Kaseya CEO Fred Voccola says that the current crisis is exponentially the worst the industry has faced. The impact is being measured through its monitoring of MSP use of its software, which shows MSP workloads up 50% in March due to the rush to remote working. At the same time, MSP revenues are under pressure as small customers delay or cut payments. But it will have the effect of driving many mid-sized businesses to move part or all of their IT to managed services, and this is real opportunity for those able to work most efficiently, he tells IT Europa.
“The consumer is now shut down. So everything is falling like dominoes. It has been hard and our customers are surviving but business is changing fast.”
To support its MSP customers, Kaseya has set aside large sums to direct support and is offering local support for MSPs accessing government funds. It is talking about this, under the Kaseya Cares scheme, to around fifty customers a day, it says.
“This crisis follows several economic downturns, from dot.com to 9/11 and the financial crisis of 2008/9 which fundamentally altered the security of real estate, and produced a world-wide liquidity scare.
“Most of our customers are SMBs, and from what we are seeing , it is exponentially worse. Recessions and economic cycles have been more abrupt, more damaging but shorter over the years and this has been a trend for at least 35 years. But this [Covid-19 crisis] is much worse,” he says.
“Kaseya customers – MSPs - are feeling the brunt of this because their customers’ customers are SMBs and most small local businesses are B2B or consumer facing – healthcare, accounting, construction, restaurants, retail. They are the consumer businesses who have driven the economy for ten years to the best of times…..until two months ago.”
In the first couple of weeks, everyone rushed to work from home and the MSPs were incredibly busy migrating customers to remote working, he says.
“It had to be done securely and be backed up and it was a big task. The average MSP in March experienced about 50% more tickets than in February. If you are an MSP and your workload jumps 50% but your income drops, this is a big challenge. Working remotely is a challenge and on top of that customer payments are down substantially. If a restaurant is closed, they cannot pay, but all other businesses are cutting back on payments – they are not cancelling but are slowing payments. It is impacting the working capital of MSPs.”
“Kaseya Cares is a programme to help customers navigate the government support programmes globally and help them apply for such assistance as is out there as well as provide direct help. In addition, Kaseya Powered Services has been offered for free to all customers with the aim of helping a lot of customers with how to take advantage of the situation. We will get a lot of goodwill from this, and we are aggressive in wanting to help. We have already deployed $5m in the last three weeks. Some 1200 MSPs worldwide have got some form of direct, government or support assistant from Kaseya in the last three weeks. It is the right thing to do, and we show we care, they know we’ll be there for the long term.”
“The better MSPs, who are better run are thriving right now because they are quick to get government money - two months with bills paid means they are better financially than two months ago, and they are using this time to restructure themselves so they are in a better position in a post-virus world.”
“It is an economic depression and this has happened faster than anything ever before, and once we go to recession back to growth, it could take two to four years and will be a very different world.”
MSPs will need to look at this new world and think about their working practices. They have to make their people more efficient, and also pay less for what systems we are using. Both have to quickly become more efficient, he says.“We are seeing the MSPs shift what they are offering to what types of customer. For example security and compliance have not gone away. This is a kick in the backside for a lot of MSPs supplying a lot of IT which people are realising they cannot do without.”
MSPs will have to compete, not on technical skills, but on service delivery in the smaller pie. Customers are going to be less tolerant. MSPs who are good at service delivery , but can’t back it with a go-to-market will be in trouble, he warns. “There is less tolerance for MSPs who are not good with technology and for those who don’t have their commercial and sales organisation in place.”
“The final thing we are seeing is very good for good MSPs: in 18 months, those serving SMBs will come out much better – the trend which has driven growth over the last twelve years is that technology has become available to SMBs that was not there before and it allows them to compete better. IT is essential to an SMB as electricity, so even in recession, the percentage of spend is increasing. The IT part of the SMB economy may still grow.”
“For our MSPs a new market is emerging in the mid-size business with a handful of IT staff. Events of the last six weeks have shown them that they don’t want to be in the IT business. They will not have been as able to adjust as quickly and effectively using in-house staff as if they were being managed by an MSP which has expertise in compliance, remote working, security etc. They can’t have those dedicated skills and have been suffering.”
More importantly everyone will look to reduce costs and IT departments in mid-sized companies are considered cost centres and are subject to cuts. Small teams can’t meet the complex needs of mid-size business. MSPs will have to take on part or all of their IT, he says. “At Kaseya we see the licenses and use of products – we know what is happening and this is a massive trend that is being accelerated. The business is better for MSPs – the contracts are longer, larger, more predictable and so those who can work with these customers will do well and is probably happening ten times faster than at the start of the year.
“It will transform the upper small business and lower mid-sized business. This is a massive market and trend that we are seeing,” he concludes.
