Six Surprises Inside the Halls of ConnectWise

Six Surprises Inside the Halls of ConnectWise

I spent most of January 20 at ConnectWise's headquarters in Tampa, Fla. Frequent MSPmentor readers know the basics -- how CEO Arnie Bellini and President David Bellini pushed beyond local IT services to build a PSA (professional services automation) software company. And the more recent IT Nation channel community efforts. But what's going on behind the curtains down at ConnectWise? Here are six clues that may indicate where the company is heading next...

... They include:

1. Around-the-Clock Support

Yes, 24x7 support is coming. The move, expected by late this year, reflects ConnectWise's continued expansion in Europe, Africa and Australia. Earl Provin, director of support, is leading the effort. ConnectWise currently offers support from 8:00 a.m. to midnight eastern.

Provin joined ConnectWise roughly three years ago. Since that time, the ConnectWise support team has grown from eight people to 42 staff members. And partner satisfaction since that time has increased from a 74 percent approval rating to a 93 percent approval rating, Provin says.

Also, Provin says more and more support inquiries are shifting to online chat. The system leverages some technology from NTRglobal. Provin previously held key support positions at Coca Cola, Bell South and Dendrive International, where he oversaw roughly 110 analysts and a call center.

2. Software - Looking Back and Looking Ahead

CTO Linda Catrett Brotherton has been working with Arnie Bellini on ConnectWise's software efforts ever since Bellini decided to branch out beyond local IT services in Tampa. Brotherton and Bellini met right out of college through PriceWaterhouse (Bellini also is a CPA). "I was working on internal IT management for a company and Arnie was my vendor; I bought PCs from him."

But Arnie Bellini didn't want to remain just a reseller. "Arnie wanted to do something different." At first, the goal was to potentially cash in on the dot-com boom -- perhaps becoming a boutique web site development shop, recalls Brotherton. But the potential model didn't seem like it would scale. Meanwhile, a local company wanted some integration software for their general ledger systems. ConnectWise delivered the code, and gradually built out a full PSA system during the dot-com era.

At the time everyone was going to host applications so [ConnectWise] was intended for the 'cloud' at that time, recalls Brotherton. "We were surprised when it became an on-premise solution."

Fast forward to the present, and ConnectWise offers both on-premise and hosted solutions in North America, Europe, Africa and Australia. The development team has grown to about 30 people, and release cycles are roughly quarterly.

For 2011, Brotherton is striving to release more APIs out to ConnectWise's vendor partner community. "I realize they need to get posted on our roadmap and we'll do that," she says. "You'll see some new managed device APIs as well." She notes that iPhone and Android support have arrived, though ConnectWise continues to polish those efforts further. For global expansion, Brotherton is starting to look at multi-lingual support on customer portals.

3. User Groups

How do you build regional user groups across the globe? The answer involves more than social networking and happy hours at major hotels. ConnectWise now spends about $425,000 annually to support user groups in North America, Europe and Australia, according to Jeannine Edwards, director of community.

The most recent gathering, in Chicago earlier this week, attracted about 110 partners. All told, roughly 1,100 partners attend ConnectWise user group gatherings each quarter. And plans for the next IT Nation conference -- the annual ConnectWise Partner Summit -- are under way.

4. ConnectWise Capital

When it launched roughly a year ago, ConnectWise Capital invested in CharTec (hardware as a service) and Labtech Software (Remote Monitoring and Management) software.

The investment effort, led by David Bellini, apparently has exceeded ConnectWise's initial financial goals. Arnie Bellini and David Bellini both declined to share exact revenue performance figures. But based on their body language at yesterday's meetings, I think it's safe to say CharTec somewhat exceeded ConnectWise's goals and Labtech dramatically exceeded ConnectWise's goals during the first year of the investments. Both businesses, from where I sit, sound like they're ahead of plan.

Privately, some RMM software partners expressed concern about ConnectWise Capital's Labtech investment, theorizing that it may tip the balance of power toward ConnectWise. But I think ConnectWise ultimately made the Labtech move in order to ensure balance of power and customer choice vs. Kaseya, which seems to be pushing beyond RMM into the PSA space. Both Kaseya and ConnectWise have vowed to keep their APIs open amid the coopetition.

Meanwhile, ConnectWise is mulling additional ConnectWise Capital investments. Director of Strategic Initiatives Gerwai Todd is vetting through potential investment candidates for David Bellini and Arnie Bellini to consider. My best guess: Arnie wants to focus more on help desk services, part of his broader Modern Office vision.

But I don't have any clear predictions in terms of ConnectWise Capital's next target investment.

5. Best Practices for MSPs

Kathy Smith, director of consulting, has seen her staff grow to seven team members with two more positions opening up now. Meanwhile, Arnie Bellini has returned to the field, visiting six MSPs in recent weeks to analyze their businesses, and then help to optimize those businesses.

"Our intent is to turn ConnectWise into a business monitoring tool," says Bellini. "All of our partners understand monitoring devices. Why can't we be proactive on implementing best practices? That's the goal."

Indeed, Bellini is working closely with Smith on the consulting efforts. The ultimate goal, Smith says, is to perform annual audits for partners -- to see how their businesses are evolving, share best practices, and evolve the ConnectWise software base accordingly. Smith also shared some details about next moves for online training and ConnectWise University. I'll try to recap them soon.

6. Exit Strategy?

Let's start to connect the dots: ConnectWise, Labtech and CharTec are in growth mode. There are opportunities to cross-sell those solutions, even as ConnectWise maintains open APIs and integrates with third-party products.

But what's the end goal? Do Arnie and David Bellini want to run ConnectWise forever? Or are they marching toward a long-term IPO strategy or a company sale strategy? Says Arnie Bellini:
"We have no formalized exit strategy. We are having a blast. It’s a dream come true for me to work at ConnectWise and be CEO. If you’re being responsible you always position for maximum valuation. If you do all the things necessary to move toward a public offering, you’ll mature your company and run it efficiently -- even if you remain privately held. Whether we have an IPO one day or not, we’ll do the things necessary to behave like one."
I captured additional thoughts on video, which I hope to post in the next day or so.

Upbeat Culture

Overall, the mood within ConnectWise is upbeat. Yes, you already know that Arnie Bellini is always optimistic. But ConnectWise employees are, too. "Arnie and David trust me, and they trust me to do the right thing for partners," says Director of Support Earl Provin, who was recruited to ConnectWise by former COO Santo Cannone.

Cannone left ConnectWise in early 2010, but he remains tight with the ConnectWise team and the Bellini's.

Competition and Challenges

Still, challenges loom. The PSA software market is fiercely competitive. Rivals like Autotask and Tigerpaw Software have both made executive changes in recent months to bolster their businesses in 2011. And in some corners of the PSA market, there's frustration that thousands of resellers and VARs continue to ignore PSA's potential benefits.

The other big challenge for ConnectWise involves the Labtech Software relationship. I've already shared my views: Consolidation happens in every market, so RMM and PSA vendors should get used to the coopetition as ConnectWise and Kaseya each blur traditional market lines. Still, ConnectWise also needs to keep its APIs open, and deliver those APIs at the same time to all industry players. Bellini has vowed to do so.

Expanding Our Rolodex... And Yours

Imagine this: ConnectWise CTO Linda Catrett Brotherton oversees technology for one of the MSP industry's best-known software providers. But yesterday was the first time she'd really sat down with the press (well, blogger...) and shared her perspectives on ConnectWise.

My goal for 2011 is to keep meeting with personalities and leaders who are quietly driving change in the managed services  industry. Yes, we need to hear from the CEOs. But we'll spend more time meeting with key corporate team members as well.

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