ConnectWise CEO Arnie Bellini says that while technology solution providers are beset by new challenges, the dynamics of the mature and nature of IT innovation continue to create ways for companies to reinvent themselves.
ORLANDO – ConnectWise CEO Arnie Bellini has been advising managed services providers for many years that they need to transition their businesses to maintain margins and relevance to customers. On the first day of the ConnectWise Automation Nation event here, Bellini sat down with ChannelBuzz to emphasize his view that despite massive commodification of many managed services, significant consolidation, and increasing competition, opportunities in managed services are still incredibly strong.
“That message, that MSPs will do well if they transition their businesses, is eternal as long as technology continues to advance, because the opportunity to implement new technology requires them to transform their businesses to do so,” he said.
Bellini said that despite the pressures on MSPs today, the basic dynamics of the market remain unchanged.
“Every single small to midsize business has a law firm they rely on as an expert, and a CPA or some sort of accounting,” Bellini said. “Small business have had that kind of professional help in these areas for many, many years. But they haven’t had technology for that long, which is new, and has only been a trend for 30 years – if that. Technology is the next professional service that every small to midsize business must have an advisor for, and this has brought about the evolution of a brand new economy and industry.”
Commoditization of some services is a natural part of this economy.
“In this creation of a whole new economy based on technology, with that comes a lot of evolution,” Bellini said. “Things will die and things will grow. Things will become commoditized. Things will become obsolete. But new technologies create opportunities to create new opportunities. I call it catching the wave. There will be waves of technology that hit the shore that will let solution providers make premium profits – for a period of time. There’s always that next thing. With managed services, we haven’t approached the top of the adoption curve yet. Cloud service providers are the next big thing.”
The key, Bellini said, is being able to recognize and act on it.
“I have been preaching from the mountain tops – ‘the cloud is coming the cloud is coming’ – and much of the recent growth has been coming from the cloud,” he said “You would be surprised how many companies still have not made any movement to accepting the cloud as a new practice area in their business. Things like cloud or the Internet of Things have to make sense for people, who see it as a natural next step for their business. Our industry has always been about catching the wave of technology and riding it to commoditization.”
Security today is one such area, where generalist solution providers can catch the wave effectively, Bellini said.
“MSSPs have been around for a long time, but they haven’t been mainstream,” he said. “Now security has gone mainstream. It’s the topic of the day – not just things like WannaCry, but espionage, and the need to protect private information. Governments are now mandating it. That is what is making security mainstream. You will have to have it.”
Bellini said that while the large vendors are now emphasizing the importance of end-to-end integration rather than best-of-breed solutions, it’s not a significant distinction for managed service providers.
“Cisco once put out a picture of an airline with parts from 50 vendors used to create it, and said that you wouldn’t fly a plane like that, so why do your IT that way,” he said. “On one level I guess I agree, but all the companies with many solutions have bought most of them. They still have to integrate them. We focus on full integration with our own suite of products. Integration just means that the waves are coming tighter together.”
Bellini described the Internet of Things is a large set of very tight waves.
“Some technology solution providers are now getting into it in a meaningful way,” he said “Once they are commercialized, they are beautiful things to implement. With agricultural technology, you can put sensors on a harvester out in the field, and measure moisture of soil and density, map it on a GPS map, and show where they aren’t watering the right way. It would be easy to open up a practice area. As things evolve, the marketplace evolves with them. We have partners who are very involved with AV, and with full home control, things like Nest. Something like Alexa is a consumer product, but if and when something like that becomes of use to business, they need someone to implement it. There are all kinds of new areas here an MSP could open up.”
Bellini indicated that ConnectWise is looking to bring some innovative solutions in-house through acquisitions.
“We are in active acquisition mode at ConnectWise,” he said. “There are some really interesting companies and solutions out there we have our eye on.”
Finally, Bellini noted the importance of the ConnectWise Community in helping partners adapt to these transitions.
“We invest so heavily in the Community because it can provide guidance,” he said. “It’s the law of numbers. Some partners will always be innovative and some will lag behind, but a Community provides a central perspective on where the industry is going. It helps to create insurance for those in the community to know the direction they’re headed in is the right place to go. Generally speaking, the community is right. That’s why we invest so heavily in it. We invest in the community because we know it’s good for IT Nation.”