On Wednesday, Kaseya CEO Fred Voccola took the stage to deliver his opening keynote at the annual Kaseya Connect conference, held this week in Las Vegas. In typical Voccola style, the CEO spoke frankly to attendees, admitting mistakes Kaseya has made, communicating lessons learned and outlining the trends that are driving the company’s IT Complete philosophy.
“Let's look at the definition of an MSP,” said Voccola. “MSPs are traditional, managed service providers that are growing the business, and also, a select group of internal MSP, or internal IT folks that function like an MSP. They behave very similar[ly]. IT is the business in both cases, and from Kaseya's perspective, MSP is our business.”
Here are the top 11 highlights of the keynote and Voccola’s most interesting quotes and tidbits.
1. The Unitrends Merger
Voccola opened the speech by addressing a common worry among Kaseya partners since its merger with backup and disaster recovery provider Unitrends. While Unitrends sells 100 percent through the channel, Kaseya has customers in the enterprise IT space, and some of its managed-service-provider (MSP) partners have expressed concerns that the merger positions Kaseya to encroach on their territory.
“I saw some interesting articles in all the different industry blogs and things that cover our space and there were a couple folks saying Kaseya is now going to be competing with our MSPs. Definitively, that's not the case. I don't know how many people in this room derive substantial business from the likes of Citibank, Caterpillar, Walmart, Deutsche Bank, companies like that …They are enterprise class capability. We will not be competing with our MSPs.”
Voccola went on to say that every Kaseya partner has the opportunity to become a Unitrends reseller, helping them move their business upstream.
2. The SMB Opportunity
Kaseya badly wants its partners to corner the growing small-and-midsize business (SMB) market, which presents greenfields for MSPs as the need for security, analytics and automation trickles down from the enterprise to the SMB. For partners that for some reason remain unconvinced of the opportunity, Voccola shared some powerful statistics:
- Forty percent of all IT spend today comes from the SMB world. The market is huge for MSPs looking to build a growth strategy there.
- SMB IT spend is up 10 percent from 2016, and half of those investments are made to grow the business. Takeaway? The opportunity isn’t going anywhere anytime soon.
- From about 1992 to 2016, the growth rate of IT infrastructure spend by Fortune 5000 companies outgrew GDP growth by 400 percent. Within a few years, says Voccola, IT spend by SMBs will outpace GDP at a rate of 600 percent.
“Why do we care about SMBs so much? Because everybody in here is either an SMB or we're an MSP that serves SMBs. Kaseya spends so much damn time focusing on understanding the SMB market so we can be a step or two ahead of what they want, so we can build the solutions to provide for you so you can deliver what those needs are, and together we need to make sure we understand all of these drivers.”
3. Endpoint Management
“This whole [SMB] trend, it started with endpoint management. I’m not saying that because I’m the CEO of the leading endpoint-management company in the world, Kaseya, but it’s a fact — it happens to be a nice fact.”
Voccola emphasized the demand for endpoint and network security, be it cloud, mobile, servers or devices, saying there’s 60 percent year-over-year growth in endpoint-management spend. It’s a starting point for any company just moving into managed services: easy for them to understand the need, but not easy enough to handle by themselves. As these business owners are exposed to managed services in other areas such as backup and disaster recovery (BDR) and compliance, they’ll gravitate toward MSPs that can roll these services into the basic endpoint-management solution they’ve already got.
Moral of the story? Endpoints are a great entry point, but they won’t be enough to generate the stickiness MSPs need in such a competitive market. Partners must expand their managed-services market to meet these demands and offer comprehensive suites.
“Why did Coca-Cola become so dominant? Not because of the distribution model, but because they had every single product to put on the shelf. It’s the same idea.”
Which brings us to ...
4. IT Complete
“The quickest way to get from A to B is a straight line. Sounds easy, but that’s not the world we live in. Nothing valuable is ever easy. Hell, technology’s not easy … we believe we have a solution for that as a company. It’s our entire company strategy. It’s a unified growth platform. You all know what it’s called: IT Complete.”
Indeed, Kaseya has been hammering home its IT Complete message for the last couple of years, tying every product release, partnership and merger or acquisition to its goal of being able to offer every piece of MSP software. Voccola says Kaseya must have three components in mind as it develops IT Complete. The platform must be:
- Comprehensive: This is the pillar that Kaseya drives home the most because partners clamor for that “single pane of glass.” IT Complete, says Voccola, must have an integrated suite of managed services with every revenue-generating solution available to MSPs. “If it’s not integrated … your technician efficiency goes through the toilet. If it’s not comprehensive, your competitor will get into your account at some point in time.”
- Collaborative: “I wish this was the case, but I don’t think everyone here is going to use every single Kaseya product. Feel free, but I don’t think that’s going to happen.” Despite competitors asserting that Kaseya’s platforms are closed off and don’t integrate with other vendors’ PSA, RMM or BDR, Voccola adamantly states one of Kaseya’s primary goals is to allow its MSPs to integrate solutions from competitors such as ConnectWise, Autotask and SolarWinds, as well as non-competitors like IT Glue and RapidFire Tools.
- Contextual: There is no “one size fits all” when you’re digging around in your customers’ most business-critical documents and applications, and no matter how much of a “trusted adviser” you are to your clients, there are some things they’re not going to want you to see. If techs have to spend time pulling up these parameters, printing them out and referencing them as they service customers, they’re going to be wasting a lot of time. At this point, we saw a screenshot of a warning to a help-desk tech that’s displayed right within the platform:
This is the CEO’s machine. Do not reboot without explicit approval from Joe Smith. DO NOT USE LIVE CHAT WITH HIM. Do not look in the folder named “Private Stuff.” He is adamant about it and will fire us if he knows we looked. And DEFINITELY DO NOT talk about football or the Super Bowl. He’s a huge Patriots fan and will go on a tirade about it.
Voccola says almost 60 percent of revenue that MSPs generate today is directly derived from managing endpoints and from their remote monitoring and management (RMM) capabilities. While the margins from these services are shrinking slightly, it’s still a growth business for the partner community.
“Remember when people were saying endpoint was dying and they were gonna go away? Anybody remember that? … The number of endpoint devices per person in SMBs has increased by about 30 percent since 2017.”
Most of the mission-critical functions SMBs are trying to address are fully dependent on the network. While the cloud has made the definition of “endpoint” a little fuzzy, Voccola says in the eyes of the customer, router switches, firewalls and network devices are all considered endpoints. But price pressure from companies operating within strict budgetary restraints are shrinking these margins.
6. The Talent Shortage
Several times this week, Voccola reminded attendees that the unemployment rate for the tech sector is essentially zero. Because of this, the cost of talent is increasing over inflation by about 4 percent. This is why partners are getting louder and louder about the need for increased operational efficiency and the need to supplement their existing staff with tools that will allow them to grow without hiring more.
“Automation is everything. Technician efficiency is everything.”
This is the driver behind Kaseya’s next generation RMM product. Beyond RMM, Voccola says, has some serious architectural changes. “It’s not just putting lipstick on the same product and adding one or two new features.”
In order to provide techs one column interface so they don’t need to learn multiple technologies, Kaseya has sunk $10 million and two years into an initiative to embed unified monitoring solution Traverse natively into VSA, its RMM product, and is rolling it out in phases. While the first phase doesn’t offer all the functionality Kaseya plans to implement in the solution, Voccola says that it will eliminate the need for partners to buy multiple products because Traverse will be embedded natively into VSA. Good news for partners: Kaseya is pricing the solution as an upgrade.
“There’s no reason why a network device should be charged four times as much as a traditional endpoint. The market believes an endpoint is an endpoint, and our business model should support that as well.”
“Every SMB is freaked out about security. My mother’s freaked out by it. I’m freaked out by it.” This translates to security solutions providing the highest margin of any managed service offered by MSPs. Everyone knows they need security, but they don’t know much beyond that.
“The difference between what a small-to-midsize business owner knows about security and what this room knows is about the difference between what I know about landing a person on the moon and what the people at NASA do.”
Voccola candidly admitted that the first take of Kaseya’s layered security model that integrated a third-party patching model was a bit of a dud, saying the company didn’t properly pressure test it for large scale environments. Whoops.
“We want to apologize for not doing our job very well, and we believe we fixed it."
Data lags only behind talent in what’s most important for business owners to protect, says Voccola, and backup and disaster recovery (BDR) applies to business continuity, compliance, asset protection and customer retention.
The key to providing a popular BDR solution that partners will integrate into their offerings is making it easy to use in terms of business — such as licenses, price points and how it’s built for scale. This need is what drove Kaseya’s OEM with Unitrends, whose UI was built directly into VSA. The offering leverages a proprietary technology called Backup IQ that uses an intelligent big-data engine, from hundreds of terabytes worth of metadata from a decade’s worth of backups. The result, Voccola says, is more accurate false-positive alerts.
The company’s two backup solutions serve very different functions. Kaseya Cloud Backup (KCB) provides relatively simple file-based backups, while Kaseya Unified Backup (KUB) utilizes an appliance-based architecture.
9. Office 365
It wasn’t all that long ago that resellers could make thousands of dollars a year reselling Microsoft Office Suite. Then the cloud and Office 365 came along, and customers discovered they didn’t need MSPs to access Word or Outlook. Those margins disappeared almost overnight.
But there are supplementary services clients need that help to offset that loss of revenue. Gartner says that the majority of Office 365 customers will use external, non-Microsoft backups within the next three years. Why would you use the same service to backup the information it already manages, he asks?
Kaseya’s answer is a partnership with Spanning, a SaaS backup provider. The company has spent about five months building an integration into VSA that offers O365 backups. Because it’s an “install and forget” solution, it’s a high-margin product.
Voccola talks a lot about his dentist when he’s explaining the SMB opportunity, who he says contracts with an accounting firm to make sure the business is HIPAA-compliant because “my MSP doesn’t even know how to spell [HIPAA].”
With all the talk about GDPR, compliance is a strategic imperative today for businesses. Two years ago, Voccola says, compliance wasn’t a big concern for SMBs. But today they’re turning to their IT providers for security-grade endcoding compliance and reporting.
The Kaseya solution is twofold. First, it offers a compliance package within its automation exchange that gives MSPs another monitoring and reporting revenue opportunity. It’s also partnered with Rapid Fire Tools, which offers compliance management, another solution that’s being fully integrated into VSA and will be available within the next couple of weeks.
11. PSA Migration
“People aren’t scared of migrating [PSA]; they’re scared of the migration, of what goes into that process.” And indeed the prospect of migrating professional service automation (PSA) is hugely daunting, especially for smaller partners without a ton of extra resources. PSA migration isn’t a simple process, and it can be easy to mess up — something Voccola says Kaseya found out firsthand.
“We learned the hard way. We screwed up the migration … it was not a pleasant experience. We’re past that point. We know how to do this. We’ve learned something.”
IT documentation plays into partners’ need for automation, and Kaseya has partnered with documentation solution provider IT Glue to provide it. Automation is key, both to manage documentation requirements and minimize the headaches that come with technician turnover.
MSP-software providers such as Kaseya only make money when their partners make money, a point Voccola hammered home during his keynote. With all of the new products, partnerships and integrations it announced this week, it should be easier for everyone involved to go gangbusters — or at least find new revenue streams to fuel growth.