ConnectWise: Building a Microsoft Office for VARs and MSPs?

At the ConnectWise IT Nation conference today, CEO Arnie Bellini demonstrated deeper integration between ConnectWise, LabTech Software and Quosal. The move reinforce's Bellini's vision to build a Microsoft Office-like suite for the IT Channel. But Bellini also evangelized continued integration with third-party RMM and quoting software platforms. Here's a look at the keynote so far.

During his keynote, Bellini spoke about a software renaissance, comparing it to the renaissance era 800 years ago. He noted that key tools -- the printing press, the compass, and other options -- triggered the original renaissance. Now, Bellini believes, new tools will trigger a software and business renaissance for VARs and MSPs. He noted Android, Apple and FaceBook, for instance, have revolutionized mobility and entertainment and communications.

Where does ConnectWise potentially fit into the IT renaissance conversation? Over the past two years, ConnectWise Capital -- the investment arm of ConnectWise -- has invested in CharTec (Hardware as a Service), LabTech (remote monitoring and management) and Quosal (quoting and sales proposal software). CharTec has certainly growing since the ConnectWise Capital investment, but I believe the bigger story involves ConnectWise, LabTech and Quosal gradually coming together -- similar to Microsoft Word, Excel and PowerPoint -- into a business office and automation suite.

Opportunities and Challenges

On the upside, ConnectWise customers will gain a soup-to-nuts approach for monitoring networks, gathering customer information, spotting new sales opportunities, and rapidly generating sales proposals from customers. It's an intriguing strategy -- and will surely accelerate when ConnectWise and LabTech together move into a new Tampa, Fla., headquarters together in early 2011.

On the potential downside, ConnectWise could wind up alienating some software partners that compete with Quosal and LabTech in particular. I can understand why some critics weren't thrilled with ConnectWise's move into sister markets. But Bellini's keynote mentioned -- verbally and graphically -- continued integration with all of the major RMM and quoting software providers.

I'm not saying the situation doesn't involve some competitive pains at times, but the critics also overlook some basic software and IT trends that Bellini and ConnectWise addressed with the ConnectWise Capital investments.

Defend and Attack

So, why did ConnectWise Capital -- and ultimately, ConnectWise leadership -- make those three investments (LabTech, CharTec and Quosal)? Some critics think ConnectWise was simply out to consolidate the MSP software market, even if it meant competing with ConnectWise's existing software partner base. But I think the ConnectWise investments were competitive moves that reflected clear market convergence.

For instance:

1. Kaseya's PSA Move: Throughout 2009 and 2010, Kaseya dropped hints that it would push beyond its traditional IT automation and monitoring business, launching some PSA (professional services automation) capabilities on the Kaseya platform. Just a theory, but I believe ConnectWise watched those Kaseya moves closely and ultimately decided a ConnectWise-LabTech combination would be a worthy counter move to Kaseya's PSA ambitions.

2. Zenith Infotech's BDR Move: Zenith Infotech gained first mover advantage in the BDR (backup and disaster recovery) market. And until the recent Zenith RMM spin-out, Zenith Infotech also seemed to be evolving into a multi-solution company, offering MSPs storage, remote monitoring and NOC services. As Zenith Infotech grew in 2008 and 2009, I think ConnectWise started evaluating competitive showdown scenarios. ConnectWise Capital's response: Invest in CharTec as a way to potentially chip away at the Zenith Infotech BDR business.

3. Autotask's VARStreet Move: This is the piece of the puzzle that most critics overlook. When ConnectWise Capital invested in Quosal, some critics said ConnectWise would wind up competing with another close partner: QuoteWerks (Quosal and QuoteWerks are rivals). But the potential ConnectWise-Quosal synergies, I believe, were first explored because Autotask acquired VARStreet, an online quoting tool for VARs and MSPs.

The Bigger Story

Ultimately, ConnectWise is trying to create a "solutions box" for VARs and MSPs, Bellini said moments ago in his keynote. And he wants that solutions box, in particular, to include ConnectWise, LabTech and Quosal -- even as ConnectWise strives to maintain continued partnerships with the other major RMM and quoting software providers.


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