News

Quest Reaches Out to MSPs

Company unveils new consumption-based licensing.

• By Jeffrey Schwartz
• August 02, 2010

Quest Software Inc. wants managed services providers (MSPs) to use its broad portfolio of systems management, migration and connectivity software. The problem is MSPs don't want to pay the traditional Quest lump-sum licensing fees.

In order to make its software palatable to MSPs, Quest has introduced a new consumption-based licensing model that it hopes will broaden its market. The company recently launched its Service Provider Program, designed to let MSPs license its software the way service providers are accustomed to doing business: by the month or quarterly, and as applicable on a per-user or -account basis.

"We're traditionally targeted at the on-premises customer to give them all the capabilities they need to do things themselves," says Darren Swan, Quest manager of development. "We've worked with service providers to help them do it with the customers, but we haven't targeted specifically the service providers to enable them to move on-premises to host and manage."

Quest had to make a fundamental change in its business model to reach this new customer set. That's because the business model for MSPs doesn't encourage them to incur upfront software license fees.

After seeing its revenues decline for the first time in a decade last year -- from $735 million in 2008 to $695 million last year -- Quest is trying to extend its reach to MSPs by offering its software via a new licensing model that's more attractive to them.

Dan Atkinson, VP of alliances and marketing at DirectPointe Inc., hooked up with Quest about a year ago and found many of its monitoring and migration tools suitable for his company's needs. But Atkinson says DirectPointe couldn't introduce new capital expenditures to pay for the software when the company was accustomed to weighing its costs toward operational expenditures. Atkinson says the Quest move from perpetual license fees to quarterly per-user pricing sealed the deal.

"Paying all of those upfront license fees and maintenance fees doesn't work well for somebody like ourselves that's a pure-play MSP," Atkinson explains.

Software vendors who want to do business with MSPs and cloud providers appear to be grudgingly moving in this direction, according to Atkinson. Case in point is CA Technologies, which recently acquired monitoring vendor Nimsoft and cloud virtualization platform vendor 3Tera.

"We're beginning to see more and more of it," Atkinson says.