ConnectWise and Autotask Pursue Vastly Different Long-Term Strategies

This is blog entry 2,340 for me here on MSPmentor. I typically stand by the views I share. But the blog entry I regret most (April 6, 2009) described similarities between Autotask and ConnectWise in the PSA (professional services automation) software market. Hey, I had a bad day on that one. I think readers in Albany and Tampa both lost their lunch when I hit publish on that item. ConnectWise and Autotask are vastly different companies. And the differences are multiplying. Here’s why.

Generally speaking, I think ConnectWise is pursuing an Oracle-like strategy while Autotask is pursuing a Salesforce.com-like strategy, while rivals like Tigerpaw Software also crank up their marketing efforts. ConnectWise, Autotask and Tigerpaw each are committed to their user bases but pursuing market growth in vastly different ways.

ConnectWise: Coopetition and Integration

To understand ConnectWise’s strategy take a look at Oracle for a moment. First, CEO Larry Ellison built a market-leading relational database. Then Oracle acquired applications — PeopleSoft, JD Edwards, Siebel, etc. — to run atop Oracle’s database. At the same time, Ellison kept Oracle’s database open to ensure third-party developers (SAP and plenty of others) could continue to plug in. To this day Oracle has a thriving third-party ISV community.

In some ways, ConnectWise CEO Arnie Bellini is pursuing a similar strategy. So far, the ConnectWise Capital arm has invested in LabTech Software (remote monitoring and management), CharTec (hardware as a service) and Quosal (sales quoting software). Also, ConnectWise’s heritage is on-premise but the company has been expanding its cloud services as has Quosal.

The LabTech deal is particularly interesting. In some cases, it created some behind-the-scenes friction between ConnectWise and RMM software partners. But ConnectWise-LabTech has also created pricing competition that ultimately benefited MSPs. In short, Bellini delivered on his promise to help MSPs gain more market choice.

Application Programming Interfaces

Here’s where ConnectWise CTO Linda Brotherton enters the picture. Bellini promised to keep ConnectWise’s APIs (application programming interfaces) open. Brotherton, in turn, has vowed to make sure the APIs are published and documented for partners.

In some cases, I think ConnectWise still needs to be more responsive when partners inquire about API support help; I do hear grumbling from a few integration partners from time to time.

But here’s a very interesting twist: Earlier this week I spoke with a software executive whose company competes with the ConnectWise Capital software portfolio on some fronts. In private, the executive told me the ConnectWise 2011.2 release contained some new APIs that made integration to ConnectWise far easier. And the executive said the forthcoming 2011.3 release should further improve matters.

Bottom line: The executive — a rival to ConnectWise Capital’s portfolio on some fronts — thinks CTO Brotherton is making good on her word to publish ConnectWise APIs to all partners, though he hopes ConnectWise will improve responsiveness when integration partners have questions.

Autotask: The Salesforce.com Model

Meanwhile, Autotask CEO Mark Cattini wants the best of both worlds. In short, he wants to maintain Autotask’s automation focus on VARs and MSPs while positioning Autotask as the channel-equivalent to Salesforce.com and NetSuite.

Yes, Salesforce.com and NetSuite are publicly held poster children for SaaS applications. But perhaps more importantly, Salesforce.com and NetSuite have also developed online marketplaces and tools to help partners plug in and promote third-party SaaS applications. It’s going to take some time but I think Cattini will pursue a similar strategy with Autotask.

Already, Autotask is a SaaS application with multiple modules. But I think the VARStreet buyout of 2010 distracted Autotask a bit. For three consecutive years, I heard Autotask promise cross-platform browser support at the Autotask Community Live conference. But the progress was painfully slow. This year seems to be the first year that Autotask is finally serious about pushing beyond Internet Explorer to support Google Chrome, Apple Safari and Firefox.

Inflection Point

Why’s that? New CEO Mark Cattini moved cross-platform browser support to the top of Autotask’s priority list. Cattini is a Mac user and he understands the cross-platform world, noting that Internet Explorer’s market share has fallen below the 50 percent mark in Europe. For years, Autotask spent too much time optimizing for Internet Explorer and too little time going cross platform. Cattini has vowed to change that, with selected Autotask modules expected to support multiple browsers by August 2011.

On the back-end, Cattini has also vowed to keep Autotask open. Without mentioning ConnectWise by name, it’s clear that Cattini believes Autotask can integrate more deeply with RMM partners who may be a bit wary about the ConnectWise-LabTech relationship.

Still, the MSP software market is far more than RMM. Dozens of cloud storage, backup, security and mobile solutions are starting to plug into ConnectWise, Autotask… and Tigerpaw. Indeed, Tigerpaw has raised its visibility under President James Foxall. And in several cases, the MSP software community is warming up to Tigerpaw’s user base, which has a strong following within the telecom industry.

Community Matters

The various PSA strategies — Autotask, ConnetWise, Tigerpaw — prove that there’s more than one way to succeed in the market. To the best of my knowledge, all three of the major PSA providers are growing. But there’s another angle worth discussing. It involves community.

Generally speaking, I believe the ConnectWise Community is the most engaged community in the managed services market. Part of that involves personnel (including Director of Community Jeannine Edwards). And part of it involves money: I have to double-check the number but I think ConnectWise spends about $425,000 annually on its user groups.

Some critics think ConnectWise tries to buy loyalty through the user groups and conferences. But the critics don’t understand CEO Arnie Bellini’s DNA. During the IT Nation conference in 2010, Bellini told attendees that he was set to visit roughly 10 MSPs to help fine-tune their best practices. The fee, I think, was about $2,500 per day. Within minutes ConnectWise received scores of inquiries from attendees who wanted Bellini to visit their businesses and share some best practices. Basically, Bellini is in the trenches with his customers and he deeply understands their businesses. Instead of just selling them software, Bellini shares business knowledge non-stop, which keeps MSPs loyal.

In the software world, Bellini’s coopetition strategy irks some LabTech rivals and ConnectWise partners. But within the halls of IT Nation, Bellini is on a first-name basis with nearly all of the MSPs. And that’s what counts to the SMB owners and entrepreneurs in attendance.

Eager Users

On the flip side, Autotask and Tigerpaw have loyal, satisfied user bases. But I think the Autotask and Tigerpaw “communities” are works in progress.

Where To Now?

I began this blog entry by stating that ConnectWise, Autotask and Tigerpaw are pursuing vastly different paths forward. Sometimes, the media is guilty of writing winner-take-all stories. In the case of PSA, I believe all three of the major players are still growing. And they’re spending less time talking about each other in the market, which is a healthy trend.

Remember: Even in mature markets there’s room for multiple rivals. Back to my database example: Oracle, IBM DB2, Microsoft SQL Server, SAP Sybase, MySQL and plenty of upstarts continue to chug along. So too will the major PSA players.

Autotask CEO Mark Cattini has promised to double-down on SaaS and great user experience to keep MSPs and VARs loyal. ConnectWise CEO Arnie Bellini promised to grow the market through ConnectWise Capital investments — and he has. And Tigerpaw’s James Foxall has promised some key partner and customer surprises at the next user conference.

Of course, it’s not all roses. The ConnectWise Capital-LabTech relationship ruffled some feathers in the market. But overall MSPs have benefited from the price competition and innovation.

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