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Autotask has been busy outlining its vision to partners at its Community Live event in Miami this week and its president and CEO Mark Cattini and vp of product management Pat Burns took time to provide an update on the current state of the market.
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In your keynote, you stressed Autotask’s growth [with 9000 customers, the vendor is now billing $6bn in IT services and sales annually]. Can you go into more detail about where the growth is coming from?
Mark: We are a monthly recurring revenue business, and it’s almost 50/50 US and international – international might be slightly more.
The growth is across the board; we have brand new customers that have never used Autotask before, sometimes from competitors, sometimes green field: ‘I have a project management tool’; I get my reports out of Excel’ – a loosely integrated set of tools. Or sometimes you’re competing against a traditional service desk, and we see migration off of that as more people move to managed services.
More of our business now comes from larger customers: 200 seats, 500 seats. They might have service desk technologies that don’t work for them anymore, or they might have some home grown systems.
And our competition is very different at the low end than it is at the high end. We’re less than two years into AEM [Autotask Endpoint Management] and we have 15000 customers, and a lot of that is competitive displacement.
There was some research earlier this year that indicates that MSPs are expanding their service portfolios in response to customer demand. Does this reflect what you’re seeing in the market?
Mark: The core foundation of any MSP is how well you run your own business, and that’s where the loyalty [to Autotask] is. But that’s a return on investment decision for MSP, because it helps them run their business more efficiently, accountably and intelligently.
The difference with backup, or AEM or Workplace, is they’re cost of goods. [Customers] buy from us at X a month and sell it on at cost price, so it’s a much harder investment decision. You’re not generating any revenue, you’re generating profits because you believe in the RoI. It’s a cost to the business and you have to believe in the RoI.
This is a crowded market. What differentiates Autotask from the competition?
Mark: The difference with us and everybody else is that platform. The only competitor that has somewhat of a comparable product in our space is ConnectWise – though I’d argue all day long that we’re different – but none of the other vendors have a serious PSA [Professional Services Automation platform].
Most people understand that part of the managed services model is remote monitoring and management (RMM) of devices, but they‘re coming to us because we own the PSA, which is fundamentally more strategic.
Our RMM competitors will point out some features that we don’t have, which is true. But that’s becoming less and less because features are easy to figure out, infrastructure is really difficult. That’s one truism of the software business; the strategic anchor of the business is the PSA.
What trends do you see happening in the MSP market at the moment?
Pat: The pace of technology is always changing but right now it’s changing faster and in ways that are more complex than in the past. So you’re looking at a combination of these big macro trends like the Internet of Things, the rise of the endpoint, Digital Transformation, and these guys are being asked to rationalise this world, this chaos, for their end clients – and the end clients need to be these digital businesses that are taking over brick and mortar industries like NetFlix, Amazon, Uber, AirBnB. The smaller businesses have their own versions of that, they’re getting disrupted and they need to take advantage of technology to achieve business outcomes. They don’t need technology to keep the lights on, they need it to be a proactive, offensive source of business growth.
Do MSPs get that?
Pat: I think they get it intuitively, because they all do it to some extent. But they are feeling that chaos so it’s a little bit intimidating but the flip side of that situation is that the pace of change is driving a lot of choices. There are more software choices and cloud-delivered solutions accessible than ever before. I call it the ‘Salesforce effect’ – the availability of an affordable, easily-deployable CRM created demand for CRM. Supply created demand, and now Salesforce has a really long tail of competitors with really cool products. So these guys need to rationalise all that, and they need to differentiate to be successful. We like the think the platform that we give them gives them the beachhead to do so.
Mark: Actually some of the larger MSPs so some major business transformation; it isn’t just about providing internet connectivity and email and Office 365. It’s transforming business processes.
So what’s next for Autotask in the UK?
Mark: We are opening a Manchester office, and we have a huge customer base in the UK. Having a local presence is part of the ethos; we’re really effective when we’re on the ground.