Set your sights on the future of the MSP industry with the first ever MSP Horizons Report, jointly produced by N‑able and international MSP-focused research firm, Canalys.
This episode featuring industry experts, including N‑able CEO John Pagliuca and Canalys Chief Analyst Jay McBainis, is from Beyond the Horizon - a virtual discussion on insights from our new study in partnership with Canalys, The MSP Horizons Report 2024: Futurology insights to transform your IT business.
Over the next three years, the fastest growing MSPs will be the ones that are investing in skills and certifications for MDR, XDR, network and endpoint security tools, managed endpoint and devices, vulnerability scanning, and cloud infrastructure management. But why? What other trends exist beneath these numbers? And how are MSPs answering the most pressing questions in the managed services world today? This report looks to answer these questions and provide a view of where growth is coming from in managed services in the short, medium, and long-term.
As part of our analysis, we’ll investigate the current state of AI and how MSPs are deploying it today. We will also look into other core areas such as RMM, backup, cybersecurity, cloud and hybrid infrastructure strategy, opportunities in compliance, cyber-insurance, and much more. The data in this paper has been gathered through an extensive global survey of managed services providers as well as in-depth interviews. We will also attempt to look further into the future, hoping to shed some more light on the horizon of managed services and where our IT world will be going over the next decade.
Download the full report here: https://www.n-able.com/resources/the-msp-horizons-report-2024
Get an in-person rundown on what N-able has to offer including products, insights, networking and more.
The N-able Roadshow is visiting more cities than ever before in 2024. Take a look at our first group of locations; we may be in a city near you! -> http://spr.ly/6000RsTOq
'Now that's it: Stories of MSP Success,' dives into the journeys of some of the trailblazers in our industry to find out how they used their passion for technology to help turn Managed Services into the thriving sector it is today.
Every episode is packed with the valuable insights, practical strategies, and inspiring anecdotes that lead our guests to the transformative moment when they knew….. Now, that's it.
This podcast provides educational information about issues that may be relevant to information technology service providers.
Nothing in the podcast should be construed as any recommendation or endorsement by N-able, or as legal or any other advice.
The views expressed by guests are their own and their appearance on the podcast does not imply an endorsement of them or any entity they represent.
Views and opinions expressed by N-able employees are those of the employees and do not necessarily reflect the view of N-able or its officers and directors.
The podcast may also contain forward-looking statements regarding future product plans, functionality, or development efforts that should not be interpreted as a commitment from N-able related to any deliverables or timeframe.
All content is based on information available at the time of recording, and N-able has no obligation to update any forward-looking statements.
Set your sights on the future of the MSP industry with the first ever MSP Horizons Report, jointly produced by N‑able and international MSP-focused research firm, Canalys.
This episode featuring industry experts, including N‑able CEO John Pagliuca and Canalys Chief Analyst Jay McBainis, is from Beyond the Horizon - a virtual discussion on insights from our new study in partnership with Canalys, The MSP Horizons Report 2024: Futurology insights to transform your IT business.
Over the next three years, the fastest growing MSPs will be the ones that are investing in skills and certifications for MDR, XDR, network and endpoint security tools, managed endpoint and devices, vulnerability scanning, and cloud infrastructure management. But why? What other trends exist beneath these numbers? And how are MSPs answering the most pressing questions in the managed services world today? This report looks to answer these questions and provide a view of where growth is coming from in managed services in the short, medium, and long-term.
As part of our analysis, we’ll investigate the current state of AI and how MSPs are deploying it today. We will also look into other core areas such as RMM, backup, cybersecurity, cloud and hybrid infrastructure strategy, opportunities in compliance, cyber-insurance, and much more. The data in this paper has been gathered through an extensive global survey of managed services providers as well as in-depth interviews. We will also attempt to look further into the future, hoping to shed some more light on the horizon of managed services and where our IT world will be going over the next decade.
Download the full report here: https://www.n-able.com/resources/the-msp-horizons-report-2024
Get an in-person rundown on what N-able has to offer including products, insights, networking and more.
The N-able Roadshow is visiting more cities than ever before in 2024. Take a look at our first group of locations; we may be in a city near you! -> http://spr.ly/6000RsTOq
'Now that's it: Stories of MSP Success,' dives into the journeys of some of the trailblazers in our industry to find out how they used their passion for technology to help turn Managed Services into the thriving sector it is today.
Every episode is packed with the valuable insights, practical strategies, and inspiring anecdotes that lead our guests to the transformative moment when they knew….. Now, that's it.
This podcast provides educational information about issues that may be relevant to information technology service providers.
Nothing in the podcast should be construed as any recommendation or endorsement by N-able, or as legal or any other advice.
The views expressed by guests are their own and their appearance on the podcast does not imply an endorsement of them or any entity they represent.
Views and opinions expressed by N-able employees are those of the employees and do not necessarily reflect the view of N-able or its officers and directors.
The podcast may also contain forward-looking statements regarding future product plans, functionality, or development efforts that should not be interpreted as a commitment from N-able related to any deliverables or timeframe.
All content is based on information available at the time of recording, and N-able has no obligation to update any forward-looking statements.
Thank you all for joining us today at the Beyond the Horizon event. I'm privileged to be joined by Jay McBain from Canalis. We're hoping to get him here live in our headquarters in Boston, but Mother Nature had other plans. But Jay is joining us live via Miami. Jay, hey, welcome to the event. Well, thank you so much for having me. I'm excited, Great. So, Jay, some of the insights that you and the Canalis team found were really intriguing. Maybe for our audience. Maybe just give a quick overview of Canalis, and then why don't we start on some of the work that you and the team have done?
Speaker 2:Yeah, absolutely. Canalis is a research firm, analyst firm. We wake up every day thinking about channels. So much so, canalis is Latin for channels. So we think about the $5 trillion of businesses and government spent on technology and telco last year and the 73.1% of that that went to through and with partners of all types.
Speaker 1:That's great and, jay, I know you and the team did a good amount on that survey Would love for you to take the audience that's really a global audience through some of the key findings. So I'll pass it over to you and maybe you can start to walk us through some of those key metrics and insights that you and the team found.
Speaker 2:Yeah, absolutely, and there are some surprises that came out and a few topics that we'll be talking about. That, even as analysts, I think, surprised us, so really looked forward to your color on some of these and some of the survey results we got back. But the first one was on optimism and growth, and we know that. You know macroeconomic challenges are out there almost at every different vector and MSPs around the world are about the most optimistic industry that we cover and we had 64% of all of our survey respondents say that they're going to grow by double digits in 2024. This is phenomenal. There's 335,000 MSPs around the world and they think they're going to outgrow every other industry and they're feeling pretty confident.
Speaker 1:Yeah, you know it's that. That's that struck me as well, I think, yeah, I think your survey found that, as you mentioned, you know, over two thirds at that, 10%, but really nearly everybody. I think it was like 97%, jay. We're saying that they were going to grow at some way or another. And you know, jay was kind enough to spend some time with me and my team and we talked to the team about, well, what can Alice meant, right, and what the channel is. And, and for me, jay, one of the reasons, why is what is that channel to? What are we getting that channel to, that path to?
Speaker 1:Well, really, the reason for that growth, the reason for that optimism, is because, really, the MSPs, they're a channel to the small medium business and their IT spend and the underlying demand that's there for the SME and their IT spend. That's the strong part that's really driving this optimism. And the good thing is, jay, it's not by geo, it's really not by vertical, it's really not even by service and we'll get into a little bit of that it's really across the board. So I think the optimism is is is well founded in a bunch of different ways as our MSPs are unlocking the channel, the access to that small medium enterprise Because, jay, you know and I know the needs of those small medium enterprises are stronger today than ever before.
Speaker 2:Absolutely, and this is a half a trillion dollar industry at this point and to have it growing by double digits is significant.
Speaker 2:But looking backwards, last year it grew by almost 13%. Looking forward, we have a compounded growth rate of 11% every year up until 2027. So it's not just 2024, as an industry, as a set of partners, as a, as a group of entrepreneurs, this is a really strong industry, and they're calling small and medium enterprises. They're looking at the opportunities from the edge to the cloud. This is something that they're really interested in, which kind of leads us to the second topic that jumped out at us, which is we're in a world of change, and we could list off. We could spend our entire time here talking about all the things that are changing at once, but we heard over and over and over again all of the changes that are happening out there, in their business themselves, within their customers businesses, the different demographics and firm graphics and the industry shifts and all these things going on. But they're really interested, curious and excited about all the growth areas and the places they can invest in their own businesses to take them forward.
Speaker 1:Yeah, sure, and Jay, I'd love for you to maybe to walk through the audience and through some of the couple of those findings. Then maybe you and I can share what we're hearing and some of the anecdotes from across the ecosystem.
Speaker 2:Yeah, absolutely. I mean one of the biggest changes and we've been kind of watching this as a trend for a while but it's this channel or partnerships, alliances or ecosystems. The world now is a team sport. You know, we spent a lot of time in this industry decades actually in this industry thinking about the single trusted advisors, thinking about that single throat to choke in front of the customer. But customers at this point are telling us that they have seven partners they trust and that doesn't mean they have seven MSPs in the room competing with each other.
Speaker 2:But it takes a group of individuals to be able to deliver. What we heard on this survey, what we heard in this report from partners around the world, is that they recognize they might be in the room with an accountant, with a digital agency, a couple of ISVs, a system integrator. There might be a dozen other businesses that they're working with their co marketing, their co partnering, their co selling, their co keeping the customer, retaining the customer, co innovating, co developing. So the word co came up a lot and we're seeing this new co managed environment and co partnering environment. So really looking at this not as a singular linear relationship with the customer, but really surrounding the customer and orchestrating a lot of the value that they're getting.
Speaker 1:Yeah, really well said, jay. You know, you and I have been in and around the space for quite some time decades, I think I guess we're starting to get up there, jay and I always talk to MSPs, usually about my two favorite verbs. Right, and historically those two favorite verbs have been around automating and standardizing. And as I look at the ecosystem now and as the complexities and the needs from the small medium enterprise are getting more and more complicated Number one, number two as we all know, unemployment is getting more and more challenging and folks need to get more and more specialized. There's a third verb that's really forming the triangle, as I like to think about for the MSP, and that verb is augment.
Speaker 1:You say partnering, you say a team sport, it's a gang tackling, right, but it's an augment. And what the MSPs need to think about is how are they looking to use other partners to now augment their services? Right, we're seeing it a lot in security, why? Well, some MSPs not all, but some MSPs are looking at some of the challenges that are required. Jay, you know as well as I do they're not going to go spend millions of dollars in standing up a sock. They might not have the team, the talent or the collateral or the financial backing to go invest into a sock. So what are they looking to do? They're looking at an MDR shop, an MSSP shop, and they're looking to augment the small medium enterprise and you and I spoke about this a little bit off camera.
Speaker 1:They're still, in some ways, there's going to be a decision point for the MSP as they look at augmenting and going with this team approach. They have a decision strategically to make. They can still be that single face for the small medium enterprise and they can use their augment, their partners, to be a team, as a part of their team, almost like a subcontractor, or they can avail that security advisor or other type of advisor directly to the customer, and that might vary depending on the industry, depending on the needs of the customer. But MSPs need to begin thinking about this now, this third leg in their triangle. I believe, jay, that the MSPs that do this right that really thinking about standardizing, automating and now, as you're talking about this team tackling of all these services and augmenting the ones that do it right, that's what's going to separate an MSP from maybe being a five to 10% profit to those MSPs that are getting 30, 35% EBITDA and they're out there.
Speaker 2:Absolutely right and the data plays out.
Speaker 2:When we talked about augment, this co-managed co-partnering, 57% of MSPs are now in this more ecosystem model of executing with their clients and when they walk in and it's not just about the traditional help, desk and break, fix and imaging of PCs and things that we might have been talking about 10 or 15 years ago we're truly edge to cloud in a hybrid environment.
Speaker 2:We're looking at business applications In small and medium enterprises. In many cases, the marketing buyer spends more on technology than the IT buyer and so in that case, you might be connected to a digital agency, because 78% of marketing digital agencies now have converted themselves into tech services companies. There's over 13,000 ISVs that are serving servicing this MarTech and AdTech space and while an MSP may not have deep marketing tech skills, they definitely have the skills to back it up, to do the disaster recovery, to do the security and to do all the layers of that cloud back through to the user support. And this is where that team sport starts to click in and that we saw all the way through the survey in terms of where the opportunities are and the line items that they're seeing in terms of growth opportunities in their business for 2024.
Speaker 1:Jay, that's a good segue. Your survey did a great job and, for those in our audience, I really recommend you take some time and download the entire survey. What you might pull out of it might be different than some one of your peers or even someone within your own company. A lot of times we talk about working in our business and in the MSP community. We know where it's not a nine to five job. We have our customers' needs that are going on and we spend a lot of time in the business.
Speaker 1:But Jay's team has done has given you kind of a cheat sheet or a growth hack form. You can spend some time in a focused way and focus on your business, see what the trends are on the industry, take some things out of that survey and then put it to good use to help move your business forward. Jay, in one of those bits of your survey it talked about the different areas that MSPs are looking at for growth, where we're saying, hey, this is how I'm planning on growing year over year. Do you want to double click and provide a little bit more insight as to where the broader ecosystem is seeing? There's a lot of growth coming.
Speaker 2:Yeah, and a lot of these growth areas replicate the industry as well. If MSPs are looking to grow by double digits, you're going to pair yourself up with opportunities at a product level, at an opportunity or solution level, that are also growing by double digits. So the cloud is everywhere, not only from the infrastructure side, but from the business application side. And then multiple layers of security. There's seven layers of security. That are big opportunities and obviously fast growing opportunities for partners, but one of the things that we heard in other research that we've done is this whole idea of this multiplier effect. For every dollar of, for example, a hyperscaler, an AWS, a Microsoft, a Google, there kicks out almost $6 of opportunity for partners to bring that solution to the point where it's delivering value, and a customer, especially a small and medium enterprise, may not outsource all of that.
Speaker 2:But partners are starting to ask different questions. They're not saying you know how much margin can I make if I resell AWS? You know plot twist, it's not much. The fact of the matter, though, is how can I make $2 or $3 for every dollar of consumption in public clouds? How can I make $2 or $3 for every dollar in subscription in SAS? How can I make you know a few dollars, 200% of the deal, or 300% of the deal when maybe five or ten years ago, I was asking how to make 10% of the deal. So these are changes and whether it's all the layers of security MDR, xdr, edr, security at the edge, security through the network, security through data and web applications, right up through cloud infrastructure there's a ton of multiplier opportunity that MSPs are aware of and are very much after.
Speaker 1:Yeah, there was a couple of bright spots. That probably won't be too much of a surprise. I really wasn't that much of a surprise to me. I know it wasn't a surprise to you, probably not too much of a surprise to our audience. Cloud helping with cloud infrastructure and your customers managing cloud infrastructure Security, as you mentioned, jay, and we'll talk a little bit more for that.
Speaker 1:But what I was also encouraged by was the breadth of which MSPs are saying hey, these are all of these different additional services that I'm providing to the SME. Hey, as I look at 2024, I expect those to grow as well. And really what it speaks to for me is what I would call the richness in the business model. The MSP, a managed service provider, has multiple levers of growth that they can reach there Not just their top line growth, but also their profit, and most businesses only have one level of growth. That say, I need to gain new customers. Well, with the MSP, of course, part of their growth algorithm is how fast can I acquire and retain customers, but also the different services that these MSPs can provide. And then, more importantly, if profit is what their focus is and at the end of the day, cash is king, as you and I know, jay, it's how can I leverage the technology to drive the efficiency up and generate more profit.
Speaker 1:And so for me it was a great scorecard and the survey did a really good job talking with some of the verticals where the opportunity is, but also presented a nice mosaic where all the MSPs can kind of lean in and get to their growth number.
Speaker 1:So, jay, we've been talking a lot about I would say almost that immediate horizon, to kind of play with that word for a bit and some of the growth opportunities right, and I think everyone's in alignment maybe not too many surprises and folks and saying, hey, look, we're in early innings in this whole space cloud infrastructure, cybersecurity definitely they're here and now from a growth opportunity. The landscape overall is quite bullish. Two thirds are saying hey, I'm going to grow by double jay. There's 97% are saying they're going to grow. But, as we know, in every business and every industry there are some challenges. Your survey spends some time on some of those challenges and I'd love for you to double click into what you and your team found as far as some of the top issues that MSPs across the globe are grappling with in more of the immediate horizon.
Speaker 2:Yeah, this is another. One of the surprising things that jumped out as we went through the survey is 22% of MSPs are looking for new customer acquisition. They're worried about the macroeconomic challenges or they're really faced in their own market of growing their sales and marketing capabilities to go get this new market. We saw a lot of other challenges that we've seen before scaling up, for example, and getting all the internal processes and technology integrations and things like that going. But having that jump out almost double what anything else was in terms of a challenge made us kind of step back and have deeper conversations with the MSP leaders and owners and principals and say you know what does this mean and you know how. How are you addressing that in your business? And then, what are you looking at in terms of partnerships and technology and operations and workflows, processes, business logic around? You know how you're going to do that and it's right on the top of the mind in the, in the partners right now and what do you see it?
Speaker 1:Yeah, and you know well. So you know it's a problem that is in some ways, I'd say, as old as the industry itself, but I think it's evolving slightly and I see it evolving depending on, maybe, where an MSP may be in their journey. And so what I'm talking to MSPs, I was talking to a very large, we categorize as an elite MSP in California, and what he told me said hey, john, it's not necessarily that we're having trouble finding customers or finding companies that are in need of our services, but it's really about finding the right type of customer. And this MSP is on a great job standardizing and automating some of my couple of favorite verbs and what he's looking for is a certain type of MSP, that is, a certain type of SME that is in a particular vertical. But it also understands the need for compliance and what their MSP is going to bring looking for an MSP not just to be their IT guy but really to be that trusted business advisor. And so for him it wasn't a challenge of finding a customer, it was a challenge of finding the right customer. And in doing so that way, his struggle was.
Speaker 1:When I talked to some of the other folks, I was talking to an MSP actually larger MSP, but with a different business model. They're more focused on the s and the SME and for them he was having more of a top of final issue how do I get my name out there? How do I make sure I get the reach? That we can do and I think it depends. You know what my advice to MSP is like look at your business model. See what your core competency is. If you're focused in a vertical, well, focus in that vertical. Get your brand out there in that vertical. So, for example, if you're in regional banks in a certain geography, make sure you're hitting that circuit. Go to those trade shows and see what you're doing there. If you're more focused on a geography or a certain type of other type of your business model, hunt there. You know you want to hunt with that type of lead because, jay, you and I know we've been in business for a long time.
Speaker 1:There's a difference between finding a customer and finding the right customer and sometimes an MSP, and that new customer acquisition model. They don't want to just bring in that right type of business because it puts a burden on their workforce if they bring in the wrong type of customer. That new customer acquisition has to be layered in with this quality filter that says is this the customer that will fit my business we're trying to accomplish not just for the immediate horizon but for the long term horizon. But, yeah, I agree, I mean, it's one of those new customer acquisition is a major element of the other part.
Speaker 1:Jay, I think your survey also talked about the workforce. I'd also say this is I think you had some of the categories it was training of the existing team and also finding and recruiting talent, and that's always been, I'd say, a challenge at the end of the day, and that's why I also get back to looking at some areas that, hey, in your market you might need to look at a partner and see if there's an augment that you can look at to bring in maybe a cybersecurity service to help you, or if you're looking at a different type of compliance agency, maybe you're looking at outsource, again to your concept around team tackling certain problems. So I think the labor part of it, at the end of the day, our managed service provider industry is built on kind of a labor arbitrage kind of model, but, as we know, it's hard to find people, it's harder to retain and train those folks, those who do it right, have a huge key, a huge advantage on the competition.
Speaker 2:A lot of the challenges in education, training, certifications, competencies are actually linked to some of the marketing challenges. For the first time in a generation, we're going through a change in terms of our buyer and our employees. By the end of 2024, the majority buyer of tech and telco around the world will be a millennial born after 1982. We could spend a lot of time talking about that, but suffice it to say there's a different psychology, there's a different behavior, there's a different customer journey. These people are very digital. 75% of them say they actually don't want to work with a person during that sales and marketing funnel, which is very different than the way MSPs have gone to market in the past. They don't work that same way in terms of word of mouth that may have worked in the past. So, being much more digital, understanding what they read, understanding where they go, understanding who they follow not only solve some of the marketing challenges, but also solve some of those internal workforce challenges as well. Understanding this demographic and the changing firmographics around it is one of the things that came through in this survey. When we went back and double clicked on that, we looked at, for example, this new customer journey Buying a considered purchase is something today that has 28 definable, measurable moments and, as MSPs kind of look at this new funnel, something's changing this year. Just a few weeks ago, google announced that the end of the cookie. So what you might have done in the past on search engines and buying up third party data around your local, like you said, your industry that you're focused on or your geography that you service that doesn't work anymore when there's not third party data to go and buy. So you got to kind of work on second party data, which is this partnering with those that surround your customer. Their ability to get in front of that type of content the podcast they listen to, the ebooks they read, the events they go to are wrapped around that type of buyer and you need to participate kind of in that model, which is again very, very different. So a lot of the challenges again come back to a very changing market.
Speaker 2:And then the final thing I'll say, which goes to your point about these new opportunities, is this integration first buyer. For decades that we've been measuring what's important to a technology buyer that an MSP is looking to acquire. They've always looked at service and support. They've looked at price. They look at your brand reputation. I mean, these are the things that have been on RFPs forever, but the thing in the last six months that have gone to number one is integrations. I care more about what you're doing and what your solution is and how it works inside of my current tech stack. How it works inside by workflows and the chance of success is maybe more important than the latest feature function, maybe more important than the price or service behind it. So getting in front of this buyer with all of these new changes is what MSPs are looking to do and they're looking to enable. They're looking to others to help partner, to help them to get there.
Speaker 1:Yeah, well said. And look, my keynote at Last in Power in 2023,. I know this is about the future. We'll go back in. The past was really about that.
Speaker 1:Change is constant, and I always shy away from and always say you know the word digital transformation. We're not, you know, turning from a caterpillar to a butterfly and you digitally transform. It's an evolution. Well, you also just touched on a couple of just things that have also been evolving and evolving at a quicker pace, right. So for the MSP we're talking about, even even inside the MSP's base, your technician team, your workforce, the management team they're now becoming the millennials. They're looking at it at a different way. But also the persona that the MSP is looking to attract has also evolved, not just from a tech or age or generation point of view, but also the persona themselves. We're seeing more and more MSPs are now targeting again, whether via Google I'm sad that the cookies are going away, jay, I've not been dunked by milk with but now they're looking at more of that persona. That's more of that technical buyer, that IT professional, the VP of IT, the CIO, and they're looking for them to help. And so it's an ever-changing landscape.
Speaker 1:There's a bunch of different dimensions you mentioned earlier. I wouldn't mind maybe pivoting in a little bit toward another type of evolutionary journey that we're on. You mentioned the seven different layers of security and what we're seeing there. In your survey, one of the hot spots were really around cybersecurity services, whether it be MDR or managed endpoint services, a backup service. We all know about the NIST framework and how it's more and more important for the proper hygiene of small media enterprises and MSPs to really have all dimensions of the NIST framework covered. I wouldn't mind talking a little bit more about what we're seeing from a cybersecurity point of view and what I'm calling more of a shift where MSPs are really looking at cybersecurity services as more of their center of their universe and how they're going to market Any insights that you could share with what you're seeing there from a cybersecurity point of view?
Speaker 2:Yeah, absolutely. I mean cybersecurity first of all. 98% of the survey respondents are all in on cybersecurity. So it's one of these things that it's not a choice. Watching the growth of that market and obviously look at it, the needs of their customers.
Speaker 2:Msps are absolutely leading the charge for cybersecurity. In the overall $80 billion of cybersecurity that's sold every year, that software and hardware, 91.5% of it goes to through or with the channel. This is a MSP-led opportunity. And now the choice for an MSP is looking at all these layers and whether the customer might be on the bit larger, medium or mid-market side, looking at zero trust or SASE, but at any size, no one wants to show up on the front page of the New York Times in terms of a breach or ransomware or something else. So MSPs are looking at this and back to that team sport conversation. The average MSP in our survey has eight people across the 300,000 MSPs and so with eight people doing the 24-7, edr, mdr, xdr type of work, looking at the threat vectors, inspecting the surface area minute by minute again, it's a co-partnering opportunity. Looking at companies like Enable, looking at partnerships to really deliver that for the customer and about 80% of partners on every layer, right from the endpoint up through the cloud, are seeing opportunities at every layer to protect their customers and to see opportunity in terms of having customers outsource that part of the business to them.
Speaker 2:One last comment I'll make on cybersecurity is that for years and years in managed services there was about 30% of small and medium enterprises that would outsource some or all of their IT. This was the help desk. This was patching PCs and doing break fix and doing everything remotely. The thing that broke that mold was cybersecurity. Whether you're the largest bank or largest government or the smallest flower shop, no one can do cybersecurity alone and no one feels comfortable thinking they have the skills and resources to be able to do it alone. So we have now 82% of small and medium enterprises outsourcing some or all of their IT and this has been the biggest opportunity for partners to take this to a half a trillion dollar industry.
Speaker 1:Yeah, no, that's a common thread as well. Right, when I look at enterprises and some of the similarities between enterprises and small, medium enterprise or enterprises is what the channel is trying to service. I think there's definitely a commonality where, regardless of your size, that's concept of trying to do it all in-house, it just doesn't scale, it's not even cost effective, but there's a level of expertise that might not really get there and that's regardless of any type of size. I think that's a really good point. What I do find I wouldn't mind your reaction to that I find different from the channel than the enterprise.
Speaker 1:In the enterprise, there seems to be a little bit more a division of church and state. Hey, I have my help desk team, my CIO's office, and I have my CSO's office, and for good reason. I understand you want folks that are looking at the threats and other folks that are making sure that the policies are being kept up and read the productivity is going up and read. What I see in the SME is really this convergence of security and IT help desk. So much so where I really look at MSPs leading with security, the way that they're differentiating themselves, the way that they're helping with some of that new customer acquisition challenge that you and I were talking about before is they're walking in and having a security or vulnerability or an assessment conversation with their SME or even their mid-sized company and helping them in starting with security not adding security but they're leading with security. How do you think about that and do you see that as a trend as well? That's going to continue.
Speaker 2:Yeah, and one thing that we saw in the research is that in many cases where maybe five years ago you're leading with security to get that conversation and it was almost a hype cycle, where you're showing the customer the latest breach that happened yesterday. Hey, look what happened to Target, look what happened to Equifax, look what I mean. You're trying to show them the front page of the newspaper and say, hey, if this happened to you it could be a going out of business event. And that is changing, where now some of the opportunity is now inbound that the CEO, the boards of these SMEs, are inviting smart people from the MSP channel in to address it. No, they're not unaware now of the risks. They're looking at compliance now as a necessity to understand, to protect their which is their fiduciary responsibility of running an organization is creating that fence of security. So many MSPs are telling us that this is actually a response to customer demand, which is obviously fueling the growth of this as well.
Speaker 1:Yeah, we're seeing it too right, and so I've been saying, really, that line between the help desk and the security services, that line's gone and the SME is really looking there. And the good thing for the managed service provider industry and the channel overall is you just touched on it. For the most part, our MSPs are really trying to provide a service, a critical service, to their customers. They want to make sure they're providing the right level of their right level of SLA with the right tech stack servicing their team. They really don't love selling solutions. What's happened now it's gone from where security has gone. More of a risk, a sliding scale of risk how risk adverse are you, jay Might be different than my profile, and how much insurance do you want to buy, jay, type of thing.
Speaker 1:Well, now, really, what's happened in a lot of it and almost nearly all the industries that the MSP service is different levels of regulatory or compliance needs. So now an MSP does not have to go in and convince a board or a persona at a small media enterprise as to why they need the seven layers of protection. Now they can walk in and say, oh okay, well, this is what you, if you're servicing in this, if you're in this industry or in this geography with this government. Here are the regulatory or compliance checklist. You need to be compliant. So it's shifted what I call like a sliding scale or an area of gray, to more of a black and white world. It's binary You're either compliant or you're not. And customers are now pulling, talking to the MSP. It helped me be compliant not just me, but this is the ecosystem that I'm servicing how can I make sure that I'm compliant for my customers? And it's raising that conversation and it's now throwing the MSP into this trusted business advisor. Because now that MSP the ones that set up themselves, apart from the herd, so to speak, other ones that are staying in tune with the compliance of regulatory changes are happening out there and they're guiding their customers before the changes are happening with their data protection, with their policy and procedures. And it's beyond just the IT, it's more of a business process bit.
Speaker 1:I believe it to be a huge tailwind in our immediate but also our medium term horizon, jay, and I think it's one here to say and it plays in to the needs where these MSPs definitely need to start looking at additional help.
Speaker 1:I'm seeing I was recently talking to an MSP here in the Boston area, where I am, and they're looking at partnering with Enable in a couple of different ways. Some MSPs are choosing to just resell cybersecurity services like MDR, and others are looking to actually just bring that in as a service that they themselves are offering and just need some help. So even the way that MSPs are looking to avail the cybersecurity services and helping their customers be the get compliant, it's going to follow a wide spectrum. My advice to the MSPs is be explicit, take a step back, have the conversation with your team, understand your core competencies of your team, the markets that you're trying to serve, and be really explicit as to how are you going to attack this delicious type of demand that's coming from a compliance and regulatory point of view. For me, it's one of the lightning rods that will drive growth in 24 and beyond, for sure.
Speaker 2:Yeah, you made a great analogy about church and state.
Speaker 2:And if you call in a big bank or a government, obviously they have massive organizations to do those things, but as you get into the small and medium enterprise, it's the MSP that actually plays that role.
Speaker 2:So if you look at business data, for example, 75% of SaaS today, business applications are bought by the lines of business. Building out a sales stack, a marketing stack, a CX stack, operations, finance, hr all of these operations depending on the size of the customer, whether they have vice presidents in place or not are building up lots of different areas and a bigger surface area with critical data. And so when there's not a CISO office, the MSP plays that role to help. If there is an IT manager or not, go and make sure that they understand and take an assessment almost that asset inventory assessment getting back into remote management here Of what's out there, what are the 112 applications that an SME is running on average and how to make sure that data isn't flying around corporate or public clouds in a way that's non-compliant or puts the organization at risk. Again, massive opportunities around compliance, massive opportunities of play in that role for your client that may understand the layers of threat.
Speaker 1:Well, and it's a great point. We know it's a hybrid world, right. We know that the MSPs are now tasked with monitoring, managing and securing data. That's in the physical world, whether it be a workstation or a server, a virtual machine. But you just touched on a couple of different bits, right. Depending on that tech stack, your marketing team might have a bunch of different SaaS applications. Your finance team might be using a couple of different SaaS applications. You're using a CRM.
Speaker 1:Msps are now being tasked with helping small media enterprises and mid-sized companies have a policy and governance and control around the data that's flying all around their company, not just in their wiring closets anymore, Jay, but all these different SaaS applications.
Speaker 1:And we know, as that economist article a couple of years back said, the data is the new oil, is the new gold, right, and in every company, protecting and being able to manage, but also being able to suss out and gain the insights from that data, can really separate whether or not a small media enterprise is successful or not. And more and more of those small media enterprises are looking to MSPs to help protect, monitor and manage the applications and the data in the cloud and at a hyperscaler in their wiring closet hybrid, hybrid, hybrid. But also that'll be getting to help them with some BI and business intelligence. We're seeing that as another uptick where small media enterprises are saying hey, you know where all the data is, help me configure this all, help me with the data lake, help me bring this into one central source so I can run my business, which I think is just another opportunity for the MSPs to go further as that trusted business advisor up to stack, driving a premium, helping with their epida and making them a stickier partner for the customer for sure.
Speaker 2:Yeah, and the great thing about partners is what you may have sold in the past as backup, disaster recovery has become a key foundational layer of security. So thinking about MSPs that are using Cove, looking at MSPs that are out there backing up and supporting their customers data it's become a key element to ransomware and other abilities to be resilient and get back up and running. So, again, things, the worlds are colliding and change, change. Change is bringing all this together, which again pushes back on the MSP to have that level of orchestration for your customer.
Speaker 1:All right, and one of the other key takeaways from your survey was talking about cloud infrastructure and both the challenges but also the opportunities that having MSPs helping to manage with that whether it be the Microsoft stack or other hyperscalers stack and helping them with their cloud infrastructure.
Speaker 1:I think that the opportunity's there. So if you take a step back, we have in our immediate horizon the opportunities and the growth looks pretty rosy Jay in that next horizon we're seeing, whether it be compliance or the push to cloud and cloud infrastructure the MSPs runway for growth also appears to be in a pretty good spot. I kind of categorize that as that next second wave, whether it be compliance and cloud infrastructure, the next second wave of growth for the MSPs. Let's push the horizon a little bit further and talk about you know where I'm going because we all we will need to talk about this AI. Your team also did a little bit of work on you know how folks will start to begin digging in to AI. Maybe share with the audience a little bit as to what your team found and we can go back and forth on you know how we think that's going to enrich maybe the longer horizon in the space.
Speaker 2:Yeah, 2023, if nothing else, will be remembered as the year of AI, and I remember earlier in my career defeating Gary Kasparov at chess and playing Jeopardy and some other earlier AI moments. But this was the moment of generative AI, and almost everyone in the MSP channel was asked by their customers what's this new thing? Chat, GPT what is this new barred tool? Are we lighting up SkyNet? Here Is Arnold Schwarzenegger going to. You know, fly back and is this it?
Speaker 2:And you know, all of us at last March were forced to kind of go in and dig in, and one of the surprising things about this survey is that 88% of MSPs are not dabbling as consumers, but are now actively looking at generative AI as a core part of their internal processes the way they market and build out marketing and sales strategies, the way they think about their internal processes and workflows, thinking about invoicing, billing, service, tickets, the way they go to business and thinking about themselves competitively. 88% are actively using it, and so this was a surprise to us. As you know, we were expecting much less, and they're putting demand on you and enable they're putting demand on the people they're partnered with today is to deliver them more. They're seeing this opportunity as a co-pilot. They're seeing this opportunity to take their customer to the next level. But they're also seeing the opportunity internally to drive out cost out of their business, to drive up customer experience, to look in at all these different areas where they can take their MSP into the MSP of the future.
Speaker 1:Yeah, really well said. I think the takeaway there is, hey, that long horizon of AI and words like Watson and from a. You know they're not as far, far reaching as maybe folks would really think. And I think it's a good I'll say even almost a warning, jay, to the audience in that, how are you approaching this? Are you spending time? Are you taking time again, not in your business, but on your business and coming up with an approach or a strategy?
Speaker 1:Look, what's fundamental to the channel. Business was fundamental to every managed service provider. I don't care if they're a two person shop in their parent's basement or their billion dollar MSP and we know, jay, we have billion dollar in publicly traded managed service provider businesses today. The core to all of that is efficiency, and the way that MSPs gain efficiency and scale is through automation. You know, here at Enable, it's one of our key tenants. Right, we have our in both of our platforms and in our cove offering. We have our automation part to help MSP scale and get there. Right.
Speaker 1:For me, ai is this natural evolution. You know, we started with PowerShell and writing scripts and got into a little bit more of some RPA. You talked about orchestration and then pulling in all the data for machine learning. Generative AI is that natural evolutionary step. When I think about how the different use cases for AI and generative AI can start playing in our industry, you're right. Some of them are in the here and now. Today, at Enable, we're using AI to have a better mail security algorithm and use all that data that we're getting from the millions and millions of mailboxes to make sure that our algorithm is deflecting and detecting the spam and any other type of nefarious activity. We're using it in our cove data protection.
Speaker 1:So when I talk to MSPs about AI, the first thing is hey, how are you going to use AI to better make a more secure environment for you and for your customers, whether it be third party or something that you're integrating? Number one, number two how are you using it to better gain efficiencies for your technicians? Right, and it can be as simple levels of orchestration or automation. But how are you going to use generative AI or chat GPT? We integrate with chat GPT so a technician can put through natural language a simple prompting, get a quick response and get back to the more meaningful bits. So then further bits as to how and now they can use generative AI to actually just route simple tasks to their technicians and make sure that they're getting the answer, making sure that they're sticking to that SLA.
Speaker 1:So for me, this will be a key tenant or a key pillar that will differentiate in the MSP community. What separates that MSP that's actually getting that 30% EBITDA, gaining more efficiency, gaining more scale. But also the ecosystem. Vendors need to spend time here. At Enable, we're spending a good amount of time to make sure we're responsibly using AI, to make sure that it avails the power to automate and leverage the automation and the artificial intelligence for our technicians to make a technician that might have X number of months experience accelerate them on their journey so they can be performing at a much higher level. So I think you're right. I think it's not just the ecosystem, but even each MSP and again, I don't care if you're a really small shop or a large shop. Take the time, see what's out there. There's a lot of tools that are here. There'll be more that are coming and they'll be pretty much off the shelf that you'll be able to start leveraging and automating, sustain efficiencies in your business.
Speaker 1:So, Jay, we were talking a lot about the hybrid needs of the SME, right?
Speaker 1:So, whether it be they're in different SaaS applications, as you mentioned.
Speaker 1:They're tech stack on the marketing side, but the need for the MSP is also a hybrid need, right?
Speaker 1:They're needing to monitor and manage physical workstations, m365, data that's in the cloud and everywhere.
Speaker 1:For me, that's why I believe that an MSP will continue to need that RMM, the remote monitoring and management cornerstone, that unified management solution that helps them with the physical world, the managing of the physical devices, but also of the cloud devices.
Speaker 1:We're here to enable. We're focused at investing for MSP so that they can actually manage and monitor and secure the Visible World and the Digital World M365, a virtual machine, an Apple device, a Windows device, a Linux device and I believe that RM is here to stay and really continues to be that cornerstone as we enter to that next wave. So we're looking forward to it continuing to make sure that we help MSP scale with that essential core fabric of the RMM. Hey, jay, one of the other interesting parts of your survey was around M&A. We know that the industry has been acquisitive for quite some time Really really Since people really started getting this concept of recurring revenue managing services. You could put some debt on a business, lever it up and acquire, maybe share with the audience some of the findings as it relates to mergers and acquisitions in the here and now, but also in the future.
Speaker 2:Yeah, this was an interesting finding. Where almost half of MSPs are acquisitive, they're looking at opportunities of building out their breadth and depth as an organization, where only 13% of them are sellers. You almost think of real estate when you have buyers and sellers, but when there's not an even amount, it's interesting looking backwards and I think there was demographics at play and some other things, but also the market. There's not a lot of things that entrepreneurs can go do outside of this opportunity that would grow faster. We have an industry here that's created billionaires. We have people selling their businesses and having retirement level events. So I think that the 87% that are really ready to move on from that are basically seeing this opportunity. They're hearing from their customers, they're watching all the stuff that we've already talked about in terms of the layers of growth and I think they're having some fun in their business and they can see not only 2024, but over the next two, three, four years, some double digit growth rates and some really interesting solutions to solve for.
Speaker 1:Couldn't agree more. You know the old Wall Street phrase right, you buy low and sell high. And what this tells me, jay and it struck me as well that disconnect between those that are looking to acquire and those that are looking to sell what that really tells me is in that balance not equation of hey, where's my risk and where's my opportunity the data really speaks for itself. The MSP community is saying, hey, there's a lot of opportunity out there. I can grow my business in a healthy way, a sustainable way, a profitable way, and if I continue to grow that well, that's going to result in a financial windfall for me. So why would I sell low when the opportunity is so high? Let's grow this thing. They're seeing that great intersection of the demand, whether it be moving to the cloud, the cyber services, the compliance bits, the need for SMEs to really look at these folks as trusted advisors. And, jay, I think you're right. They're having some fun, they're growing their business and they know, if they continue to execute on this path and really leverage to these winds that are at their back, they can have an exit, you know, at a future spot when there might be less opportunity.
Speaker 1:But the data seems to speak to itself. The MSPs are saying, hey, there's more opportunity than risk. Let's keep growing our business and having some fun with this thing. So, hey, jay, sorry you couldn't make it up here in the cold up here in Boston, but really a big shout out to you and your team for the amount of work, the science behind the data, the surveys that you did, the live conversations that you had with all of these MSPs. The report's fantastic. It helped me. I know it will help an MSP again, regardless of size, geography, vertical focus, strategy, where they are on their journey. It's worth the read, it's worth the time. So a big shout out one for you joining us today at this event, but also against your team for putting in those hours to really bring in those key insights to help our MSPs figure out what is that right horizon for them.
Speaker 2:Well, thank you so much again for having me, but I was excited about this, I think, as you were, and there's still some surprises left in the report.
Speaker 1:I love it. I love the little, I love the cliffhanger there. So thank you for joining us. Hopefully you took away a couple of those insights. As Jay mentioned, there are other nuggets inside the survey, so inside the report, so please take the time and do that. With that, I'm going to pass it over to Mike Adler, who's our CTPO here at Enable Mike over to you.
Speaker 3:Thank you, john Jay, I want to take a couple of minutes to describe some of the key innovations that we're going to be delivering in 2024 to help you meet some of the needs that you have now and into the future. Specifically, I want to address our managed security services and how we're going to help you simplify managing the Microsoft Cloud. Both of these solutions are being designed to help you address both the fact that talent is going to continue to be short and to ensure that the talent that you do have is able to operate efficiently and profitably so you can continue to grow your businesses. Let's step into managed security services first. Managed security services are the solutions that are going to help you address the major needs that you're seeing from your customers dealing with security. We know and the survey provided more information that your customers are going to demand more security from you than you might be able to provide. As such, we want to help you be able to provide greater security services that go beyond EDR, that help customers truly meet the needs of cybersecurity. Moving forward, this includes driving increasing cyber threats, increasing cyber demands and, more importantly, addressing the quality and speed of response that's necessary in order to meet cyber requirements moving forward.
Speaker 3:What are these MDR services? First and foremost, it's about enabling multi-layer detection. It's ensuring that you're not just using EDR solutions, but you're bringing data together from across the ecosystem that you have deployed at a small and medium-sized business. It's providing the right investigative tools so that not only do you have that data coming together, but you can tie that data together in a particular way so that we can identify patterns, risky patterns, concerning patterns that are happening within each and every customer that you service individually, and be able to bring those to your attention and automatically potentially remediate them, so that those concerns can be dealt with before they ever take up a technician's time. We also need to design these solutions to ensure that you have full access to this information. Our tooling is set up so, while we are taking care of the security services 24 by 7 for you, you still have access to the tools. You have access to the reports, you have access to the data so that you can get the information you need to build confidence with your customer. And, most importantly, these solutions provide the compliance reporting and compliance information directly to you so that you can meet cyber insurance requirements and be able to continue to drive the needs of your customer from front to back, including patching, security services, edr response and other security needs from a singular solution.
Speaker 3:So how does MDR services work? So the first key part of MDR services is the fact that we are going to gather data from across a variety of sources within each small and medium enterprise that you are servicing. Yes, this is going to include information off the device using an agent, but it's also going to bring together information from an EDR solution and not just enable EDR. But if you have other third party EDR solutions that you want to bring in data from, we can support that as well. We will also bring together information from Microsoft Azure, ad and other third party products that you are using to support identity solutions, data access solutions and data categorization solutions. All of that data gets ingested into a singular data store From there.
Speaker 3:We are going to enrich that data, provide, give it context. This is the place where we take a piece of data or information about a device and map it to the user. This provides a place where all the data comes together and can be tied together so that it has rich context. With that rich context, we can do better pattern detection. We can look at the behaviors of devices and users and information across the small and medium enterprise, then we can use that enriched data to draw assumptions and provide better remediation. Moving forward, once we have this data enriched, that's when the magic happens.
Speaker 3:Now we are going to plug this into a set of rules, a set of machine learning, some artificial intelligence, and we are going to start looking for patterns, patterns that a human can't always see. Yes, there are simple patterns, like impossible travel, in which hey detect the fact that a user logged in from one place and another place simultaneously. Obviously, that's a bad situation, but it can be more complex than that. Maybe you have a new executable that's been downloaded onto an endpoint and it's suddenly using credentials from one endpoint to attempt to log into another endpoint. Often those detections are going to be silent. But if you've brought the data together, this is where our MDR service can find those patterns, see those patterns, bring them up to the surface and identify them, and from there we can correlate and we can detect potential issues.
Speaker 3:It's these detection issues, as they're raised, where then our analysts 24 by 7 in a SOC are able to address them, and that addressing can result in a number of ideas. It could be an idea that, hey, this is a very minor situation and it's been dealt with automatically by one of the other tools, and that's fantastic. It could also be a situation in which remediation actions need to be performed by a technician, and that's fantastic, and we're going to be able to automatically remediate some of these and others we can escalate to you to be dealt with. Some of the remediation techniques that you might want to take, or you might want us to take on your behalf, might include patching a device, might include isolating a device from a network, forcing a password change, enabling re, enabling 2FA and forcing all existing sessions to be logged out. All these types of situations can be dealt with and remediated from our SOC and escalated to you as you require, and all of these services are happening 24 by seven from a staff that you don't have to manage. What we're going to provide you access to is the reporting that comes afterwards how many incidents did we find? What were they? How often did we have to act on your behalf? How many things do we have to escalate into your team? This is the information that's going to provide great security and comfort for you, for your customers and, more importantly, meet the compliance and insurance needs that your customers may have. Moving forward, socialmdr is a solution that's going to help everyone be comfortable with security, and not just EDR security, but the full picture of the security setup within that particular partner. To get more information about Enable's managed security services, reach out to your partner success manager or go to enablecom.
Speaker 3:The second thing I wanted to talk about was our Microsoft Cloud technology. We know that each of you are using the Microsoft Cloud to help service your customers and, let's face it, using the Microsoft Cloud isn't easy, because most of the technologies that are in play here were not built for MSPs. They're single tenant. They are not able to be set policies across the different tenants. You can't set permissions, you can't set policies, you can't drive out a standard across the use of Microsoft Cloud across all of your SMBs. This makes it inefficient for you to use and it makes it frankly expensive for you to be able to drive profit out of managing Microsoft Cloud technologies for your customers. This is where we want to be able to step in and help you simplify and manage the Microsoft Clouds.
Speaker 3:Let's take a simple example. Think about the use case where you simply have a customer who wants to onboard a new employee. This is a multi-step process. This is something that your technicians have to do across a series of Microsoft Clouds. You have to create the user. You have to get a license for that user. You're going to have to configure an MFA token for that user. You're going to have to create a mailbox for that user. You're going to have to assign groups. You're going to have to assign an asset, a device. You're going to have to manage it with Intune. You're going to have to potentially configure Azure access. You're going to have to get the various patches and everything else that needs to happen on that device. That's a lot of work. That's a lot of steps. Imagine a place in which you could automate the onboarding of new users and new devices so that it was A consistent into your organization and B didn't take 20 to 25 minutes of technician time every single time that particular action happened.
Speaker 3:This is the solution that we're looking to bring together with our Microsoft Cloud Management Technologies. This is where we're going to introduce Enable Cloud Commander. Enable Cloud Commander is going to help you manage across the Microsoft Clouds. It's going to manage across M365. It's going to manage across Azure. It's going to manage across Exchange. It's going to manage across Intune. It's going to help you tie together all the individual pieces of the Microsoft Cloud in a single tool in which you can set consistent policies, in which you can set consistent orchestrational behaviors and in which you can make changes directly across any number of your tenants without having to leave a console. This is going to save time, it's going to make it more consistent and it's going to help you manage the Microsoft Cloud much more easily and much more profitably.
Speaker 3:So how does this happen? Enable Cloud Commander product is, first and foremost, built to work across the Clouds and it brings the together, ties together each of these Microsoft Clouds in a multi-tenant way, starting on top of Microsoft's GDAP authentication protocols. We authorize each tenant of yours into Enables Cloud Commander. We get the permission set up correctly, we get the group set up correctly. This enables your technicians to be able to quickly manage across all of your customers from a single console. From there, we can apply policy, we can drive behavior, we can give you API access, we can give you script access and be able to do all these things from a singular place across the entire Microsoft Cloud infrastructure.
Speaker 3:This is going to simplify how you're able to manage the Microsoft Cloud, shortening the time that it takes for you to perform actions in the Microsoft Cloud, creating consistency for the Microsoft Cloud and the way in which it's deployed, not just for one of your customers, but across all of your customers. Most importantly, this is the place where automation comes in and this is the place where Enables Cloud Commander product can help you simplify the Microsoft Cloud. The product is becoming GA. You again should reach out to your PSM or go to enablecom to get more information. These two innovations are just parts of the Enable portfolio that we're bringing together to help you meet the needs that we have today and the needs that we've identified moving forward, to help you continue to be a growing MSP, an innovative MSP, and to meet the needs of your customers as we move forward together in the future.