Kaseya Rides 2018 Momentum Into the New Year

2018 was a big year for Kaseya, the business management software provider, which on Wednesday reported record-breaking growth last year. The company posted more than $250 million in annual bookings, completed four major acquisitions, grew to more than 1,000 employees nationwide, and now counts about 19,000 unique MSPs around the globe.

Kaseya CEO Fred Voccola told Channel Futures that the company’s continued commitment to building out its service offerings drives its strategy. The provider touts its IT Complete suite of products and services, designed to supply managed service providers (MSPs) and internal IT teams with all of the tools they need to build and support core IT infrastructure.

Kaseya’s Fred Voccola

Kaseya’s IT Complete offering is geared toward the small to midsize business (SMB) market, which Voccola says offers opportunities for any size of partner just about anywhere around the globe. Kaseya itself is banking on SMBs to grow its market share and partner base.

“I feel very blessed that we’re able to operate in the market we’re operating in,” said Voccola. “I don’t mean the stock market or the economy. I mean the market for small to midsize businesses. Their adoption of technology is exploding.”

Building IT Complete Through Acquisitions and Integrations

Voccola said that last year’s rush of acquisitions was in response to a massive tectonic shift in the global economy. Small businesses are driving economic growth because technology has given them a newfound ability to compete on a larger scale. Kaseya is just riding that wave, he tells us, and trying to stay a step ahead in terms of what the company can offer MSPs that helps them support the growing SMB market.

“[2018] was a busy year because we realized compliance is huge. IT documentation is … a must. And on the backup and disaster recovery side, that’s a big moneymaker for MSPs, and it’s also a big cost point,” Voccola explained. “So we went out and got better tech at a lower price.”

The most talked about of Kaseya’s four major acquisitions last year was that of backup and disaster recovery (BDR) solution provider Unitrends. The company’s technology underlies Unitrends MSP and Kaseya Unified Backup, and the acquisition positioned Kaseya to better compete with providers such as Datto – which acquired Kaseya competitor Autotask in 2017 – with robust BDR offerings.

To capitalize on the growing market for compliance services, Kaseya bought RapidFire Tools, the popular threat detection and compliance solution software provider, and quickly began rolling out products to help partners spin up a compliance service for customers in highly regulated industries.

Kaseya’s acquisition of Spanning Cloud Apps gave its partners opportunities to make money off of Office 365 and G Suite, those necessary but often unprofitable parts of many MSPs’ offerings, by selling SaaS data protection for the cloud-based productivity suites. It ended the year by buying IT Glue, the uber-popular IT documentation software many MSPs rely on to increase technician efficiencies.

Voccola says that 2019 will be as busy, if not busier, in terms of acquisitions. While he wouldn’t give details, he said there would be …

… “a lot of movement from Kaseya on the security side,” not only through acquisition but also through product integrations.

Kaseya’s Advice to Partners

The competitive landscape for MSPs is growing more crowded every day, but Voccola says there are some opportunities for partners to gain new customers that are either emerging or not being taken advantage of.

Customers working out of small offices/home offices (SOHO) with fewer than 10 employees are looking for MSPs to integrate the different components of their IT infrastructure. These customers pay less and can be demanding, so they aren’t the ideal clients. But it’s a relatively new market that Voccola says is poised for growth.

The “large small businesses” with an employee headcount of 10 to 60 or so is a highly competitive market many MSPs may think is already cornered. Indeed, much of these organizations are already consuming their IT through an MSP, but Voccola says they’re starting to shop around. Because these buyers are increasingly educated, partners don’t have to do a lot of hard selling for things like BDR, compliance management or extra security layers because these savvy customers know how important those pieces are.

While much of the larger midsize and enterprise markets are saturated, MSPs can still carve a place out for themselves by developing a niche offering and contracting with internal IT to cover the bases the company doesn’t have the resources to manage, such as compliance, network monitoring or level-three support. These gigs are beauties, says Voccola, because the contracts are long-term and have a lot of zeroes — sometimes hovering around $25,000 per month. The fact that the buyer is an internal IT department is a huge selling point for this market.

“You’re dealing with an IT-knowledgeable customer, which is better nine times out of 10 because then the technicians are dealing with competent technicians,” he says. “You’re not talking to a dentist who doesn’t really understand what a firewall is.”

These niche MSPs also present an attractive opportunity to potential investors, either private equity or competing MSPs looking to expand their offerings and market share.

Regardless of what market an MSP targets, Voccola stresses that the biggest competition isn’t going to come from the large MSPs, but from mature providers that excel at sales, marketing and service-delivery capabilities. The field is so crowded, the competition so fierce, and the buyer so educated that only shops with efficient processes and teams that operate like well-oiled machines will rise to the top.

It’s an exciting time to be in the channel, where the market forces are changing rapidly and big money is flowing in and out. If you’re Kaseya, it’s an especially big thrill ride, coming off of one blockbuster year and moving full steam ahead into another.

“It’s so cool, and it’s fun,” says Voccola. “I’m blessed, lucky, fortunate. Pick your word, but it’s super fun to be in this right now.”