Continuum's chief executive is expecting partner fallout and "significant changes" following ConntectWise's sale to Thoma Bravo.
Speaking to CPI, Michael George said the departure of ConnectWise founder Arnie Bellini after 36 years of running the company could cause partners to look elsewhere for an RMM provider.
MSP service delivery vendor Continuum is also owned by Thoma Bravo. The equity giant has built a monopoly in the MSP tools space after similarly acquiring SolarWinds in 2015 and Barracuda in 2017.
But Barracuda and SolarWinds were publicly listed before selling up to Thoma Bravo and Continuum has its origins in private equity ownership. ConnectWise, meanwhile, has been owned and led by founder Bellini for more than 36 years. George (pictured) said the firm will find it difficult to settle into a private equity structure as a result.
"Any time you have a privately held, run and entrepreneurially led company getting bought by a private equity firm, there are going to be significant changes," he said.
"We were already run by an institutionally financed private equity company [before being acquired by Thoma Bravo]. So for us, it was a non-factor. I think it will be different in the ConnectWise world, because Arnie ran that company for the 36 years since he founded it. For them, trying to fit into a private equity configuration is going to be complicated and I think there will be some fallout from it," he said.
Friend or foe?
George said Continuum could stand to benefit from the potential disruption within the ConnectWise ranks as it begins to settle into private ownership. He said users of ConnectWise's RMM tool, which competes directly with that of Continuum's, could be looking for another solution.
"[ConnectWise] is not going to be able to pay attention to it in the same way it did under its prior ownership. Those are all natural things. I don't think it's catastrophic, it's just the natural laws of how that world works," he said.
But although Continuum directly competes with ConnectWise in RMM, George claims that it also maintains partnerships with the PSA vendor community. As many as 600 each of ConnectWise's and Autotask's largest partners are currently using Continuum's service delivery system, George said.
[ConnectWise and Autotask] don't have an NOC (network operations centre), they don't have an SOC (security operations centre), they don't have a helpdesk. It's a shallow solution in that category. They don't solve the skills gap problem. We have an API with them, we interoperate with them, and we will continue to do so."
Is Thoma Bravo building a 'master MSP'?
Some have speculated that the close co-operation between MSP tools vendors will become even tighter now that Thoma Bravo has added a forth (ConnectWise) to its portfolio.
Speculation has been swirling around the industry that Thoma Bravo is planning to build a "master MSP" and it will look to knit together the solutions offered from each vendor.
But George was clear that there are no plans from Thoma Bravo to merge its portfolio.
"They look at all of these as independent investments and they have their own investment thesis around every one of them. These will all be very successful companies; the good news for MSPs is you've got an investment firm that is sharp and smart, sure of market segments and has invested billions of dollars into that category. So it's a big endorsement for that market segment," he said.
George went on to explain that each MSP tools vendor in Thoma Bravo's portfolio is a market leader in a specific category.
"They went out and bought the category leaders in that respective space. So if you look at ConnectWise, everybody knows them for their PSA but they don't have anything in the security category… They bought Solarwinds. If you look at their revenue they have an MSP division within it, but they principally sell direct to the enterprise, so they're in a different category in that regard. Barracuda is a firewall company; they sell through MSPs. We don't even have a firewall," he said.
"So Thoma Bravo chose the category leaders. If you look at us in RMM, security and backup disaster recovery, we have a unique place in the Thoma Bravo portfolio and in the world at large."
From MSP to a reseller of MSP services
The Continuum CEO spoke to CPI in London while promoting a report exploring how cyberattacks are affecting MSPs operating in the SMB space. The report found that 24 per cent of the 850 SMB end-user companies surveyed said they have ended their relationship with an MSP in the aftermath of a cyberattack. The study also found that SMB customers are willing to pay 22 per cent more on average for a better cybersecurity offering.
George added that he thinks more MSPs will be hired and fired over cybersecurity in the next two to three years than the industry has seen over the last 20.
He said it was "impossible" for MSPs to competitively run their own security operations centre, claiming that outsourcing it to an MSSP, or a provider like Continuum, is the only way they can survive.
"It's impossible; outsourcing it is the only way to do it. There's a big skills gap, so it's difficult - if not impossible - to try to hire a helpdesk and a network operations centre out in the field. And it's impossible to hire a security certified person in that same geography," he said.
"The MSPs that think they have to touch every knob and turn every dial - they will lose; plain and simple. Why would you think you have to employ people to deliver services to be a service provider? It's foolish! It's antiquated, it's a dinosaur, it's dead."
He said Continuum operates its own SOC and SIEM capabilities and employs more than 1,000 service delivery staff in Asia to offer RMM at a lower cost.
"There isn't an MSP that can financially and effectively provide comprehensive services with a lack of automation and local talent at an affordable price. Nobody is doing it effectively unless they're outsourcing it," he said.
Some say performance, others say money but it may be systems and processes that carry the day
Japanese vendor sells product development, manufacturing and logistics base in Bavaria to S&T subsidiary, Kontron
'MSPs are all scared to death. They don't want end users asking, what am I paying you for?' - Datto CEO
Tim Weller tells CPI that he sees MSPs struggling to update how they package and deliver security, and opens up on what he makes of MSPs trying to rebrand as MSSPs
In its Q4 results, Microsoft reveals its cloud unit is now its biggest business segment