MSPs that get ahead of security skills shortages and security complexity and cost challenges will achieve above average growth, more than 500 attendees at the ConnectWise IT Nation Connect APAC partner-fest on the Gold Coast heard last week.
ConnectWise CEO Jason Magee kicked off the event, held for the second time in Australia, by thanking attendees for their success – he estimated that MSPs in Australia and New Zealand had grown on average by 16 per cent year-on-year.
He talked-up the prospect of MSPs continuing that trajectory, fuelled by more increases in spending on technology by small businesses.
ConnectWise continued to advocate security as a path to growth. Magee acknowledged challenges created by shortages of cyber security skills, and by cyber security complexities and costs: “Cyber is too complex for your team to sell implement, support, protect. It’s way too complex for customers to even understand or comprehend the impact if something were to happen.“
“Then you throw in affordability – it’s too expensive. An entry level cyber analyst, for example, you’re looking at, here in Australian and New Zealand, the average rate in Australian dollars is around $100,000 to $150,000 a year.”
But he also framed these issues as opportunities. “For MSPs that get ahead of it, it’s opportunity – you’ll grow above average compared to your peers. But not only that, think about what that means for valuations of your company,” he urged attendees on the Gold Coast.
“Huge consolidation opportunity”
There was M&A news early at last week's Gold Coast event, with news that Melbourne-based payment automation business Wise-Sync has been snapped up by ConnectWise. The market remains ripe for more buyouts, according to some.
One attendee at last week’s event said they are looking for acquisition targets and that they see Australia’s fragmented MSP landscape as “a huge consolidation opportunity” in the next 12 months. In their view, private equity firms and banks’ interest in funding the sector has given MSPs the ability to “stretch a bit further and achieve what they want from M&A.”
Four MSP representatives with first hand M&A experience took to the stage to speak about what they look for in acquisition targets - quality executive management was high on one speaker’s wish list.
A diverse range of organisations, including telecommunication providers and others in “commoditised industries”, are looking to buy MSPs, pointed out a representative of a recently acquired MSP.
Cost cutting
"In recessions, the solutions providers who do best (get hurt least and accelerate out the fastest) cut total costs the most and soonest and get to a positive bottom line,” Paul Dippell, VP, Ecosystem Evangelism Service Leadership, a ConnectWise Company, told attendees on the Gold Coast last week.
“Those who do the worst are don't cut costs much or at all and instead count on cash to cover losses and revenue growth to restore to profitability".
"It's one of those paradoxes of business management, but cutting harder sooner ends up hurting less and succeeding more. It takes a lot of management maturity," Dippell said.
This is because desired revenue growth often doesn’t happen, Dippell argued. Then multiple sequential cuts are needed, and that's hard to do. Fix the profit model first, he urged the audience. He backed this up with analysis of revenue growth and profitability before and after initial Covid lockdowns.
Dippell also laid out a financial early warning score, and spoke about how to design offers for reducing fees and deferred maintenance offers.
MSP staffing
There were at least a couple of companies at the Gold Coast event last week pushing outsourced staffing services at MSPs – including one that evolved from an MSP's own outsourcing efforts to become a business in its own right, with hundreds of staff in the Philippines.
Skills remains a key selling point for ConnectWise, which pointed last week to its expert services, which include helpdesk, NOC and SOC services.
ConnectWise also plans to bring a digital apprenticeship, launched earlier this year with CompTIA in the US, to other locations "such as" Australia and New Zealand.
In the US, the program aims to find “rank-and-file cyber professionals”, which are certified by CompTIA and paired with IT businesses that put their hand up for apprentices via the ConnectWise partner community.
The US program was launched with a focus on training, certification and employment opportunities for five roles: tech support specialist, network support specialist, cybersecurity support technician, tech project coordinator and data analyst.
Machine learning buzz
The MSP automation story continues, with some of the vendors attracting attention on the Gold Coast last week for bringing machine learning to MSPs. They include Pia, which offers an “intelligent automation-as-a-service” platform that integrates with ITSM tools to speed up ticket completions. Pia is the second company launched by Wollongong MSP Virtual IT Group, headed by Managing Director Christian Pacheco.
Another Australian business at last week’s event offering machine-learning-driven automation was Tribu. Also created by an MSP, Tribu integrates PSA functions into Microsoft Teams with the aim of “simplifying, predicting and resolving ticket interactions”. The company boasts collaborative research teams across universities in Australia.
ConnectWise also talked up automation and its Asio platform, which is unveiled in Orlando in late 2021. Asio will be the platform that all ConnectWise products will be built with or integrated with in the “near future”.
ConnectWise is also “reimagining” how its user experience works to provide a workflow engine covering a range of uses, from technology work to billing. It is also “reconceptualising” project management in Asio.
Cyber 'Hail Marys'
Educating customers about cybersecurity risks tremains a slog. Part of the problem can be fundamental approaches to selling, attendees on the Gold Coast heard last week.
Peter Melby, CRO of US business New Charter Technologies, reiterated the oft-repeated advice to have a business conversation, not a conversation about ones and zeros.
He urged MSPs not to expect to sell in single conversation, likening this to a “hail mary” football play. “I think it’s what a lot of companies do sometimes. They run out of time; they have to get in the end zone in one play. It almost never works,” he commented.
Melby laid out a more productive way to have a conversation with customers about how they see security issues, and focussing on risk, before getting MSPs to think about levers and how to discuss costs.
While more than 90 percent of business leaders know they need more security, advanced security adoption for MSP clients hovers below 20 percent, according to Melby.
William Maher attended ConnectWise IT Nation Connect APAC as a guest of ConnectWise.
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