Kaseya MSP survey cites security, cloud management growth

The software company's annual service provider poll also found revenue expansion amid COVID-19 and nagging supply chain issues; more IT channel news.

Security and cloud management services are the top growth sectors for MSPs, most of which expanded their businesses during COVID-19.

Those are key takeaways from Kaseya's 2022 Global MSP Benchmark Survey Report, which the company published this week. Nearly two-thirds of the polled MSPs reported year-over-year revenue growth for their security services, making security the top-rated line of business. Cloud management was second, with 51% of respondents citing revenue growth. The Kaseya survey polled more than 1,200 MSPs and technician firms.

The results track with other studies that have identified security and cloud as mainstay MSP businesses and, predictably, their customers' top IT spending priorities.

A focus on security is one factor that may be fueling the fastest-growing MSPs. The majority of the survey's respondents reported monthly recurring revenue (MRR) growth of 6% to 15% over the last three years. But 15% of the MSPs polled cited MRR expansion of more than 20%. The survey doesn't explicitly link security services to higher growth rates, but Mike Puglia, chief strategy officer at Kaseya, said such services are a characteristic of top-performing companies.

Mike PugliaMike Puglia

"It is our experience that those MSPs who are leaning into security, leveraging peer groups and dedicating staff to sales and marketing are finding the most success," he said.

In addition, MSPs have typically emphasized outsourced IT support in their marketing messages. But service providers that focus on cybersecurity and compliance instead -- and how they solve those customer needs -- fare much better, Puglia said.

Kaseya's research also revealed MSP resiliency in the face of the pandemic. Fifty-one percent of respondents said COVID-19 helped them expand services within their customer bases, while 62% reported the pandemic accelerated MRR growth. The pandemic opened partner opportunities to help SMBs retool their IT infrastructure for a remote environment and adopt digital and cloud technologies to remain competitive, according to Kaseya.

The pandemic spurred sales in other areas as well. "Not surprisingly, [MSPs] saw an increase in demand for security and business continuity and disaster recovery solutions," Puglia said.

Pandemic-related supply chain issues, however, negatively affected MSPs. Thirty-five percent of the MSPs polled said supply chain problems significantly affected their ability to sell offerings, while 57% said that issue somewhat affected their sales.

"While we live in a virtual world, there are physical realities we have to deal with," Puglia said, citing servers, workstations and networking equipment as examples. "All have been harder to come by, and lead times are much longer."

Product reselling remains a part of many MSP businesses, even as they boost MRR from services. Only 11% of the Kaseya's survey respondents said hardware and software resale was not an applicable part of their businesses.

Tercera updates IT services investment strategy

Tercera, an investment firm specializing in cloud professional services, focuses on a handful of industry categories and ISV ecosystems as it enters its second year of operation.

The company's watchlist includes martech and e-commerce, IT service management (ITSM) and DevOps, and cybersecurity. In martech and e-commerce, Tercera will track the likes of Adobe, BigCommerce, Commercetools and Salesforce, according to Tercera. Atlassian and HashiCorp are among the ISV ecosystems Tercera will monitor this year in the ITSM and DevOps market. And in cybersecurity, the investment and advisory firm will track Crowdstrike, Lacework, Zscaler and Wiz, among others.

Chris BarbinChris Barbin

Tercera's strategy is to take minority stakes in IT service providers and help them grow. The company looks for investment candidates in the $10 million to $40 million revenue range, and makes $5 million to $25 million investments, said Chris Barbin, CEO of Tercera.

Tercera's main interest is in IT services firms, especially cloud professional services companies, associated with high-growth ISVs. The company invested in four such companies in 2021: BeyondID, a cybersecurity MSP and Okta partner; Hakkoda, a Snowflake partner; Terazo, an MSP and Twilio partner; and Zennify, a digital consultancy and Salesforce partner.

In addition to its three primary investment categories, Tercera will also look at AWS partners. Barbin called the AWS ecosystem "very crowded," but said his company would take interest in service providers with a strong vertical market focus. Zennify, for instance, concentrates on the financial services industry.

There's a tremendous amount of capital in the market.
Chris BarbinCEO, Tercera

Tercera's deal pipeline could prove fuller this year because the company has had time to get the word out on its approach, Barbin said. Tercera, however, must contend with deep-pockets investment companies that aim to purchase IT service providers outright and at high premiums.

"There's a tremendous amount of capital in the market," Barbin said, noting that investment firms sitting on giant funds are willing to overpay. Tercera, in contrast, looks for founders who might take some liquidity now, build a bigger company and then "take another bite of that apple downstream," he added.

Other news

  • Cascadeo, a cloud IT transformation services provider based in Seattle, has entered a strategic collaboration with AWS with the goal of accelerating enterprise and midmarket cloud adoption. The company said the relationship represents a "significant investment" in its professional and managed services offerings. A number of partners have recently disclosed efforts to boost their investment in top cloud platforms such as AWS, Google Cloud Platform and Microsoft Azure.
  • Tata Consultancy Services, based in Mumbai, India, launched a 5G edge offering in conjunction with Microsoft Azure private multi-access edge computing. TCS' Enterprise 5G Edge suite -- designed for a range of vertical markets -- addresses use cases including industrial automation, loss prevention, real-time video surveillance and autonomous vehicle management.
  • Rackspace Technology, a multi-cloud technology services provider with headquarters in San Antonio, Texas, gained Snowflake Premier partner status and reached the top 30 Snowflake partners. The partnership between Rackspace Technology and data cloud company Snowflake aims to accelerate value for customers through data service expertise, simplified data management and analysis.
  • Red Hat, an open source software provider in Raleigh, N.C., extended free self-paced online training courses aimed at partners in customer-facing IT support, consulting, solution architecture, system administration and development. Training was previously only available to customers. The 17 free courses cover critical skills for Red Hat technologies, such as cloud computing, containers, virtualization and automation. Courses include Red Hat System Administration I, Red Hat Openshift I and Red Hat Cloud-Native Microservices Development with Quarkus, and the provider noted it will add courses throughout the year.
  • Ermetic, a cloud infrastructure security company, rolled out its Ermetic Synergia Partner Program. The channel effort spans IT service providers, systems integrators, consultants, MSPs, managed security services providers and ISVs. The company identified Trace3, Marcum Technology, Cyberuptive, HI Tech Hui, SolCyber and Tecflair among its foundational partners. Ermetic has offices in Tel Aviv, Israel; Palo Alto, Calif.; and Boston.
  • ConnectWise, an MSP software provider in Tampa, Fla., plans to integrate Intel's Threat Detection Technology into its remote monitoring and management software agent. The linkup will let the company's remote monitoring and management software rapidly identify and respond to security incidents, according to ConnectWise.

Executive appointments

  • Pythian Services, a data, analytics and cloud services company based in Ottawa, appointed Joey Jablonski as vice president of analytics. His background includes stints as CTO at HPE's Cloud Technology Partners business and subject matter expert for analytics, big data and high-performance computing at Dell.
  • Upstack, a web platform that sells cloud services through sales agents, has appointed Kurt Walk as vice president of delivery for customer experience. He joins the New York company from Global Communication Networks, Inc.
  • Chicago-based distributor Avant named Alex Danyluk, the company's chief strategy officer, as managing director for its Avant Analytics division.

Additional reporting by Kristen Gloss.

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