Quest Reaches Out To MSPs

Quest Software wants providers of managed services to use its broad portfolio of systems management, migration and connectivity software. The problem is managed services providers, or MSPs, don't want to pay Quest's traditional lump-sum licensing fees. In order to make its software palatable to managed services providers, Quest has introduced a new consumption-based licensing model that it hopes will broaden its market.

The company earlier this month launched its new 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 are traditionally targeted at the on-premise customer to give them all the capabilities they need to do things themselves," Darren Swan, Quest's manager of development told me. "We have 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-premise 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 up-front software license fees.

After seeing its revenues decline for the first time in a decade last year, Quest is trying to extend its reach to MSPs by offering its software via a new licensing and model that is more conducive to them.

The subscription model is appealing for two reasons: the ongoing revenues and convenience for the end customer, explains Scott Gode, VP of marketing at Azaleos, a managed services provider and Quest partner.

"The unique thing with Quest, particularly around their migration tools, is that it's not at all a niche because migrations are huge and will continue to be," Gode says. "But it's not your typical annuity model because a migration is more often or not a one-time event verses consuming cloud storage space, which is an ongoing annuity model."

But Quest also has monitoring and other tools that are used on an ongoing basis. Yet MSPs are only willing to pay for those tools as they are consumed. One MSP that found Quest's array of tools appealing is DirectPoint Inc., based in Lindon, Utah.

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

"Paying all of those upfront license fees and maintenance fees does not work well for somebody like ourselves that is a pure-play MSP," Atkinson explains. Software vendors who want to do business with MSPs and cloud providers appear to be grudgingly if not gradually 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.

If you're an MSP, are you finding software vendors showing more willingness to work with you on licensing? Drop me a line at [email protected].

Posted by Jeffrey Schwartz on June 29, 2010