By samdizzy

Autotask, which develops SaaS applications that help VARs and MSPs to run their businesses, has named Mark Cattini as CEO. Autotask Founder and former CEO Bob Godgart shifts to the Chief Visionary Officer post. The move comes as Autotask tries to evolve from a $20 million (or so) SaaS software provider to a much larger company with multiple channel-centric SaaS solutions. Can Cattini and Godgart deliver big SaaS growth? Here are some clues.

For readers who are extremely familiar with the managed services software market, MSPmentor (TalkinCloud’ sister site), has a detailed report about the past, present and future of Autotask and rivals like ConnectWise and Tigerpaw Software in the MSP space.

Let’s Talk Cloud

But there’s also a cloud and SaaS story to be shared. It goes something like this: When Autotask launched around 2001, SaaS was largely unproven. But these days, reliable cloud platforms are widely available for upstarts to quickly launch home-grown SaaS applications. The real challenge — for SaaS companies old and new — involves attracting and retaining customers, and generating hockey-stick growth.

Autotask has been in growth mode. In an interview earlier this year with a local newspaper, Autotask Founder Bob Godgart predicted the company would grow about 30 percent in 2010, reaching about $20 million in annual revenues. (Godgart offers more thoughts in the FastChat Video, left).

Autotask’s growth has been impressive. But here’s the multi-million-dollar question: Is it possible for a SaaS company (focused entirely on VARs and MSPs as end-customers) to march toward $50 million or even $100 million in annual revenues?

That’s where new CEO Mark Cattini enters the picture (FastChat Video, left). Cattini previously served as CEO of MapInfo, which Pitney Bowes acquired in 2007 for about $408 million. He also ran Pitney Bowes business units that generated roughly $200 million in annual revenues.Translation: Cattini has experience building and growing multi-million-dollar technology organizations.

While Godgart will focus on innovation, Cattini will oversee day-to-day operations. Together, they’ll focus on strategic long-term growth strategies.

So far, Autotask has three SaaS-centric product lines:

Key Challenges Ahead

No doubt, more and more VARs and MSPs are using SaaS-based business management tools. But Autotask also faces challenges. They include:

1. On-Premise Alternatives: A very large number of channel partners prefer on-premise software — which is why Autotask rivals like ConnectWise (hosted and on-premise) and Tigerpaw Software (on-premise only) also remain in growth mode. Remember: TalkinCloud does not blindly endorse SaaS; we exist to help VARs and MSPs engage in a SaaS and cloud discussion, but we realize sales of on-premise software continue to grow. And many channel partners prefer on-premise options.

2. Reseller Ignorance: A huge portion of the IT channel — thousands of resellers and VARs — has yet to embrace PSA software of any form. Somehow, PSA providers must convince traditional resellers that PSA is a requirement, not a nice-to-have option, for all  of today’s solutions providers.

3. Corporate Growth: People forget… growing a company is difficult work. Can Godgart let go of his day-to-day responsibilities within a company he launched 10 years ago? Can Cattini put his own stamp on the company without alienating an Autotask team that’s used to Godgart’s management style? And can Autotask coordinate multiple new hires, including a newly created CFO position that’s expected to be filled within weeks? We’ll be watching each of those potential issues closely in the weeks ahead.

4. Limited Audiences: How big can a pure SaaS company really become? Salesforce.com, arguably the world’s best-known pure SaaS application provider, hit $1 billion in annual revenues in 2009. Impressive but puny compared to Oracle ($28 billion) and Microsoft ($60 billion).

Now here’s where things get tricky: Salesforce.com targets a massive potential audience: Small and midsize businesses that need CRM (customer relationship management) software. In stark contrast, Autotask focuses like a laser on IT channel companies as customers — VARs, MSPs, resellers and solutions providers.

How big is that total market opportunity? For decades, conventional wisdom has stated that the North American IT channel has 80,000 to 120,000 or so resellers. But there are whispers in the market, suggesting that maybe the real North American channel is closer to 30,000 to 50,000 resellers. That’s a far smaller figure than most people assumed, but still a healthy opportunity for Autotask and its rivals. Overall, I suspect Autotask, ConnectWise and Tigerpaw only serve a combined 10,000 resellers.

Long-Term Strategy

For Autotask’s Cattini and Godgart, the near-term mission is to push beyond traditional managed services communities to reach the broader IT reseller market. Even if you’re not doing managed services, Autotask and its rivals would certainly agree, you can benefit from PSA automation software.

Also near-term, watch for Autotask to also double-down on its VARStreet investment. There should be plenty of VARStreet-related news during the Autotask Community Live 2011 conference (May 22-24, Miami).

Bottom line: Autotask certainly is growing. And new CEO Cattini has experience building and running larger companies. But we’ll be careful not to hype the opportunities ahead. Autotask faces fierce competition, most notably from ConnectWise, which runs the IT channel’s largest annual conference — a key point as MSP software companies work hard to build community and long-term customer relationships.

But even if Autotask didn’t have PSA rivals, we’d be watching to see if the IT channel truly is a large enough user base to deliver the kind of SaaS growth Autotask is seeking. Our bet: Eventually, the broader reseller channel will discover the power of PSA — whether from Autotask, ConnectWise or Tigerpaw.

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