Memo From LabTech CEO: All Corporations Should Outsource IT

LabTech Software CEO Matt Nachtrab is set to challenge managed services providers (MSPs) during his Automation Nation keynote this morning in Orlando, Fla.  "As an industry we need to drive a clear value proposition that describes exactly why IT has to be outsourced. If MSPs get incredibly efficient it won't make sense for businesses to keep internal IT departments." That's right: Nachtrab wants to make a business case for all corporations to outsource IT to MSPs. But that's not all.

During a one-hour interview last night in Orlando, Nachtrab described:

  • LabTech's long-term business strategy;
  • how the broader LabTech team has extensive experience building and running MSP businesses -- just like LabTech's partners;
  • recent learnings from the LabTech 2012 launch;
  • initial milestones from the LabTech Cloud launch;
  • integration efforts across the MSP industry and within the ConnectWise Capital businesses (LabTech, ConnectWise, Quosal); and
  • his continued efforts to drive remote monitoring and management (RMM)
First some background: ConnectWise, the professional services automation (PSA) software provider, used its investment arm to pump money into LabTech about two years ago. During 2010 and 2011, LabTech added roughly 160 partners per month. That figure slowed a bit in late 2011 but has been accelerating again amid the launch of LabTech 2012 plus a cloud edition. Also of note: 45 percent of partners are new to RMM, Nachtrab said, with 55 percent switching from other platforms.

Today's Rally Cry

I don't want to give too much of the keynote away, but it sounds like Nachtrab will paint a picture that shows why MSPs can -- and should -- replace the vast majority of corporate IT departments. Nachtrab also has some strong feelings about channel conflict. When he was running an MSP, Nachtrab says he suffered a channel conflict setback with Dell that he never forgot. On stage today, he might also describe run-ins MSPs have had competing with at least one RMM vendor.

The key takeaway: Nachtrab wants the industry to know that the LabTech team includes numerous former MSPs, and the entire team will remain focused entirely on partners -- with no chance of direct sales ever emerging.

For MSPs that want to displace corporate IT, Nachtrab recommends:
  • Find a specific focus or specialty because IT departments can't specialize against you.
  • Align your sales, marketing, PSA, RMM and business processes behind that specialty.
  • Get your customers on standard architectures before you deliver your services.
  • "Collectively the MSP community can align accordingly and cover all segments of the entire IT market."

LabTech 2012 Release

LabTech earlier this year launched its LabTech 2012 software release. Of LabTech's 2600 partners, the upgrade rate was 2x to 3x times the rate of previous releases, he said.

Nachtrab concedes that LabTech has experienced some challenges with the roll out, but LabTech has been working through the issues.

For instance, an initiative called LabTech Ignite is wildly popular with new MSPs that want automated alerts that they don't have to set up on their own. But that same Ignite feature has overwhelmed some established MSPs that received hundreds of alerts they were not expecting.

"Before Ignite there were no out-of-the-box alarms," said Nachtrab. "MSPs had to build all that stuff. Post Ignite we added like 400 alerts and automated scripts. It delivered overwhelming visibility."

But that overwhelming visibility overwhelmed some MSP dashboards. To get the situation under control, LabTech has delivered "release changes" through its online marketplace each Wednesday. "That allows people to tone down [Ignite's initial settings]."

Convergence Meetings

Looking ahead, Nachtrab says LabTech remains committed to integrating with third-party software. But he's also working closely with ConnectWise CEO Arnie Bellini and Quosal CEO Kent McNall to coordinate product roadmaps across the company.

The idea is to give MSPs a complete equipment lifecycle management strategy:
  • Using LabTech to discover where customers need IT upgrades
  • Leveraging Quosal to prepare product and project quotes for those upgrades.
  • Jumping to ConnectWise to manage IT projects and services tied to those upgrades.
  • Then jumping back to LabTech to begin the lifecycle again.
"Kent, Arnie and I are allowing the convergence story to dominate our roadmap discussions," he said.

LabTech In 2013 and Beyond

A year from now, Nachtrab predicts, "the amount of integration with PSA end-to-end will completely differentiate us. My goal is to make it a no-brainer for MSPs to own LabTech because we have completely nailed integration and agreement management and lifecycle management."

Of course, LabTech faces numerous rivals. And many of them are enjoying double-digit growth. Names like Continuum, Kaseya, N-able, Level Platforms and GFI Software (among others) come to mind. Those rivals, LabTech's own goals and MSP demands should keep Nachtrab plenty busy.
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