N-able CEO details freemium model growth success

Garbutt: freemium strategy has seen managed devices jump more than 50 per cent this year.

PHOENIX, ARIZ. , president and CEO of Ottawa-based remote management software vendor N-able kicked off the company’s 2010 Partner Summit by painting a bright picture of the opportunities for providers in today’s market.

Despite rapid growth for the company’s MSP customers at the event at the Scottsdale Plaza Resort here – a 45 per cent increase in new customer and a 51 per cent increase in new managed devices this year – Garbutt suggested the market is young, and the company’s strategy of building a network of partnerships that allow MSPs to focus on their own differentiation and services puts N-able partners ahead of the game.

“You’re showing up to a knife fight with two big guns right now,” Garbutt told attending MSPs. “This is your opportunity to get out there and win it. Our competitors will figure it out and catch up sooner or later, so now’s the time to make hay while the sun shines.”

Garbutt detailed the role the company’s freemium strategy, introduced a year ago at this event, has helped MSPs reach those growth numbers. By giving away (in some cases for a limited time and in some cases in perpetuity) managed endpoint security and other software along with paid versions of the company’s remote management tools. Access to those free licenses has allowed partners to get much more of their customers’ environments managed. And more importantly, he said, it’s allowed MSPs to get reporting on more of their customers’ infrastructure, which in turns drives other opportunities.

But has the model given away the milk leaving no interest in buying the cow? Not so, says Garbutt. While overall number of managed devices is up 51 per cent, the number of devices using paid versions of N-able’s remote management tools is up 39 per cent. And the number of SMBs managed by N-able MSPs has risen from 23,100 at the beginning of the year to 33,500 a few months ago, projecting to 77 per cent annual growth.

Consider this – Garbutt said that in 2006, only about two hands went up when he asked event attendees how many had customers asking for fixed-fee services. The same question this year resulted in a sea of hands going up, nearly three quarters of attendees. The insight: customers are starting to ask for managed services by name, and it’s creating pull in addition to the push from MSPs and related companies like N-able.

Overall, Garbutt said, SMB spending on remote, managed IT services is expected to jump by a factor of more than three times over the next five years, a 28 per cent growth rate. “If we keep pace as service providers, our businesses should be growing at an accelerated rate,” he said.

To help that growth along, Garbutt told MSPs to focus on a clear, simple message that resonates with small-business customers. What most of those companies want, he suggested, is a “simple, cost-effective value proposition” that can be communicated equally effectively by the MSP’s management or its sales or technical staff. It has to be something that “they can understand and get on board with,” which means on focusing on a clear path to value rather than executive selling and complex TCO analysis.

It’s an important time in the space, he said. Because awareness of managed services is increasing, there’s a bit of a land-grab soon to come. For that reason, Garbutt urged attendees to get customers into proactive managed programs and to make sure they have as many of the devices as possible within their customers’ organizations under some sort of management.

“Somebody soon will have those customers on a dashboard. Is it going to be you or your competitor?” he warned.

Garbutt closed his address to the 300-plus MSP partners in the room with a challenge to grow their managed services clients by 100 per cent by next year’s N-able Partner Summit. Garbutt said this is “totally doable if you have a focused plan” that includes using N-able’s reporting tools to create cross-sale and up-sell opportunities; build profitability into recurring revenue streams and “take control of your market.”

ChannelBuzz.ca will be sitting down with Garbutt later in the day on Thursday to get a feel for the size and growth path of the MSP market in Canada. Expect full coverage of that conversation, and additional news from N-able Partner Summit, in Monday’s Daily Buzz e-mail newsletter.

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