It has been roughly nine months since Quest Software acquired PacketTrap Networks, the remote monitoring and management (RMM) software specialist. So how are Quest and PacketTrap working with MSPs? And what makes PacketTrap different in the crowded market for RMM software? In this MSPmentor FastChat Video, Mike Byrne, director of MSP for PacketTrap, provides some updates.

Several months ago, MSP coach Stuart Selbst told me to keep an eye on Live Virtual Help Desk (LiveVHD), an upstart provider of NOC (network operations center) and help desk services. It was a quick, generic comment from Selbst. But he had a point: Fast forward to the present, and LiveVHD seems to be inking relationships with a range of MSP-oriented software companies.

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.

Some readers tell the managed services market is loaded with shelfware (i.e., unused managed services licenses that cost individual MSPs thousands of dollars). Other readers tell me MSP shelfware isn’t a problem. But now comes word that PacketTrap Networks will soon adjust its software licensing model to mitigate MSP shelfware risks. Here are the details.

I mentioned the potential MSP shelfware problem in a June 3 blog post. In an email reply to me, PacketTrap Networks’ Mike Byrne wrote:

“I would have to agree with you that shelf-ware is one of the biggest (and growing) issues in our space.  So, with that in mind I thought I’d ping you and let you know that we’re in the process of launching a new pricing methodology/structure that is based on our existing license tiers, however, gives our customers the freedom of buying any number of licenses in between as well.”

PacketTrap, a division of Quest Software, currently offers MSPs 100, 250, 500 and 1,000 ‘packs’ of licenses. “Moving forward,” says Byrne, “if the existing license tier doesn’t fit with our customers go to market support model they will now be able to chose any number in between and get a pro-rated price per node. So if a customer wants 362 nodes …. They can buy 362 nodes and not get forced into the 500 tier level.”

It sounds like a hybrid approach to me: Pick the closest tier, then get pro-rated pricing to zero in on the exact number of additional nodes you need. PacketTrap is expected to officially announce the new licensing model on June 21. But the PacketTrap sales team has already started reaching out to MSPs with the new offer, Byrne says.

Plenty of Options

While some vendors have long-promoted tiered licensing packs, more and more MSP software providers are moving to a pay-for-what-you-use model. The reason: Plenty of overly optimistic MSPs purchased more licenses than they actually use. Some of those MSPs have since pursued simplified licensing models from vendors.

Also, pure-play SaaS companies have put pressure on the old license pack model. And established MSP software providers (particularly Zenith Infotech) have aggressively pointed out to me that they don’t require license pack commitments from MSPs.

Of course, it’s impossible for me to track every software company’s licensing policy. But much of the shelfware chatter over the years has involved Kaseya’s license packs. I’m frequently asked by MSPs how many unused Kaseya licenses are out in the market. (I don’t have a firm answer.)

That said, Kaseya’s MSP partner base appears large and engaged. Also, Kaseya is expected to launch its SaaS version of the Kaseya 2 platform in July 2010. And Kaseya recently launched G1, an on-premises platform for smaller MSPs.

PacketTrap Networks is the latest managed services software specialist to develop a SaaS (software as a service) strategy targeting Europe. Specifically, a European distributor will start hosting PacketTrap’s platform soon, according to Mike Byrne, director of product management at PacketTrap. Tekdata Distribution will host PacketTrap’s software in the United Kingdom, Byrne says. Moreover, PacketTrap is negotiating with a major Master MSP to host PacketTrap’s software in Australia, Byrne adds. PacketTrap, acquired by Quest Software in December 2009, focuses on network-centric managed services rather than emphasizing PC-centric services. Quest has continued to invest in PacketTrap and signs of a global PacketTrap push surfaced in April 2010. On the European SaaS front, PacketTrap’s Tekdata relationship arrives at a key time. Multiple MSP software providers already have critical mass in Europe. And several upstarts are making their own moves. For instance, LabTech Software partnered with T2 Solutions to move into the United Kingdom. And CentraStage, a European company, claims to be winning business with former Kaseya MSPs

ALISO VIEJO, Calif.--(BUSINESS WIRE)--Quest Software, Inc. (NASDAQ:QSFT) today announced that PacketTrap MSP, its managed services platform used by MSPs and IT service providers, was named “Best of Show” at the ASCII Success Summit DC 2010. This prestigious award is presented to the technology company that demonstrated the best overall showing at this esteemed IT channel event. The PacketTrap MSP “Best of Show” honor was voted on by solution provider attendees of the ASCII Success Summit DC 2010 in Fairfax, Virginia. “Quest Software recognizes the value and reach of the ASCII Community. This recent award is a testament to its unique approach in educating our members about the value and benefits of their technology in the managed services space” .“Quest Software recognizes the value and reach of the ASCII Community. This recent award is a testament to its unique approach in educating our members about the value and benefits of their technology in the managed services space,” said Jerry Koutavas, president of the ASCII Group, Inc. The six ASCII Success Summits are hosted by the ASCII Group, Inc., the oldest and largest group of independent information technology (IT) solution providers, integrators and value-added resellers (VARs). “The ‘Best of Show’ honor is a testament to the technology and programs we’ve constructed at the request of our channel partners,” said Mike Byrne, director of partner management, Quest Software. “With the recent introduction of PacketTrap MSP and our unique managed services development program (the MSP Acceleration Process), solution providers recognize the business and customer service benefits from partnering with Quest Software.” For more information on PacketTrap MSP and the Quest Software channel programs, please visit www.packettrap.com About The ASCII Group, Inc. (ASCII) The ASCII Group, Inc., headquartered in Bethesda, Maryland, was established in 1984, with additional offices in Canada, India, and the UK. ASCII is the largest paying community of independent computer resellers in the world with more than 2,000 members and system wide end-user sales of approximately $10.5 billion. ASCII provides technology tools, products and services to assist independent information technology resellers increase profits, reduce costs, and grow their respective businesses. The Company can be reached at (800) 394-2724, or at www.ascii.com. About Quest Software, Inc. Now more than ever, organizations need to work smart and improve efficiency. Quest Software creates and supports smart systems management products—helping our customers solve everyday IT challenges faster and easier. Our innovative solutions for application monitoring, database management, Windows management and virtualization management help customers achieve better results, faster. Visit www.quest.com for more information.