10 Pearls of Wisdom from Top Channel Executives – Ignore at Your Expense

Will we see consolidation in the MSP software market?

We will do probably two acquisitions in 2019. Nothing is about to be closed, but we are talking to a number of folks. In terms of mega-deals, some have already happened. We bought Unitrends. That was about a $100 million company, roughly about the size of Continuum. Do I think we will see a deal between a Kaseya or Autotask or ConnectWise? Well, Vista owns Datto. Thoma Bravo owns Continuum. Those are both very sophisticated, vert capable, tier-one, private-equity firms that know this space. They understand software infrastructure and understand the MSP space. Now we are owned by Insight Ventures, which – I am biased – think is the best … I would speculate that you will not see a mega deal done in ’19. But I think in ’19 people will start talking.

—Fred Voccola, CEO, Kaseya

With the realization that Big Tech is as much as bad boy as it is an agent of good, how should tech companies react?

If people said a decade ago that Silicon Valley was going to eat the world, I think the world is now going to eat Silicon Valley. To me, technology was always about enabling people to do better things. And now what I am seeing from people from all over [the U.S.] is that they know how business is done and understand the value of relationships. To me, these are the people who really know what’s up. I don’t want to say anything bad about people in the [tech] industry — you need people who focus on innovation. What we believe is that we want to be a technology provider. Over time, we can give our clients the data on best practices so they can see the patterns necessary to improve their merchandising and businesses by extension.

—Daniel Saks, President and co-CEO, AppDirect

Who is likely to give new challenge to the channel in 2019?

I will pick any of the vendors [that] think the channel is less relevant than they think it was as before. I won’t name names; they will see themselves in that comment. But any company that thinks [it] can go without the channel and that has started to use its direct sales team more aggressively is making a huge mistake and opening a window for [the likes of] me — and I intend to leap through it.

—Janet Schijns, Executive Vice President, Office Depot

Will the rise of online marketplaces threaten traditional channel players?

My sense is the reseller is and will be a valued part of the industry. Whoever is the end customer – be it an enterprise customer or SMB – somebody has to touch that customer and explain the solution, how it works, how to maintain it, [and so on]. No vendor wants to touch the millions of end customers that are out there. As a result, I think the reseller has a valued place in the industry. And most of them who I talk to say they couldn’t do their jobs without their distribution partners. That’s not changing in 2019.

—Tim Curran, CEO, Global Technology Distribution Council (GTDC)

What becomes of modest-sized MSPs in 2019? Will consolidation continue?

There will always be some companies that are small. And there will always be companies trying to do what Office Depot is trying to do. What I do think is going to keep happening is this consolidation somewhere in the middle. What I am seeing after talking to private-equity groups, including our new investor Evergreen, is few investors are interested in trying to create the next national player. I find that interesting. They really are not trying to create a national presence. I have heard from three private-equity groups – and I won’t name names – who believe that past attempts to do just that have not panned out that well. So they [and others] are looking to build things and keep it to a regional standpoint.

—Jason Jacobson, CEO, NetGain

How will cloud and security continue to impact managed services in 2019?

The massive shift to the cloud that everyone is starting to see – and leading indicators are suggesting it will fain even more steam – combined with the shift to managed services [is going to be huge. Research firm] MarketsandMarkets said that there’s a 9.3 percent CAGR on $180 billion and by 2023 it is going to be $282 billion. I think that’s really low. I think that it could triple that. I think the focus on security that is out in the marketplace today, coupled with the ability to up-sell, cross-sell onto Microsoft is big. We’re betting big on it because we think it is going to be the big play … When you think about continuity, the days of selling an appliance are falling to the wayside. People are going to use infrastructure players like Azure [and] Amazon — which is the clear leader in infrastructure. While the growth [of all] is impressive, I think it is going to be triple what analysts are saying.

—Nick Heddy, Chief Revenue Officer, Pax8

Will the industry get its arms around cybersecurity in 2019 or will it continue to lag behind bad actors?

As we approach 2019, the security landscape is more tumultuous than ever. DDoS attacks are on the rise, based on individually hijacked machines, and it’s safe to assume hackers are sitting on a wide array of personal data accessed from any one of the number of breaches in 2018. In 2019, the ever-changing security landscape will pose the greatest threat to small and midsize businesses, while simultaneously creating greater opportunity for both managed service providers (MSPs) and managed security service providers (MSSPs). MSPs are seeing the opportunity to expand their businesses to include security services; however, we can expect that many will lack existing security resources and as a result look for partnered assistance from MSSPs. The benefits of the MSSP model include the ability to quickly scale capacity and security expertise while MSPs build their own internal capabilities. As a natural effect of the previous prediction, MSSPs will see an uptick in the next year. In addition to MSPs driving demand, MSSPs will be on the rise due to the lack of properly trained security professionals at smaller businesses and the growing need for organizations to rely on a third party for true security support and defense.

—Destiny Bertucci, Head Geek of Security, SolarWinds

What does the threat landscape look like in 2019?

Email security will continue to dominate the threat landscape. Attacks that target the individual, such as phishing, spear phishing, and business email compromise, are increasing. Further, cyberattacks are becoming increasingly sophisticated. Today, we are seeing a growing number of hackers turning to social engineering techniques to increase their success. One example of this is account-based takeover. Typically resulting from a successful phishing attempt, DNS redirect attack, [and so on], an account-takeover attack happens when a user shares their credentials, giving the hacker access to their account. Phishing attacks aren’t just confined to email anymore; we are seeing them penetrate into voice and text communications.

—Neal Bradbury, Senior Director of Business Development, Barracuda MSP

What will be the impact of 5G and other technologies?

The launch of 5G in 2018, and the rollout of 5G-enabled "edge" devices such as smartphones, hotspots, gateways and IoT devices in 2019, will accelerate the ability to perform analytics in a hybrid or distributed architecture — enabling a new breed of commercial and consumer use cases for AI.

—Doug Hillary, Strategic Advisor and Board Member, Fractal Analytics