Kaseya predicts rise of 'super' managed services companies

Kaseya predicts that 2018 will see the emergence of large MSPs as the managed services market continues to consolidate; other channel news from the week.

In the year ahead, channel partners can expect to see the rise of "super" managed services companies. That's according to IT services management vendor Kaseya, which recently revealed its 2018 industry predictions.

The growth of these large managed services entities are resulting from two market trends, said Miguel Lopez, senior vice president of MSPs at Kaseya. The first trend is that private equity firms are increasingly buying large MSPs and merging them. In some instances, private equity firms are combining their MSP acquisitions "in the same area or region," he said.

An example is the 2015 private equity-backed deal to merge managed services companies Pomeroy and Tolt Solutions. The MSPs were integrated in July 2016, resulting in a powerhouse with was expected to make $1 billion in revenue.

The second trend that Lopez pointed to is that many managed services companies are choosing to forge groups. These MSPs partner up to leverage their respective services and capabilities such as a helpdesk or network operations center, he said. As part of a 'super MSP' group, these firms can also expand their reaches and take advantage of other benefits that they might not get independently.

Lopez said pressures in the managed services industry are driving the rise of the super MSPs. "Competition ... has gotten much harder. Pricing is coming into play a lot. A lot of MSPs are competing against each other from a pricing standpoint. ... So they are trying to figure out how to grow, expand, become a larger company and keep ... margins under control," he said.

He added that customers are now asking for services that they weren't four or five years ago, such as security services, and MSPs are trying to meet the demands.

While the rise of super MSPs might seem threatening to some channel firms, Lopez noted that a market segment of small-sized businesses will remain an opportunity. As managed services companies grow in services and sophistication, they tend to move upstream in terms of their customer bases, and, as a result, might not be the right MSPs for their small clients any longer. This creates a gap that smaller managed services companies can fill.

SlashNext taps channel for sales expansion

SlashNext, an internet security solutions vendor, is looking to the channel to grow sales, signing a deal with corporate reseller SHI International Corp.

Based in Pleasanton, Calif., SlashNext provides a security appliance that plugs into a network switch's SPAN port. The product, the SlashNext Internet Access Protection System, focuses on social engineering and phishing, malware, exploits and callback attacks, according to the company.

Seamus Meagher, vice president of business development/channels at SlashNext, said SHI, based in Somerset, N.J., is the largest partner company the company has signed thus far. The company works with 10 other channel partners, mostly regional value-added resellers (VARs).

"We thought early on the VAR channel was very important to us," Meagher said. The company was founded in 2014 and it signed its first reseller, Integrated Archive Systems, a solution integrator in Palo Alto, Calif, a couple of years ago.

For SlashNext, channel partners provide more "feet on the street," extending the company's sales reach, Meagher said. SHI, for example, brought SlashNext into one of the reseller's customers, American Showa, a Sunbury, Ohio, company that makes suspension systems for motorcycles and shock absorbers, power steering systems, and power-train pumps for cars.

Meagher said the SlashNext product offers channel partners something to sell that is complementary to what they are already providing in the local-area network environment. He said resellers that have already sold endpoint security offerings and next-generation firewalls to customers can go back to those accounts with a product that integrates into the current LAN and "helps the firewall do its job better."

SlashNext plans to court managed security services providers in addition to resellers. The company said it is committed to 100% channel fulfillment.

In other cybersecurity channel program news, SecurityFirst added three technology partners to its SecurityFirst Partner Program: CMA, Sengex and First Nation Corporation. Those firms will resell SecurityFirst's DataKeep offering.

Other news

  • Accenture has released a report that explores the impact of blockchain technology on business operations. "In the operations space, we are seeing the most momentum in supply chain, with finance [and] accounting and sourcing beginning the exploration in earnest this year," an Accenture spokesman said. Across those sectors, the company said it expects to see more clients move from prototypes to live pilots in 2018.
  • In another move this week, Accenture said it has completed a cloud transformation project with United Way of Metropolitan Dallas. Accenture worked on that project with Salesforce and certified Salesforce partner Configero.
  • Pulseway, a remote monitoring and management software provider, said it has signed more than 700 new customers in 2017 with its premium Pulseway Team plan. The company also cited year-over-year revenue growth of 108%. Pulseway's RMM tool debuted in 2016.
  • Onica, an Amazon Web Services (AWS) Premier Consulting and Managed Services partner, expanded its AWS expertise and customer base through a pair of acquisitions. The company purchased Sturdy Networks, a software development, DevOps and managed services provider, and NetBrains, a professional services organization. The buyouts allow Onica to have more than 250 AWS certifications and nine competencies, according to the company.
  • Masergy, a provider of hybrid networking and managed security, launched a service that aims to protect AWS, Microsoft Azure and Google cloud environments, as well as private clouds. The company's Managed Cloud Workload Protection offering is part of Masergy's Managed Detection and Response platform.
  • Business process software company Agiloft added Koho Software to its roster of resellers. Koho provides IT service management and IT asset management products and professional services offerings.
  • NYI, a hybrid infrastructure solutions provider, inked a partnership with Avant Communications, a channel-sales enablement firm.
  • Faction, a multi-cloud MSP in Denver, Colo., appointed Dan Grote as its chief financial officer.

Market Share is a news roundup published every Friday.

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