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Cloud, IT security continue to reshape MSP business model

Recent channel research suggests MSPs increasingly prioritize cloud computing and IT security as part of their core business models; other IT channel news.

Managed services providers continue to push decisively into cloud, security services and recurring revenue.

Datto Holding Corp.'s annual Global State of the MSP report underscores prominent trends related to the MSP business model. The Norwalk, Conn., company, which provides cloud-based software and security offerings that MSPs sell to clients, polled more than 1,800 MSPs worldwide.

The survey reveals that 97% of MSPs provide cloud-based infrastructure design and management services, a statistic that demonstrates the cloud's rapid ascendancy among service providers. By comparison, a 2016 TechTarget channel partner survey revealed that a bit more than half of the respondents didn't offer cloud services.

MSP's core constituency, SMBs, appear to play a pivotal role in influencing services providers' cloud directions. Nearly every MSP client -- 99% -- uses the cloud in some capacity, with 50% of customers shifting more than half of their workloads to the cloud, according to the Datto study. 

Other studies have pointed to the centrality of cloud computing to the channel partner business. Channel companies responding to an Accenture survey in April identified Microsoft, Google Cloud and AWS as their primary three partners.

The Datto survey, meanwhile, also shows the importance of cybersecurity to the MSP business model. Ninety-nine percent of MSPs said they offer managed security services, a tally that compares with 75% in Datto's 2020 report. Some MSPs in recent years have been on the fence about launching a cybersecurity consulting practice, but attacks on SMBs have drawn them into the business.

The Datto report also reflects MSPs' continued focus on recurring revenue. Sixty-seven percent of respondents' total revenue comes from recurring services. And, in a departure from previous years, competition unseated sales and marketing as the top MSP challenge. Thirty-four percent of MSPs cite competition as their biggest headache, with revenue growth and profitability ranking second and third, respectively.

ConnectWise debuts reconciliation, MSP metrics offerings

ConnectWise unveiled a cloud billing reconciliation feature and a free version of its BrightGauge business intelligence product.

The Tampa, Fla., company, which provides business automation software for MSPs, discussed the offerings and shed light on future developments at its virtual IT Nation Explore event, running through August 12.

ConnectWise's reconciliation feature addresses a time-consuming and error-prone cloud billing process, said Sam Demulling, vice president of product management at ConnectWise. The task involves a lot of manual steps and there's not a lot of automation available today, he noted.

Many vendors and distributors provide spreadsheets containing data, such as customer name, product number and quantity, Demulling said. MSPs must reconcile that data with the data they maintain in ConnectWise Manage, a professional services automation product. ConnectWise Manage Billing Reconciliation, however, provides automatic reconciliation of vendor bills, mapping vendor data to the information maintained in ConnectWise.

ConnectWise Manage Billing Reconciliation will be part of Manage 2021.2, which is currently expected to arrive in August. "This is not something you have to buy," Demulling told attendees, referring to the reconciliation feature. "It's just going to be a part of the finance menu."

In addition, MSPs will soon have access to BrightGauge Essentials, which ConnectWise describes as a lightweight version of its BI offering. BrightGauge Essentials provides dashboards and reports with financial and operational metrics, the company said. The product's preselected metrics are geared to "partners just starting to use data to help drive their business," said Brooke Candelore, product manager at ConnectWise.

ConnectWise is piloting BrightGauge Essentials with a small group of partners, she said. The offering will be free for partners using ConnectWise Manage and will be available in the coming weeks, according to the company.

Jeff BishopJeff Bishop

Other IT Nation Explore developments include:

  • ConnectWise has entered a technology partnership with SentinelOne, an autonomous cybersecurity platform provider. The company's SentinelOne Control and Complete offerings will be available as standalone products in ConnectWise's security suite.
  • Jeff Bishop, chief product officer at ConnectWise, said the company would start to reveal "bits and pieces" of ConnectWise Fusion, a platform that will underpin the company's 23 products. He said the company would provide additional details on the platform at its IT Nation Connect event, scheduled for Nov. 10-12.
  • ConnectWise plans to integrate additional backup vendors into its ConnectWise Recover Complete BDR product. The offering launched with Acronis Cyber Protect integration. Dave LeClair, senior director of product management at ConnectWise, said he anticipates Veeam, StorageCraft, Axcient and Storage Guardian will be among the vendors integrated into the BDR offering.

Other news

  • MSP software vendor Kaseya has obtained a ransomware decryptor and has begun working with its customers. A ransomware attack earlier this month compromised dozens of Kaseya's service provider customers and up to 1,500 MSP clients. The attack raised vendor accountability questions within the MSP community.
  • Accenture continued its acquisition spree, purchasing Workforce Insight, a workforce optimization consultancy based in Denver. Workforce Insight provides human capital management advisory and technology services. The company partners with UKG, Workforce Software and Workday. Its 300 professionals will join Accenture's Workforce Management practice. Accenture's acquisitions fuel the company's cloud strategy.
  • Upstack, a web platform that sells cloud services through sales agents, acquired DataCenterAndColocation.com, a consulting firm advising midmarket enterprises on data center and colocation services. Upstack, based in New York, has purchased several cloud partners in 2021, following a $50 million private equity investment from Berkshire Partners. Cloud services firms have been attracting investor dollars this year.
  • Pax8, a cloud distributor based in Denver, inked a pact with Qunifi, offering MSPs access to Call2Teams. The Qunifi product connects business phone systems and SIP trunk providers to Microsoft Teams.
  • Corel, a software vendor based in Ottawa, updated its partner program with partner portal access, sales training, deal registration, and presales, technical and customer support.
  • Addigy, an Apple device management vendor, is providing Splashtop as its remote support offering included in Addigy subscriptions. The bundling arrangement lets MSPs use Splashtop remote access from within Addigy to manage Apple devices, according to Addigy.

Executive appointments

  • High Wire Networks Inc. appointed David Hand as vice president of global systems integrators, a move that aligns with the company's expansion of its technology services channel to support integrators. He was previously global vice president of GSIs at Nortel and an executive at CSC (now DXC Technology).

Next Steps

Cybersecurity consulting, MSSPs in channel spotlight

Cyber-risk rating firm Black Kite ups channel focus

AWS MSSP competency program opens up to partners

Dig Deeper on MSP business model transformation

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