Software CEOs Respond to Channel Partner Conflict Rumors

Are some managed services providers (MSPs) poised to suffer from software vendor channel conflicts? Or, are recent channel conflict rumors based on fear, uncertainty and doubt (FUD)? Either way, MSP software industry executives are striving to assure partners they remain committed to the channel. Two prime examples: Kaseya CEO Gerald Blackie has sent MSPmentor an unsolicited email describing Kaseya’s partner strategy. Separately, Vembu CEO Sekar Vembu has written a lengthy blog entry addressing alleged partner concerns. Here’s a closer look at both moves.

First, the situation with Kaseya. MSPmentor has been keeping an eye on Kaseya’s new Small/Medium Enterprise Edition software. Upon SMEE’s launch, three MSPs asked MSPmentor if Kaseya will use SMEE to bypass MSPs in the small business market. In response, Kaseya Executive VP Jim Alves said the company remains committed to partners. And MSPmentor hasn’t confirmed any recent cases of channel conflict involving Kaseya.

I’ve Got Mail

Still, Kaseya CEO Gerald Blackie seems concerned by all the chatter. On July 20, he sent me an unsolicited email. Here is the entire message, with two link inserts (from me) to help readers follow the back-story. Blackie wrote:

“I read your post [this one] this morning with interest and note that you did refer the reader to another article [here] setting forth our position on the channel. Thanks for that.

However, I thought that I should weigh in, too. I have heard from the rumor mill too many times that we are bypassing the channel with SMEE and that notion is being supported, if not encouraged, by some vendors with a clear vested interest in sowing FUD in the channel. let me reiterate our position on the matter:

Our channel is sacrosanct. We do not compete and will not compete with it.  We refer all under 100 employee opportunities to partners. We work closely with partners in transactions above that line, supporting them in their efforts to sell managed services or the product. SMEE is available as part of our channel program for those channel partners who have a need to sell to a customer wanting an internal product for their own use. Kaseya’s direct sales teams have access to it for larger corporate deals where there are departmental, subsidiary and similar needs and the SMEE fits as an adjunct to that corporate business as a whole. Even our Cloud offerings are channel focused. We support and endorse our channel as part of our overall corporate growth strategy.

You can print any, all or none of this if you wish.

Let me know if you need any further clarification.

Best,

Gerald

Reality Check

Without naming names, Blackie’s second paragraph suggests some of Kaseya’s rivals are spreading fear, uncertainty and doubt (FUD) about Kaseya’s channel strategy. To reiterate: We’re listening closely to MSPmentor’s readers. If we hear and confirm cases where a vendor’s direct sales team takes business from channel partners we’ll be sure to report it. So far, no MSPs have gone on-record with us about recent channel conflict cases.

Either way, Kaseya has a challenge on its hands: Kaseya has long-maintained a blended sales strategy, leaving the sub-100 seat market to MSPs and focusing its direct sales force on the 100-seat and above market. There’s the risk of a rogue salesperson not abiding by Kaseya’s rules of engagement… though I don’t have any documented cases to cite.

In contrast, many other MSP software providers — such as Level Platforms, N-able and companies within the ConnectWise Capital ecosystem — are pure channel. In theory, there’s no risk of rogue employees at those companies rocking the boat with partners.

Another Day, Another CEO Memo

Meanwhile, Vembu, the storage and online backup company, is responding to similar channel conflict concerns.

Apparently, some partners are worried Vembu plans to start selling its backup software directly to customers, potentially bypassing VARs and managed services providers. Responding to the speculation, Vembu CEO Sekar Vembu has written a blog outlining his company’s channel strategy.

Throwing SaaS and Cloud Into the Discussion

No doubt, more channel debates will likely emerge as more software companies launch SaaS and cloud strategies. From giants like Microsoft to MSP-centric players like Kaseya, dozens of software companies are balancing direct sales strategies with channel strategies.

Still, several SaaS-centric companies are taking steps to eliminate the risk of channel conflicts. A prime example involves online backup specialist Intronis, which switched from a direct sales model to a pure channel sales model (for new engagements) under former channel chief Eric Webster. Intronis CEO Sam Gutmann says the company will maintain that channel-centric approach under new channel chief Ted Roller.

Bottom Line

I’m not suggesting that all technology companies have to be “pure” channel. And when it comes to Kaseya and Vembu, I haven’t heard from partners who say they’ve lost business to the companies’ direct sales forces.

If MSPmentor hears otherwise, we’ll be sure to report it.

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