IS Your Organization an ISV? Decoding the Alphabet Soup of Tech Industry: MSP, VAR, SI, ISV & More

MSPs, VARs, SIs and ISVs all live in the tech industry but have very different goals and business models.

Understanding these differences helps companies choose the right partner for their technology needs whether it’s adding managed services, outsourcing IT management, buying custom solutions, integrating complex systems or implementing specialized software.

MSP: Managed Service Providers

Managed Service Providers (MSPs) are companies that manage a customer’s IT infrastructure and/or end-user systems remotely. Typically MSPs offer services such as network, application, infrastructure and security management under a subscription model. They focus on proactive, holistic IT management to ensure their clients’ technology runs smoothly and securely. This is great for small to medium sized businesses that don’t have the resources to have a full IT department.

VAR: Value-Added Resellers

Value-Added Resellers (VARs) are companies that add features or services of greater value to an existing product and then resell it (usually to end-users) as an integrated product or complete “turn-key” solution. The VAR business model is project-based and focuses on adding value to the products they sell. This can include additional hardware, software, consulting, system integration or implementation services all of which contribute to the added value for the customer.

The key to VARs is that they add a value proposition to a product before offering it to customers, they differentiate themselves from simple resellers and others by adding their unique touch. A big part of the VAR business model is the discovery and onboarding process which helps clients find and integrate new technology effectively.

SI: Systems Integrators

Systems Integrators (SIs) bring together various subsystems into one and ensure those subsystems work together. They play a big role in IT by combining different computing systems and software applications physically or functionally to act as one. This is great for companies looking to integrate new technology into their existing IT infrastructure without disrupting existing systems.

ISV: Independent Software Vendors

Independent Software Vendors (ISVs) are companies that create, market and sell software that runs on third party software and hardware platforms. ISVs work with computer hardware producers, operating systems and cloud platforms to offer customers their software solutions. They are different from hardware manufacturers and MSPs as their primary focus is on software development. The software they produce can be niche applications or broad solutions for many business needs, ultimately driving software sales.

VAR Trends and Opportunities

The VAR industry is always changing and to stay ahead of the game is key to success. Some of the current trends and opportunities in the VAR industry are:

• Cloud: The move to cloud has opened up new opportunities for VARs to offer cloud based solutions and services to their customers. By using cloud VARs can offer scalable, flexible and cost effective solutions that meet the diverse needs of businesses.

• Cybersecurity: With the rise of cyber attacks VARs can capitalize on the growing demand for cybersecurity solutions and services. Offering robust cybersecurity can help protect clients’ data and systems, business continuity and trust building.

• Artificial Intelligence and Machine Learning: VARs can use AI and ML to offer solutions and services that improve customer efficiency and productivity. These technologies can automate processes, provide predictive insights and enhance decision making.

• Internet of Things (IoT): The rise of IoT devices has opened up new opportunities for VARs to offer IoT based solutions and services. By integrating IoT VARs can help businesses optimize operations, asset management and customer experience.

• Managed Services: VARs can offer managed services to their customers, provide them with a proactive and preventive approach to IT management. This will ensure smooth operations and build long term relationships with clients through continuous support and maintenance.

The Future of VARs

The future of VARs looks good, the industry will continue to grow in the next few years. But VARs need to adapt and stay ahead of the game to be competitive. Some of the key difference and the trends that will shape the future of VARs are:

• Services Focus: VARs will need to focus more on services and solutions rather than just selling products. This will enable them to offer more comprehensive and customized solutions that meet the specific needs of their customers.

• Cloud: Cloud will continue to be a big part of the VAR industry and VARs need to be ready to offer cloud based solutions and services. By using cloud VARs can deliver scalable and flexible solutions that can adapt to the changing needs of businesses.

• Cybersecurity: Cybersecurity will be a big part of the VAR industry and VARs need to be ready to offer robust cybersecurity solutions and services. Protecting clients’ data and systems will be key to building trust and business continuity.

• Artificial Intelligence and Machine Learning: AI and ML will continue to be a big part of the VAR industry and VARs need to be ready to offer solutions and services that use these technologies. By using AI and ML VARs can help businesses optimize operations, decision making and growth.

Why Specialization in the VAR Industry

Specialization is getting more important in the VAR industry as customers are looking for VARs that have expertise marketing experience in specific areas. Some of the benefits are:

• Customer Satisfaction: Specialization allows VARs to offer customized solutions and services that meet the specific needs of their customers, resulting to higher customer satisfaction. By understanding and addressing unique requirements VARs can build stronger relationships with their customers.

• Efficiency: Specialization enables VARs to focus on a specific area, they can develop deeper expertise and become more efficient. This focused approach will result to more effective and streamlined processes and better outcome for the clients.

• Competitive Advantage: Specialization will give VARs a competitive advantage as they can offer unique solutions and services that differentiate them from others. By becoming an expert in a particular area VARs can differentiate themselves and attract more customers.

• Revenue: Specialization can result to increased revenue as VARs can offer high value solutions and services that command premium prices. By offering specialized solutions VARs can tap into niche markets and make more money.

By specializing in a specific area VARs can differentiate themselves from others, increase customer satisfaction enhanced sales and revenue. Some of the areas VARs can specialize in:

• Cloud: VARs can specialize in cloud, offering cloud based solutions and services to their customers. This specialization will help businesses move to the cloud and get the benefits of it.

• Cybersecurity: VARs can specialize in cybersecurity, offering robust cybersecurity solutions and services to their customers. This will protect clients’ data and systems from cyber threats and business continuity.

• Artificial Intelligence and Machine Learning: VARs can specialize in AI and ML, offering solutions and services that use these technologies. By using AI and ML VARs can help businesses optimize operations and growth.

• Managed Services: VARs can specialize in managed services, offering proactive and preventive IT management solutions to their customers. This will help businesses run smoothly and build long term relationship with clients through continuous support and maintenance.

Different but Connected

Each of these entities—MSP, VAR, SI and ISV—have their own role but they are not mutually exclusive and often intersect in the tech world. For example, an MSP may work with a VAR to offer a complete solution to a customer, or an ISV may develop an application that is integrated by a partner programs an SI into a bigger system. Suppliers also provide marketing resources to their partners so they can market their products.

Knowing these differences is important for businesses in the tech world whether they are looking for partners or service providers. Each of var companies and these types of companies has their own set of skills and services and choosing the right one is key to technological success and innovation.

Managed Service Provider (MSP) vs. Value-Added Reseller (VAR):

MSPs offer ongoing IT management and maintenance, they handle services like network monitoring and security on a subscription basis. They focus on continuous proactive IT support. VARs resell third-party software or hardware with customizations to create unique value added bundles. While MSPs prioritize steady management with long term support, VARs focus on project based revenue models with custom solutions. MSPs have predictable income through monthly recurring revenue agreements, whereas VARs operate on a project by project basis.

Managed Service Provider (MSP) vs. Systems Integrator (SI):

MSPs maintain and optimize IT infrastructure through continuous management and remote monitoring. They ensure steady IT performance. SIs design and implement one time IT projects, often integrating multiple technologies to create a system. While MSPs focus on continuous support, SIs are project based, providing integration services.

Value-Added Reseller (VAR) vs. Systems Integrator (SI):

Both VARs and SIs offer customized IT solutions but their approach is different. VARs buy software or hardware, add custom features or configurations and resell as a bundle. SIs implement and integrate complex systems, often involving multiple technologies to create a single solution together. VARs focus on customizing specific products, SIs handle complex project implementations. VARs often operate in consumer electronics, adding services and integrations to products.

Independent Software Vendor (ISV) vs. Value-Added Reseller (VAR):

ISVs develop and sell specialized software, often for specific business needs or industries. Their main focus is software innovation and feature development. VARs customize and bundle software and hardware from ISVs or other vendors, to customer requirements and adding value through integration and support services. ISVs are product focused, VARs provide complete solutions ready to use. Onboarding is key for VARs as it helps customers discover, customize and manage new technology.

Independent Software Vendor (ISV) vs. Systems Integrator (SI):

ISVs are focused on developing and marketing their company their own software, innovation and specialized features. SIs integrate multiple products and technologies into systems, manage projects that involve customizing and implementing software and hardware. ISVs are software focused, SIs deliver integrated solutions through project based work.

Managed Service Provider (MSP) vs. Independent Software Vendor (ISV):

MSPs offer continuous IT management services, they ensure the stability and performance of the business stability existing infrastructure. They provide support, monitoring and proactive maintenance. ISVs develop software that MSPs often deploy and manage as part of their services. MSPs maintain infrastructure, ISVs create software products.