Zenith RMM CEO Explains Managed Services Software Spin-Off
When Zenith Infotech spun-off its managed services software business earlier today, MSPmentor started to pursue timely questions about the spin-off company, known as Zenith RMM LLC. Now, Zenith Infotech CEO Akash Saraf, Zenith RMM CEO Michael George (pictured) and Summit Partners Principal Jason Glass offer some answers and insights for managed services providers. I’ve boiled down our conversation to five key points. Here they are.
First, a little background: Zenith RMM is now a standalone company that offers remote monitoring software and NOC (network operations center) services to nearly 3,000 MSPs that manage almost 400,000 customer endpoints. Zenith Infotech and Summit Partners have both invested in Zenith RMM.
Now, my questions and the responses from Saraf, George and Glass.
1. MSPmentor: What was the spin-off process? Did Zenith Infotech put the RMM business up for sale and did other companies bid for the business?
Answer: Saraf indicated that Zenith Infotech has been considering some strategic RMM options for the past year or so. But serious talks with Summit Partners started around four months or so. Saraf didn’t discuss whether other companies had bid on the RMM business. Saraf noted that Zenith Infotech maintains a strategic stake in Zenith RMM, though he confirmed it’s a minority stake.
2. MSPmentor: Why did Summit Partners invest in Zenith RMM? And will Summit Partners invest in more managed services software providers?
Answer: Said Glass, “From a market perspective, the remote monitoring capabilities are critical for the evolution of MSPs from old-school break-fix to a true partner to SMB customers like doctors offices, real estate offices, and more. But there’s not a lot of penetration today; we think there’s a lot of growth left. Both on the software side and the [NOC] services side. We met Akash and saw the opportunity clearly.”
Glass added, “We invest only in growing, market leading companies. Zenith RMM fit that bill. But there’s a lot of opportunity around the RMM market; if we can find other opportunities we will investigate them. But we won’t invest in anything that competes with our current investments.”
3. MSPmentor: Will there continue to be synergies between the Zenith Infotech (cloud services) and Zenith RMM companies?
Answer: Saraf said, “Absolutely. Our partners see that continuing to happen. Our partners will not see any inconvenience [by the RMM spin-out].”
4. MSPmentor: Does Summit Partners see Zenith RMM as a short-term investment that can be sold off to another company, or a long-term holding?
Answer: George said, “It’s true the last few companies I’ve been CEO of have been acquired but that’s not because we were looking to sell. We had long-term plans but the companies were acquired because they were strategically important to the buyers. The future of Zenith RMM is in front of us. I think we’re in the early stages of our opportunities. We don’t have any intentions of selling anytime soon at all. We want to make our MSPs the most profitable MSPs in the industry.”
George didn’t say how many employees Zenith RMM will have, but he indicated that Zenith RMM is investing in its technical team.
5. MSPmentor: What steps will Zenith RMM take to protect its installed base as some rival RMM providers potentially spread fear, uncertainty and doubt about the Zenith RMM spin-out?
Answer: George said, “It is a competitive market, no question about that. But frankly I think we’re right in anticipating the marketplace will not read the news as negative. This is a positive event. We’re reassuring our position in the marketplace. You’ve got a real investment happening and a seasoned management team. Can [rival RMM providers] go and convert our MSPs? I think they’ll find great difficulty. We have an integrated platform — software coupled with the NOC operation to provide an end-to-end solution. It will be very difficult for someone to [displace] the software and the NOC operation. The more successful an MSP becomes, the more inclined they are to join us with the NOC operation.”
Clarity and Competition
For MSPs I see two clear takeaways: Zenith partners now have clarity about the state of Zenith RMM — who owns it and why. MSPs also benefit from continued competition in the RMM market, where software rivalries are pretty darn intense.