Kaseya's Fred Voccola: Efficient Operations Key to MSP Success

**Editor’s Note: Read Kaseya CEO Fred Voccola’s “11 Gems” from on stage at Kaseya Connect 2018.**

At the recent Channel Partners Conference & Expo, I moderated a panel about the tools that managed service providers (MSPs) use to increase their operational efficiencies. Within minutes, the room was alive with panelists and attendees having a freewheeling conversation about their frustrations, war stories and worries about when and how to implement MSP management software.

There are more streams of data to manage and analyze, new business lines and models, new technologies and more challenging customer-engagement processes. Partners are struggling. In a recent CompTIA survey, 29 percent of respondents deemed themselves mostly inefficient, especially when it comes to service delivery operations and sales processes.

For many MSPs, commercial software platforms such as professional services automation (PSA) and remote monitoring and management (RMM) are the key to improving efficiencies and doing more with less. But these solutions are still complex and messy, and as more and more “must have” solutions like backup and disaster recovery (BDR), IT documentation and security are integrated into partners’ offerings, MSPs’ frustration levels are high. There are too many solutions and not enough techs.

Kaseya’s Fred Voccola

This week at the Kaseya Connect conference in Las Vegas, the business-management software provider unveiled new products, features, partnerships and integrations designed to simplify the lives of MSPs. The company’s goal is to allow its partners to go to one interface in order to manage their clients, rather than having to cobble together processes and platforms that mght not play nicely together to form a comprehensive solution.

I sat down with Fred Voccola, CEO of Kaseya, this week to discuss the operational challenges faced by SMB partners and how Kaseya’s new announcements will help.

This transcript has been edited for length and clarity.

Kris Blackmon: In your keynote, you emphasized that Kaseya is focused on SMB not only because it’s an exploding market opportunity, but because the partner attendees in the audience are by and large SMBs. As much as we talk about PSA, RMM and other MSP management software, there are still a significant number of smaller partners who don’t use formal platforms. They think they aren’t big enough to warrant the cost, or that the implementation will cause more headaches than it solves. What is Kaseya’s approach to this market?

Fred Voccola: We have over 7,000 MSPs between 10 and 30 employees using RMM. A third of them using our PSAs. When I think of the smallest MSP, I think of something that’s, like, one to five people. We get a ton of leads from customers that are under 10 employees, and a lot of those we don’t really recommend other products, when it’s that small.

It depends on how sophisticated they are. Sophistication level of an MSP is not dependent on …

… the number of employees. [Partners that] use policy, they will use automation, they will actually use the aspects of an RMM. I find it a little more common in the 10-plus MSP world.

KB: MSPs know they need these in order to scale, but the cost and complexity for bringing them on and getting set up, or God forbid, migrate from one to another, can seem extremely prohibitive. They’re stuck — it’s like a software chicken and egg. These solutions may be game-changing for a business, but they’re not exactly easy or inexpensive to adopt.

FV: So RMMs are really made up of multiple components. You have remote control, automation, patch management, policy, discovery. If you want to patch someone’s machine, you have to use something to do it. You have to. If you want to back something up, you have to back it up. If you want to implement policy and automation, you have to use something. From that perspective, I don’t know if the product is cost-prohibitive.

PSA requires a commitment from an organization to do it. Whereas an RMM, it generates revenue immediately. If you can patch me, I’ll pay you $30 a month; that’s not a bad deal when you’re paying, say, $2 a month for the product. To get the most out of any RMM product, to the point where you can have one technician managing two thousand endpoints, there’s some investment there.

It’s the same way if you want a PSA to really administer your business. You need to make some investments with it. The difference between the two is the investment in PSA — it doesn’t yield you revenue, [just cost-savings in terms of efficiency]. The investment in RMM yields you direct revenue, because you’re charging for what the RMM does.

KB: When Kaseya talks about its IT Complete vision, it’s clearly saying the goal is simplicity for partners overwhelmed by so many solutions and demands. That efficiency piece is a huge driver for your market. What’s the most helpful tool you released this week in that regard?

FV: Well, of course they’re all helpful. [laughs] Depending on the partner, probably the announcement around our RMM 2.0, our Beyond RMM. Endpoint management has changed. It’s different. Endpoints are not only PCs, phones, laptops, tablets, servers, virtual servers; now they’re routers, switches, that frickin’ industrial device that’s monitoring the irrigation of your farm. So you have customers saying they’ll pay you whatever dollars per machine per month, but you have to make sure their network is working, because you’re their IT. And they’re not going to pay you any more for that. It sucks, but it’s happening.

There’s price compression for two reasons. One, customers are smarter. That sounds kind of jerky — what I mean is that seven or eight years ago, technology was a lot more scary to a non-technician than it is today. Who hasn’t used the internet now? Or an app?

The second thing is that we’re seeing price points …

… come down a little bit for basic endpoint management, and they want the MSP to throw networking in with it, and technicians are now 12 percent more expensive every year because we have zero percent unemployment in the tech sector. Guys are getting beat up a little bit.

There are also so many more MSPs, and a lot of them are mature organizations. It’s not just seven people anymore. It’s 70 people with disciplined, trained salespeople saying, “Our offering is better. Not only are we going to manage your PC and server, but I’m going to take care of your HIPAA compliance. I’ll give you a full backup and disaster recovery plan, so God forbid if another Hurricane Sandy comes, you’ll be up and running in two hours. All that security stuff? Taken care of. Done. Use us.”

The market is changing, so from an MSP point of view, when I look at the things we’ve talked about, RMM 2.0 gives them that network management capability in the RMM. They don’t have to buy two products now, so it saves them a lot of dough … Automation exists in the product that now allows the tech to manage more endpoints … The automation’s already built in this thing, because the Automation Exchange has hundreds of thousands of Kaseya users building that automation that goes into the product. Whatever [the need] may be, just search the products, grab it, and plug it in instead of having to build it. They’ve got a ton … because it’s crowdsourcing.

KB: So give me a real-world example of how Kaseya and IT Complete are increasing tech efficiency.

FV: OK, take the whole documentation. Here’s why it’s important, and this is going to sound really nitpicky, but nitpicky is what technicians do. Let’s say I have to remote control into your machine there, your … I don’t know anything about Apple, sorry. So your Apple thingie isn’t working. You’re the CEO. You’re incredibly hard to deal with. You don’t want people talking to you. Well, I mean, not you …

KB: I don’t know, there are an awful lot of days I don’t want people talking to me.

FV: [laughs] Fair enough. When I remote into your machine, I’m using a screen, I’m logged in, I’m looking at your computer. How do I know not to look in your Secret File folder? I have to go to IT Glue documentation and read that. I’ll write it down, maybe print it off, have it right next to my screen: It was last patched on this day, last updated on this day, here are the special notes. Sounds like a silly thing. But a technician will use remote control 20 times a day. Saving just that five minutes saves an hour or two a day. Now that person can pick up anther $800 or $400 a day in revenue, or whatever the math works out to be.

We��re talking about making technicians efficient. These sound like subtle little things, and if you don’t live in that world, it doesn’t seem like a big deal. But those are massive things.

Imagine saying, “I’ve got to check the status of the Wi-Fi router of the dental office. I have to leave my RMM, and go into my network-management product, which I just paid a sh**load of …

… money for, and I have to learn a brand new interface that are saying the same things in different ways.” Now it’s all in one place.

KB: OK, so getting more efficient increases your bottom line because it’s keeping your business from hemorrhaging operational costs. Let’s talk revenue generation. You announced a partnership with SaaS backup provider Spanning centered around addressing the loss of the Microsoft Office resale revenue opportunity now that customers can self-provision with Office 365. Is there a way partners can make money with Office again?

FV: O365 is kicking the sh— the poop out of MSPs. Back in the days of on-premises Exchange, we were getting like $4,000 a year for it and to manage it. Now customers are like, “Oh, I’m using the cloud. I don’t need you anymore. Thank you very much and have a nice life.” So we resell them O365 and get our seven points from Microsoft, so now we’re making $250 a year instead of $4,000. Not a great career path.

But it all needs to be backed up, and even if Microsoft decided at some point to do it, why would you back up your SaaS application with your SaaS provider?

So now we have [this partnership with Spanning]. It backs up SharePoint, all your contacts, email, it does everything. We use it internally, and now it’s built right into the Kaseya products so the Kaseya engineer doesn’t have to learn that interface. Every MSP should be going to every one of their customers and saying, “For four bucks a month, you should be backing up your email and contacts. Why? Well, here [are] 18 papers from every IT group in the world that says you should.” [MSPs] pay like $1.50, $2 a month for it, and getting, say, $4 a mailbox — for pressing a button.

That’s not as much revenue as they had for managing Exchange, but it’s more profit. To manage Exchange, you need like one person for every four Exchange servers. Here you need one button pusher. I mean, this is just gravy. It’s a great way to get in the door, too, because it’s hard for MSPs to get clients. What are you going to say? “Hey, I can manage your endpoints better than she can?” That’s not going to work for you unless your prospect is mad at their current MSP.