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Should MSPs Go 'Colo' or Stay Solo?

The clear advantage an MSP can offer SMB customers or enterprise-level clientele is the ability to be nimble and agile, trimming the fat on overhead. One methods is colocation, or the industry-shortened "colo," a sceneario which has MSPs sharing costs of managing customer data and maintaining a customer network off site.

Here's a wicked idea: What if MSPs with similar interests went in together to set up a sort of "co-op" with the "colo" or a shareholder or jointly managed facility that could then be leased out to even smaller vendors or larger vendors?

Beyond red tape and cultural differences, it's a thought. there are some MSPs out there doing just that, either combining "colo" capabilities with their offerings or creating better margins by simply managing the processes for customers at a location either owned or co-owned by yet another third party.

According to Darin Stahl, senior analyst at Info-Tech Research Group, those that merely provide managed services on or off "colo" sites, where they support the customer's equipment can realize a 25 percent better profit margin in managed services.

This number gets more appealing if an MSP also owns the customer equipment or is partnered at a datacenter or "colo" site with a partner who owns or leases the equipment themselves.

If it still sounds like too many cooks in the kitchen, it should be noted that "colo" providers are becoming more appealing in the SMB space, especially in specialized verticals such as financial services firms and customer-service-heavy businesses that require large CRM emphasis, or housing data that needs to be accessed at moment's notice.

There are two general types of colocation providers: wholesale and retail. Depending on an MSPs business model it may be better to go "colo" than solo.

Posted by Jabulani Leffall on July 11, 2011


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