Kaseya and the VAR500?
I’ve been mulling this item in the back of my head for about two weeks, trying to figure out how to write a responsible blog. Let me start with the facts, then dive in with my own thoughts. The facts: Kaseya, the managed services software provider, landed on the latest VAR500 list — which tracks North America’s largest solutions providers. Then Kaseya issued a press release announcing the VAR500 honor. That’s when the industry chatter started.
To be sure, the VAR500 (formerly the VARBusiness 500) is a well-read media report. And generally speaking, landing on the annual VAR500 is a distinguishing achievement for many solutions providers, IT consulting firms, VARs and service providers.
But here’s the potential problem: Kaseya issue a press release about the VAR500 honor. And over the past two weeks or so, several of Kaseya’s own customers have reached out to me — expressing concern about the Kaseya press release.
All of the sources expressed the same sentiment: Kaseya’s listing on the VAR500, they allege, suggests the software company is going direct in some areas and bypassing MSPs in some market segments.
Kaseya’s Channel Strategy
In many ways, the Kaseya direct vs. indirect “debate” is old news. Kaseya CEO Gerald Blackie has told me multiple times the following:
- For businesses with 100 seats or less: That’s a pure play for Kaseya’s channel partners.
- For businesses with 100 or more seats, Kaseya does sell direct but partners are free to sell into those markets as well.
When I asked Kaseya about potential channel confusion related to the VAR500 report, Executive VP Jim Alves reinforced Blackie’s previous statements:
“Nothing has changed with our strategy. We are absolutely committed to our MSP partners and their goal to sell managed services to the customers under 100 seats. Typically the customers over 100 seats are not looking for managed services and we do and have always had a direct sales force selling into the enterprise. In any case where an issue arises, it has always been worked cooperatively and to the benefit of all parties.”
Some rivals see the market differently. N-able, for instance, has announced pure channel and mid-market strategies that funnel all sales leads out to partners.
If this was a normal day and a normal blog entry, the story would end here: Some Kaseya partners express concern, Kaseya offers response, and I move onto my next blog as readers weigh in on this entry.
The Other Twist
Still, there’s a subplot to this story. Specifically, Alves isn’t sure how or why Kaseya wound up on the VAR500 list in the first place. Offered Alves:
“The fact we are on the list is a bit of a mystery to us since we are an independent software vendor. We are not sure how we were qualified as a VAR.”
With that thought in mind, why did Kaseya issue that press release about the VAR500 honor? Especially when the VAR500 report lists Kaseya’s consulting, services and reselling revenue at a lofty $50 million annually.
Where did that number come from?
Kaseya is a privately held, so I can’t prove or disprove the $50 million consulting/reselling figure. But let’s just say “I doubt it.”
The bottom line: Whether you embrace or question Kaseya’s channel strategy, Blackie and Alves have a consistent message for MSPS — 100 seats or less is pure channel; 100 seats or more and Kaseya’s direct sales team could be in the running. But I can’t figure out why Kaseya put out a VAR500 press release that ultimately triggered direct sales concern among some of the company’s channel partners.
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There are two interesting comments that you point out here the 1st is the statement “We are not sure how we were qualified as a VAR”. I personally have not applied for the VAR500 but the last time I checked to get any recognition in these trage magazines you need to complete an application. I know that is what we did when we were awared “VAR of the Year” a while back. So it would seem that someone at Kaseya did in fact know how they qualified as they filled out an application to do so.
The other comment “Typically the customers over 100 seats are not looking for managed services”, what an unusual commment coming from an EVP in the managed services industry.
In this current economy the 100-1000 employee companies are an ideal candidate for managed services and from what I have seen are very much interested in the services we provide. In fact I was with one of our customers yesterday discussing the savings they have seen as a result of the managed solutions that we provide. They have 950 employees across 30 locations in the US. A very conservative estimate was that they save 20% annually by leveraging managed services.
Kaseya did not submit an application for this list, nor do we ever quote our revenues. The Publisher put us on the list, which is described as:
“… the definitive listing of the largest IT solution providers, system integrators, IT consultants and services companies in North America…”
Kaseya is a solution provider and a services company, just like many other software and services companies who made the list, including: IBM, Microsoft, Oracle, Symantec and HP.
Kaseya issued a press release about it because it is proud to be among these prestigious industry names considering it is an appropriate list of “solution providers.” Nothing in this public relations effort effects any change to the way Kaseya works with its Managed Service provider partners.
Jim: Thanks for offering Kaseya’s perspective. I do appreciate it.
-jp
This is from the VAR Business website.
Methodology
The VAR 500 is the definitive listing of the largest IT solution providers, system integrators, IT consultants and services companies with headquarters in North America, as measured by worldwide gross revenue.
The survey was fielded in February 2009. Rankings were determined by 2008 fiscal year gross revenue generated by the sale of IT goods (hardware and software), software licensing, customer software sales, professional services and managed services. The editorial team reviewed the financial performance of hundreds of companies. Public and private companies were asked to participate. Applications are vetted and cross-checked against multiple independent resources including “Hoovers” and “Selectory.”
http://www.crn.com/it-channel/217700120;jsessionid=ALDJIVTM30BXUQSNDLPCKHSCJUNN2JVN?pgno=3
If Kaseya did not fill out the application than I wonder who did? Interesting??
I have to say that the “I don’t know how we got nominated” excuse is a little weak! Anyone that has been in the channel for more than a year can see that this is a classic example of a vendor turning their back on the channel and going direct. To say that an award was given, and that a press release was issued without corporate knowledge is like saying that you didn’t inhale!
Lots of companies have hybrid models (autotask, tigerpaw, n-able, microsoft, etc…)
Let’s call it for what it is: Kaseya is one of the top VAR’s because they generate a lot of business going direct! Personally, we don’t care because we use an open source product to get the job done, but that’s not for everybody!
Hey John,
Two follow-up thoughts…
1. Channel: Jim Alves and the rest of the Kaseya team have stated repeatedly that the aren’t going after businesses with 100 or fewer employees. So to say Kaseya is “turning its back” on the channel, at least in the small business market, is wrong. However… Kaseya could certainly wind up competing with VARs in accounts with 100 or more seats, which could be a legitimate concern for VARs and MSPs that service larger customers.
2. PR: This is where the real error occurred. If you’re running a high-tech company and a research report mentions your name you DON’T put out a press release unless you’re (A) 100 percent comfortable with the data and (B) 100 percent comfortable with the message. In retrospect, I wonder if Kaseya is comfortable with A and B.
Joe, Check out this press release, it looks like Kaseya does sell to companies of less than 100 seats directly..
http://www.kaseya.co.uk/company/news/en-GB/pr-uk-eclecticbars-oct08.aspx
The release states “By placing a Kaseya ‘agent’ across its four servers and 50 work stations, Eclectic Bars can remotely manage its entire IT infrastructure through a single, integrated web interface”.
Clearly looks like this account is under 100 seats however the press release does not appear to mentioned any reseller at all.
Perhaps they have a different strategy in the UK?
Lane, I think you’re stirring up a tempest in a teacup. I’ve been a reseller of Kaseya for something like 4 years. (Since before there was officially a reseller program, I think.) I’ve worked very closely with the Enterprise sales team, and I’ve never had them step on my toes, my deals, or anything else. It simply has never been an issue. They don’t have TIME to pursue the sub-100 deals. What is more, they have been very supportive in the over
Joe, I think you hit the nail on the head. If there was a mistake, it was by Kaseya’s PR department in not anticipating the negative feedback they got for winning the VAR award. Although somedays it just doesn’t pay to get out of bed in the morning.
In the spirit of full disclosure, VirtulAdministrator.com provides a Hosted Kaseya solution (and while I’m at it, Lane’s company, DoITSmarter, provides a Level Platforms solution).
As a Master MSP whose primary reach is to small VARs to want to become bigger MSPs, I can tell you from personal experience that I strongly lean toward believing Jim Alves in this statement.
We know many of the personnel at Kaseya personally. Most are good people, driven as much by making a difference as they are by money. Some, including the sales staff, are driven by money as well (they have to be – that’s what commission is for).
Yet we have had situations where the sales staff will refer potential Kaseya partners (channel only) to VirtualAdministrator.com so that they can receive an extended ramp-up period, training, etc. They would not do this if they were going after everyone. They do this, honestly, because it’s best for the prospect, and good salespeople recognize the value in doing right by their prospects.
Salespeople, especially those in a direct environment, only have 40 hrs in a week. They have to make the effort they put into a sale, especially a long term one, worth their time. 100 units can often take MORE time to sell than 1000 due to the cash flow / trepidation of the client. It’s simply not worth it to them. This is why smart companies set parameters like Jim has mentioned.
I think the question we need to raise as Master MSPs is, “What are we doing each day to add value with and to the services we provide to our partners?” While we are aware of our competition in this market, if we focus more on them than we do on the difference we make, we don’t grow as quickly as we could. I would encourage all Master MSPs, and all MSPs in general, to maintain this type of focus.
Thanks for the forum, Joe. Always interesting. Sometimes like talk radio :).
Rich Forsen
VirtualAdministrator.com
Ok, I may have gotten a little off track here, just having a little fun at Jim Alves expense…. The only reason I commented on this post in the first place was the statement that companies over 100 users do not want managed services. I was a bit shocked to read this coming from anyone in our industry and thought I should point out that this is very much not the case.
Plus the fact that Kaseya is on the VAR500, put out a press release about it and yet still insist they did not apply for it just does not make any since. Why wouldn’t they apply for it? It certainly is good PR.
Anyway I certainly here your points Rich and Jim L as I cannot image that they would truly be competing with their partners. I have posted blogs on a similar scenario with Dell. The reality as that the reason there is a channel is because it takes a personal realationship to properly service the SMB marketplace. These large companies know this and that is why they have a channel. While individual sales reps may step on some toes every now and then it is generally in the companies best interest to work with their channel and not compete.
Back to that 100 seat issue,whether you are using Kaseya or LPI or N-Able or an opensource solution, I cannot stress enough that managed services fit very well in the 100-1000 seat marketplace. You can create very good relationships with these companies and you provide your team with a challenging environment to keep them excited about coming to work.
At Dell, our partners are finding it takes about the same time and energy to sell to the 50 user environment vs. a 200 user environment. However, the 200+ user environment can typically be a lot more profittable and usually not as demanding.
The current economy is really opening the door for MSP’s to enter this larger segment of the market as companies struggle to keep existing IT Staff in place but, most certainly need the support as data continues to grow. Use your vendor relationships to help you get introduced to these bigger prospects.
The exciting part, IMHO, is that MSP’s have only begun to scratch the surface with their ability to reach the end user. Best estimates suggest that there might be around 1 million companies in the market place being supported by an MSP. Direct/Indirect…Let’s focus as an industry on how we attract the other estimated 23 Million companies here in the US. http://www.census.gov/epcd/www/smallbus.html
The best providers will win the majority of the business.
Way to keep them honest Lane!
Regards,
Todd McKendrick