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October 1, 2018
Kaseya, the IT infrastructure management software provider, continues its string of acquisitions with an announcement Monday that it’s snapping up Spanning Cloud Apps. Austin-based backup and disaster recovery (BDR) provider Spanning has a large customer base, with 10,000 managed service provider (MSP) and enterprise customers worldwide, says Kaseya.
At its annual Kaseya Connect conference in May, Kaseya introduced Kaseya Office 365 Backup powered by Spanning, giving users a full BDR solution for Microsoft’s cloud-based productivity suite. The company says the new offering will enable MSPs to create additional revenue streams around Office 365, whose small profit margins tend to make providing and managing the solution a wash for some channel partners. It also increases Kaseya’s positioning against its competitors.
“Adding a backup solution of O365 makes [Kaseya] a more formable competitor against SolarWinds, but also against ConnectWise Automate,” Gavin Livingstone, president of MSP Bryley Systems, tells Channel Futures.
Still, the 365 opportunity isn’t exactly a cash cow for Bryley.
“Selling O365 provides slim margins; we wish to support our clients on this platform, and a separate backup platform will open additional opportunities, but not a significant change in revenue.”
But to other MSPs, Office 365 migration and management have become table stakes. According to Kaseya’s research, 87 percent of MSPs support Office 365, which has grown to 120 million users in just a few years. There is revenue potential – albeit not a massive amount – in moving upstream in Office 365-related services, particularly in backing up tools like OneDrive, SharePoint and mail. The flexibility offered by Spanning helps mitigate time-consuming processes for techs, such as trying to get backups of user accounts older than 30 days, find missing files or circumventing incorrect retention policies per user, say the two companies. The backups are housed in Spanning’s AWS-powered cloud, so MSPs don’t have to buy extra storage for gigabytes wroth of mail and files.
“It is an enormous opportunity and critical to the success of any IT outsourcing company that they have expertise and a full solution offering with Office 365,” says Karl Bickmore, CEO of managed service provider Snap Tech IT. “I wouldn’t say this is a big new revenue stream so much [as] it is a way to get and keep clients that represent a much bigger revenue stream for IT services in general.”
The offering is available as an integrated module within VSA by Kaseya, the company’s remote monitoring and management (RMM) solution.
“Powered by Spanning, Kaseya stands alone as the most complete Office 365 backup solution available in the market — hands-down,” Kaseya CEO Fred Voccola said. “Our community of MSPs and IT users can immediately take advantage of our Kaseya IT Complete platform to expand their data-protection capabilities and differentiate their cloud services, all while generating additional revenue from their existing Office 365 business.”
The move comes on top of Kaseya’s acquisition in May of Unitrends, a provider of BDR and a slew of other critical IT solutions. That deal closely mirrored the merger of Kaseya competitor Autotask with BDR provider Datto a year ago. And just last month, the company announced it was buying RapidFire Tools to build out its compliance and security capabilities.
Kaseya’s stated goal is to provide a comprehensive platform that allows MSPs to provide a managed service for every type of technology consumption that its customers will want. It calls this vision IT Complete, and acquisition is clearly a key strategy for bringing those capabilities in-house. It’s a strategy that many MSPs say is beginning to pay off.
Bickmore is a long time ConnectWise partner. Recently, he says, Snap Tech finds itself more and more a Kaseya customer as well, due to its acquisition strategy.
“They have made two acquisitions into third-party solutions that we have used for a long time, so suddenly I am a Kaseya customer, and I have having conversations with them I never thought I would,” says Bickmore. “That being said, I am still fiercely loyal to ConnectWise and I do not find myself even slightly interested in the VSA or PSA products at the moment.”
Others are more reluctant to say whether or not the acquisition strategy will move the needle for Kaseya. Jeff Altom, principal at Core Vision IT Solutions, is a longtime Kaseya RMM partner, and says it’s good to see them rounding out their MSP offerings and continuing to invest in broadening their portfolio.
“However, their recent acquisitions won’t change our established data-protection offerings as we have embedded relationships and service processes already in place with other vendors,” says Altom. “So these moves make them a bit late to the table compared to other vendors, as the value proposition for making a change just isn’t there.”
Kaseya is growing by leaps and bounds. In the first half of this year alone, sales at Kaseya were up 30 percent, putting the company on track to generate $250 million in revenue for fiscal 2018. The company credits the SMB market with the lion’s share of that growth. A Kaseya study indicates that the rate of increase in IT spending among SMBs since 2010 is roughly six times more than overall growth of GDP in the U.S.
“We are growing; we are rocking,” Voccola told Channel Futures earlier this year. “And I would love to take credit for this. But the reality is that the marketplace we are competing in is exploding. SMBs are spending more on IT and IT infrastructure than ever before.”
Kevin Clune, operations director for managed service provider Tech Please, says that while the acquisitions undoubtedly position Kaseya to better to compete against ConnectWise and Autotask, they are still a few acquisitions away from being a legitimate contender.
“I believe that Datto’s merger with Autotask to bring together both hardware and software offerings leaves them in the best position to dominate the category, leaving Kaseya and Connectwise to compete for the No. 2 spot at best,” says Clune.”
Voccola tells us the buying spree isn’t over yet. We can expect one more “monster” acquisition announcement in the December-January time frame.
Head of Channel Communities, Zift Solutions
Kris Blackmon is head of channel communities at Zift Solutions. She previously worked as chief channel officer at JS Group, and as senior content director at Informa Tech and project director of the MSP 501er Community. Blackmon is chair of CompTIA's Channel Development Advisory Council and operates KB Consulting. You may follow her on LinkedIn and @zift on X.
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