but I always had an interest, obviously just my generation growing up with computers and video games and that sort of thing. And I was given an opportunity to work with a very small niche distributor of ergonomic products located here in Saskatoon. Didn’t work for a couple of different reasons but I transitioned into a national role with Grand & Toy, a national VAR, value added reseller. And that was really my first foray into professional B2B sales. So right out of school was kind of straight into the IT industry and honing my skills as a salesperson.

Value Added Reseller

George: Let’s start talking about value added reseller because for the conquerors listening to the broadcast and may be a new term, can you explain a value added reseller and a couple of examples that maybe our group might recognize because it is very common thing.

Andrew: Yeah, sure is. I think the term is probably most simply defined just as the last word that reseller and I think reseller became a dirty word in the IT industry and it became kind of almost a marketing play to call yourself value added, right? And I think that definition of what that value is is very different depending on the organization you may be talked to, but you here in Canada and North America, CDW is a major online reseller that I came across my whole career selling IT hardware systems software so there were definitely a large global player for sure.

George: So we have a value added resellers, and it’s interesting you talk about the value add. I could buy these products, these tools, whatever it is for my business, but sometimes you need somebody to set it all up, make it work and then you get it out of the box and you realize, “Oh I needed this other piece to make it work.” And that was the value that was being… Some people call out an upsell, but I don’t know if it’s an upsell if you buy something it’s not gonna solve the problem without this other component. Now then you arrive at a managed service provider. I’d love to talk about what that is so that our audience can understand that.

Managed Service Provider

Andrew: Sure. Yeah. I had a brief stop over with a distributor and we can get into the whole IT channel later and talk about distribution if you want. But I ended up working locally with a great managed services here in Saskatoon, Anchor Managed Solutions. I’m still very close with the three founders. And I was brought in really for my insight into the IT channel, different connections with manufacturers, different connections with distribution. They were just year two as a company. And I give them a ton of credit for building something from the ground up, signing that first client with no references, no business, and I kind of got to ride their founding coattails and just bring my industry experience and really help develop some sales process, some sales practice and just make those introductions into the the IT channel.

Anchor was born out of a gap in what they deemed the gap in local services. So a managed services provider, we call them MSPs but by managed services provider really is a locally focused IT company. And our sales pitch when I was with the MSP was really we become your IT department. So for a small business that does not have internal IT, someone to help your printer reset a password when you forget it for the thousandth time, that’s what Anchor and MSPs really do is they provide outsourced IT services top to bottom for their small and medium clients.

George: You and I have had this conversation. I think we’re having lunch one day. And my background is coming from the media side and your background is coming from this managed service provider side and how we arrive here in our organization that started in the marketing technology channel is we’ve kind of been dragged. And I’ve used that line a lot with guests on this very podcast. We’ve been dragged into this space in our relationship in the telco space. And our telecommunications partners that are selling to their business owners, they wanna solve other challenges. But coming from the media side where I was one of 20 people lying to the customer, and I mean that in the most nicest way possible where we would go out and sell an ad campaign and then try to figure out, and I’ve said this on this broadcast, try to figure out why it didn’t meet the goals and that type of thing. We really were selling our product, not really being a true consultant and trying to solve the challenge. Now, there’s lots of folks in that industry that definitely they do care about their customers and solve the challenge. But I guess my point is being that media sales rep, the level of trust was eroded by bad actors over the years. And when you talk about people that have passwords of the business and that is a level of trust that is at another level, and that’s what you and I have been talking about, the managed service provider that controls and takes care of that IT ecosystem for a small business is massively trusted.

Andrew: A hundred percent and more so today than ever the industry moving to all of these ransomware and the security breaches that are happening on a very public level. I really can’t think of someone in the organization more trusted than an IT manager. Where you have the CEO’s password, as well as the company administrative password. And there’s a lot of power and what we used to call kind of a black hole of knowledge. IT people tend to speak almost their own language, right? And there’s a lot of power the tactical people carry just because a lot of the other business units just simply don’t understand what they’re talking about.

George: Right.

Andrew: And I think a managed services role is really to bridge that gap have those conversations with the C level, with the finance department, with the owner of a business, explain why the technology was gonna help their business improve, not just the tech side, but the actual business practice

George: Janet Shine, good friend of the broadcast was on this show a little over a year ago talking about convergence of the channel. We just spent the last three days at this recording moment listening to a number of experts in the IT channel at the Channel Partners Virtual Conference which actually went off very well. It’s almost like they have IT resources ’cause it went well, it was a virtual event but she’s very famously talked about agencies are eating our snacks and eventually they’ll be eating our lunch. And then down the road there’ll be eating steak and having wine with her customers. And so what she’s concerned about coming from the IT channel is these MarTech agencies that have trust of the customer are adding other products and services. You come from the managed service provider side of the business, and you see an enormous opportunity. And I remember in our lunch meeting where I think we might’ve got the deal done at that point was when we were talking about some of your customers in your managed service provider role. And you I’m sure that it was the light went on and I saw the look on your face. You’re like, I’ve just been sending them to GoDaddy to get to the domain, I’ve been… So some of the things that were in the marketplace that were adjacent to your space you were just given the lead to somebody else and you might’ve been able to capture more value for that customer and more margin. So was that really the moment where you were like, wow, this is pretty cool.

The IT Channel

Andrew: It was definitely a bit of the aha moment. I think managed services companies do a good job sticky business from day one we have recurring revenue. So we knew our day one monthly revenue. We knew our costs, obviously do businesses have challenges of being profitable, but adding in licensing and then realizing there’s actually a gap here. We’re sending revenue elsewhere. We’re missing, whether it be GoDaddy renewals or maybe security ad-ons or additional tie ins, not even getting into the whole… As an it company, we got asked a lot, your technology do you do websites? Do you help with SEO? We know what this SEO thing is but we don’t handle it as an SMB clients. And I think to to the average small business owner, a lot of them viewed IT companies as being that first point of contact. They would ask us all the time, can you help with our website? And we would politely say no, refer them to a great local local company here in Saskatoon but it definitely started to click that there might be something here, there might be a crossover into the industries.

George: One of the things that I’ve heard a lot in the managed service provider space is this concept of we’re not break-fix anymore. Can you explain that statement to me?

Andrew: Yeah. I mentioned resellers a dirty word. Break-fix might be the worst in the industry. I think a lot of IT people break-fixed associates with a very old school reactionary approach to service. So when something breaks, I call you, you fix it. So you’re only dealing with fires. You’re only dealing with issues when servers are down or emails down, or people can’t access their files. When managed services really went to the marketing span of it was it’s proactive. We monitor, we get alerts when things are happening. As a managed services partner the best thing you can do is you can solve a problem before the client even knows it exists, right? So it’s really moving from reactionary to proactive on paper. So yeah. Break-fix has become… There’s a lot of great guys here in our market, in Saskatchewan, around the world, there’s great IT guys and girls that will help you for a low hourly rates. But what if they take a holiday? Like I said, it very reactionary and if they’re gone, what’s your business gonna do?

Become the Trusted Advisor

George: You know, the entrepreneur in me, what I’m hearing you saying is that sounds lumpy. And it sounds episodic. And it sounds a long way from monthly recurring revenue. And that’s my customer and I work with them on an ongoing basis. And I make sure that all the roads and lights are on in the journey that they’re in. And isn’t that really the dream is that we, everybody wants to move to this space where I’m the trusted advisor, I’m the one that is core to your business succeeding because I make sure that everything just works. And yes, of course there’s an associated fee, but it isn’t this idea of fire, five grand, nothing for eight months, small fire, $500. It’s more of this idea of here are the challenges you’re having, here are my fixes. And we just worked together on this and you don’t have those. The other thing with a fire is you gotta clean it up and get rid of the sweat and all that stuff and, right? Like when a fire happens, usually there’s a cost there. So if we could make sure that everything’s just maintained properly, so it just works, I’d pay for that as a business owner, probably.

Andrew: Yeah, no, absolutely. I mean, it’s peace of mind and it’s moving those capital costs fires into just operational, right? We used to use the term where it’s the Netflix model of a fair monthly user costs. To be fair, IT services cost more than Netflix, whatever it is now, $14.99. But the reality was we needed to move into a predictable recurring revenue stream which is good for the MSP because then they can hire, right. They can bring in more technicians as they sign clients knowing their revenue’s going up. But for a business owner, January, July, doesn’t matter the month, you’re paying the same for your IT support. So there’s no crazy ebbs and flows and peaks and valleys, just very predictable.

The New World of Marketing Technology

George: It makes easier to budget. You know you’re paying a thousand bucks a month and all the lights are on. That can be… I see that as an interesting value proposition that probably pretty easy to deliver to the customer. Now, we’ve got this thing over here where you’ve got the managed service provider and they have a pedigree and they have training and they know what they’re doing, and that there’s new products that come along, but they have the ability to deliver those products or services. And now we’re introducing an entire new world of marketing technology. What’s that gonna look like? Because in my history, I went from selling boxes on paper and seconds of airtime to now selling a stack of digital solutions that changes every frigging day, that you heard Google is getting rid of cookies. And we gotta learn all that, what’s gonna be. So what does this mean for that managed service provider, value added reseller, people in the IT channel to learn these new skills?

Andrew: I think it’s an evolution. It’s nothing that IT people aren’t already doing. I mean, I can’t think of an industry with more ongoing training and education. So I think really, at Vendesta, my role and the great teams we have here is just to augment additional training and learning that the IT companies are already doing. There’s annually, If you’re not getting new certifications, training, new revenues to sell, new partnerships to position, you’re gonna become the dinosaur, the break-fix model. And only a couple of years, I mean that it transitioned extremely quickly and not that it’s too late, not that people have completely missed the boat but you run that risk, if you’re not always looking for the next sticky value add that you can bring to your great small, medium sized client.

Curating a Marketplace

George: I have to tell… I have to confess something. And this might be a bit of a lesson for everybody that is within earshot of this. When we were first looking at managed service providers, there’s an interesting stat. 95% of the managed service providers in this planet have less than 10 employees. So we started to discount that they were an ideal customer profile. And then we started to talk to some managed service providers, go to some conventions, and like, there’s three guys with beautiful trucks running a managed service provider with $20 million in revenue. And the first question is, okay, how do you do that? And they’re like, it’s like someone explained it to me. It’s like a general contractor. They know that having staff is the challenge because you’ve got to train them, you got to keep them, you got to retain them, you got to give them promotions, they go on holidays, all of those issues. What it really is this idea of going to other people who are experts when you get a job because you have the brand and you have the trust and you are the general contractor bringing in the other people to execute on that. And that now is really interesting because when you look inside a curated marketplace of solutions that are ready to be consumed with all the marketing material and all of the FAQ’s and those types of things that general contractor concept makes a lot of sense.

The second thing that’s interesting about this, true entrepreneurs is what I’m finding. People who go to work every day to grow their business. And you covered in the last vignette. They train all the time because the things that they sell you need to stay trained all the time on those components. So I’m sitting here going, this is a win-win. The one thing that you have identified and I’m gonna give you a lot of credit for this because I think this is the piece because you were sitting in the other chair, you had been missing out on an enormous amount of revenue which wasn’t going to be that hard to execute. In fact, it might even lead to more grief for the customer if they go try and vet some new person, rather than you go do it, because you were the technical expert. And I know you talk about you don’t think you’re that technical. You are quite technical my friend.

Andrew: Don’t tell the techs at my old company that, they’ll laugh. No, you nailed it though, George. I think the reality is the MSPs is being asked and they’re the liaison. They’re the vendor, the partner, the software liaison, the small business owner they’re supporting. They kinda know where they wanna get to. They might even know what they want or I’ve heard of a brand like let’s use virtual collaboration as an example. Maybe they’ve heard of Zoom or Teams or Google Hangout. They don’t maybe know where to go though. So they’re just gonna throw that to the MSP. “Hey, you’re our tech company. What should we do?” And as an MSP, I mean, I was quick to… If I didn’t know something first, admit it, but then quickly go find out who I need to talk to and bring them in. So it was all about partnerships and leveraging your partners with your brands or manufacturers, your software providers and knowing who to bring into those conversations to add value. So a lean team of three or five people is like a company of 20.

George: One of the reasons that I wanted to ask that question and I had a feeling you would go there and you just said it, you admit that you don’t know. And then you go find the answer or find somebody who can give you the answer that you can partner with. And I find a lot of times that our channel partners or prospective channel partners are really staggered by 500 SKUs, stock keeping units. ‘Cause I’m trying to kill acronyms. In a marketplace, like how the hell am I gonna know all of that stuff? And I’m like, okay, you don’t need to know at all. You do need to know that it’s there, right? I’ve been using this analogy recently ’cause the garburator’s broken at our house and it’s winter. So I’m not gonna go get the big toolbox, right, and roll it out to fix the job. I have a little tool kit that I put the tools in. And by the way, all the tools in my little toolkit are for the gazebo I was building in the backyard last year. So I bring the toolkit into the kitchen and I get underneath the sink, right to fix the garburator. There’s a bunch of tools in there and I’m not gonna use them. I’m not gonna use the chalk line. I don’t need that to fix the garburator. I’m not gonna use the hammer. Although I may beat that bloody garburator if I can’t get it fixed. But my point is is you have a tool kit with lots of things that could solve the challenge. But right now, all we have to do is fix the garburator. And this is the other thing is we start to move into other channels like managed service providers. You were asking me the question of the day. Can I sell Lenovo laptops? This is not a paid endorsement of Lenovo by the way. But yes, one day you very well may be able to, with some of the partnerships that we are building with distributors and we won’t get into that today because we’ve got a time limit. But I think that it’s important for people to understand in your model, you were selling thousands of solutions and you weren’t a trusted expert on them all. What you were, was a trusted expert with lots of people in the back pocket that could then come in as subject matter experts, correct?

Andrew: A hundred percent. And I do love the analogy, you said I would and I do. Yeah, the whole whole career I’ve built and that Anchor built as an MSP was based on relationships, true relationships selling. Knowing who to go to, when to go to them and what to ask. It’s okay not to know something. And I would much rather admit that than make it up on the fly, but I’m gonna get back to you as quick as humanly possible with the accurate information and the right person to bring some value because business moves quick and business owners need answers, not necessarily this second, but definitely same day, if possible.


George: As director of sales for the managed service provider value added resellers and IT channel, Andrew will be working with a team of our folks to work with managed service providers and value added resellers all over the world and introduce them to the Vendesta platform and to our marketplace of products and services. And I know you’re really looking forward to it. And we’re looking forward to learning more from you about this very interesting industry that we are building more and more friendships all the time with folks that are pretty excited to be offering an expanded line of services that actually are very adjacent to what they’re doing today.

Andrew, it’s been a great eight years going through this buyer’s journey with you. I’m glad that you finally came to the conclusion that this was the right thing to buy and great to have you cross the line. And I’m looking forward to working with you and in all seriousness. And thanks for coming on the show today.

Andrew: Appreciate it, George. Happy to be here, thanks.

George: The trust that managed service providers and value added resellers have is staggering. When I think about the folks that I’ve worked with in the IT channel over the years, you really do. They have your passwords and when things don’t work in the network or with your equipment, you phone them and they drive down in their truck and they fix it and you don’t give them the password ’cause you never changed it. They still have the password they put in there when they set everything up. That level of trust is paramount to having a relationship and being the trusted local expert.

We, on the other hand that maybe came from other industries and I have that famous thing of I was one of 20 people lying to the customer. Of course, I talk about 30 years ago where we really couldn’t measure the deliverable of the things that were selling. It was this, we were selling air at the end of the day, but eventually we started to build trust and we started to truly become consultants. I’ve talked about this journey a lot. And in that broadcast, I just used the one vignette. And I guess I should put some, a little bit more color around it. But what I’m telling you is managed service providers have an enormous amount of trust. In fact, as an agency owner I would love to partner with one of those folks because we could solve a lot more problems. So I think that that’s an interesting thing we didn’t cover with Andrew. And maybe in the future we will cover is what does it look like if you took someone who was an agency owner delivering digital marketing services. And they had a friend that was a managed service provider and you both went in together kinda peer to peer and you helped solve the challenges of the customer, or you start to learn new things and you start to get new products and services that are adjacent to what you’re doing. There’s a number of different ways that we can skin this challenge in order to really help solve for our customer.

So managed service provider is somebody that is a locally focused IT company. A value added reseller is somebody that added value to buying a product usually. And then we have IT consultants that really are that general contractor bringing it all together. That’s what we talked about today with Mr. Andrew Down. And as part of our team, you can reach out and speak to Andrew, anytime that you would like. And we’re looking forward to doing some more work with him as we move forward into this brave new world, brave new segment for us in the IT channel. Thanks for joining us this week on the “Conquer Local” podcast. My name is George Leith. I’ll see you when I see you.