LogicNow general manager, Dr. Alistair Forbes, has watched the MSP movement grow from humble beginnings to the widely adopted partner model it is today. He sat down with ARN to discuss the evolution of service providers and what the company is doing locally with partners.
You have a lot of experience in the MSP space globally. How does the market in A/NZ compare to the US and EU?
If you look at all the western markets, including A/NZ, they have all gone through an evolutionary process where the managed services model has become the one many reseller businesses are aspiring to adopt because it gives them that recurring revenue stream that is beneficial in terms of cash flow and helps manage internal operations more effectively.
The move of those companies to become service-based as opposed to reseller-based has been pretty consistent across the UK, US and A/NZ. There are tiny differences between the markets, but Australia is pretty well developed in that regard.
The market in Australia is very much mature now in terms of managed services, there are some very substantial businesses operating that model. There is still always an influx of new entrants into the market as well so it’s still a growing market overall.
One of the things that has helped drive that was the international crisis in 2008, it had the effect of encouraging small businesses to try and trim costs and headcounts and so they are more likely to outsource their IT. So, although the economy as a whole was not in great shape, it has driven a growth in the managed services market.
Do you think a lot of this growth has come from the SMB market?
As far as our customer base is concerned, that’s who they are servicing. You still have those large enterprise businesses that will still look for a large outsourcing deal, but our customers are mainly focussing on the small to medium sized segment.
At the lower end of that there are businesses that have no internal IT department, but in some of the larger organisations have some form of internal IT resource but they don’t necessarily cover all of the skill sets or all of the IT requirements necessary.
So where are the big opportunities for MSP’s going forward?
The move into specialisation in managed security services is one of the big opportunities for service providers to grow their businesses. It helps them get into the larger organisations as well because rather than simply doing the commodity type outsourcing for those businesses they can focus on the security side.
If they can differentiate themselves in that space, it helps them appeal to larger organisations that may have some of their own internal IT capability and are looking to supplement that with managed services. That’s where we have put a lot of focus in terms of the product of course but also in terms of messaging and how they go to market with these offerings.
If you look at the external research that has been conducted in the space, you are looking at compound annual growth rates of 15 per cent over the next few years, which is far greater than you would expect in terms of general IT spend. That’s a bigger opportunity for partners.
Most end user businesses are very familiar that they need an AV product, but it is no longer the case that that is adequate. They need a proper multi layered defence, so they need something that is going to manage email security, AV, patching, website filtering and the like.
That’s an area where MSPs can package all that into a managed services offering, and it is much more efficient for them than going to try and sell each of those things individually.
What starts the discussion on a move for resellers to an MSP model?
The key thing, if partners are going to make that transition, is they have to be able to handle the customer service relationship in a different way. It is no longer a traditional product type sale. There are two key tools they need for this, one is the platform to manage the technology and the other is the customer service management tool.
So what is the typical model for your MSP partners?
It depends on how far along they are in the cycle. The well established and sophisticated ones are typically looking at security and backup as two of the key planks of the service. They would have various components underneath that, but if you boil it down, availability, confidentiality and integrity are the three pillars of security.
The ones that are the most successful are the ones that manage to hide all of that complexity from the client. Those would be the two key pillars, security and back-up.
We have a team of over a dozen people in Australia now that cover all of that and they are supported by the global organisation. Some of the things we discussed at the conference were operational as well so that is another area we look to engage with partners. We spoke about how partners can help develop their businesses structure within their own organisations.
We now have an research and development organisation of about 200 people so we have invested a lot into continuing to build the product set and giving partners the tools they will need.
So what does the LogicNow roadmap look like for the next six months or so?
One of the things that we have focussed on this year is refining the core product to help partners with their businesses as they scale. We have a whole range of customers from small three person operations up to businesses with 50 plus engineers within the organisation. So we are looking at how the larger customers are using the product, what they need to operate at that scale and using that to help the smaller guys who are not at that stage yet but aspire to be.
We are trying to give the smaller guys the functionality to scale their businesses and support more devices with fewer people so they can go after bigger deals. We are also doing upgrades to the patch management product to support a lot more third party applications. We already support many but we are extending the list because just patching Microsoft is not sufficient these days.
Because we are a 100 per cent Cloud-based product, we have employed a data analytics team to look at how the product is being used and give those results back to partners so they can get better results from the product.