And if you're implementing the policies, you're making sure customers are purchasing correctly, things are provisioned properly, what's being used is being used correctly, and you're identifying issues. On top of that, once you're in that managed services role, you're getting the projects because customers won't go out and source other bids.
What is Kaseya doing to help resellers get into managed services?
Tim McMullen (TM): Our emPower program is designed to educate the channel and help them understand the managed services provider's role. From a business point of view, it's about looking at what resources you need, how to work out price, and then applying the technology to get the automation and efficiencies that Gerald [Blackie] has been speaking of. We know these guys are also struggling from a resources perspective, so as they are going through the transition we put a program together with engineers they have access to that can provide these services on their behalf 24/7, 365 days a year.
Is taking a managed services approach inevitable? And which customers should resellers start with?
GB: Yes, it is. There is probably a realistic cut-off where you are unlikely as an IT managed service provider to gain traction, and that's above 100 employees. At that level, you're fighting an uphill battle. That's not to say that a lot of our MSP partners don't have customers above that, but generally it's a small number. If you're focusing on acquiring new customers as an MSP, you'd be at the heart of it from 10-20 employees. Below 10 you're getting into marginal territory where the cost of customer acquisition is too high.
What other initiatives is Kaseya working on to get channel partners involved in managed services?
GB: We're close to a series of announcements in the first month of the year. We don't want to give away too many details at this point.
We've seen Kaseya acquire a desktop migration company, Versora, and strike an OEM partnership with Acronis for AVG endpoint security. Will we see more acquisitions or OEM deals?
GB: You could see more acquisitions - we are very focused on delivering what we think is a long-term vision. We would make acquisitions if they were appropriate and cost-effective. There are other OEM relationships that we will almost certainly do because our job is not to reinvent the wheel. There are a lot of wonderful technologies out there that can be integrated with our framework. Next year we'll also come out with a desktop optimisation model that will incorporate third-party technologies for things like defragmentation.
How about working with some of the larger vendors in the market?
GB: That I can't talk about today.
What other technologies tie in with the managed services play?
GB: We're looking to support most of the functions in which an IT service provider is engaged. Things like professional services, as well as accounting for time, project-related costs and things associated with service delivery. We are also looking at doing a lot of things that facilitate comparatives. This will help resellers to account for and allocate resources in a way that makes sense.
There is a fear in the channel that once services are commoditised, resellers lose their ability to differentiate. Should that be a worry?
GB: It should be a worry for a lot of them and I'll tell you why. What an IT service provider does for the SMB is very important. But, if you boil it down, what is it they have and do versus someone else? It really comes down to the relationship between the service provider and the customer. That's where it happens and that's the thing of great value. The things they provide as part of that relationship are not of such great value.
In IDC's report, the number one message is that we're going to see commoditisation and true industrialization in the IT space. Systems like ours are changing the face of the IT world. If you have a relationship with the customer, you do a great job and you apply the right kinds of systems, you're going to make money and have a good time. But if you're still playing in the old world, you should be worried.
MA: The whole idea of the managed services model is to focus customers on the services being delivered as opposed to the rate being charged. That's where a lot of guys are struggling.
GB: The common question from many of our top partners is how do they continue to improve that value they're delivering to their customers. It's not so much from the things Kaseya is enabling them to do, but how their role is changing in that customer relationship.
And then it's about what new methodologies we're providing for them to be much more strategic. Because when they are face-to-face with the customer, they need to be talking about the budget for 2008, what kind of projects are going to be on tap, what impact IT is expected to make on the business, and what are some things they can do to make it more cost-effective. So resellers are at a much higher level than they were before.
For us, it's about providing them with the data around the underlying infrastructure - such as what was the uptime on the servers through to what the lifecycle cost of a particular switch device. It's about bringing resellers up to that level.
How are the telcos affecting this market?
GB: We don't see telcos being a significant factor at this time. However, you've got to look at the likes of vendor players who have the capacity to deal direct, like Dell. I see the big vendors getting into this space - not so much to provide the reseller with the capacity to improve their business, but because they want the SMB business themselves.
If we do see telcos getting into this space, my guess is that they will focus on very small businesses.
MA: The telcos are more about network provisioning - it seldom gets down to the end point. I don't think they've got the full strength yet to do what the system integrators are doing.
So are vendors the biggest threat then?
GB: I've been in the business of selling software for 20 years and in all of that time the channel has morphed, but it hasn't gone away. That's simply because even if you could, as IBM or EDS, deliver IT services in the most efficient way, you still have to have some connection to the customer. That could be a small business owner who has small business issues and needs a relationship with a person who can service those kinds of issues. We see our role as providing systems that allow resellers to grow their business to a scale that will allow them to be profitable, as opposed to existing in a questionable manner, like a vast majority of them do today.