Tomorrow’s RMM Isn’t RMM

On the eve of IT Nation 2015, plenty of readers are asking me how the core MSP software market (RMM, PSA, BDR) will evolve. Some of the answers will surface at the ConnectWise-hosted conference. But others are unfolding -- right now -- in Silicon Valley. Here's how.

First, a little background for those who are starting their MSP journey: Generally speaking, managed services providers leverage RMM (remote monitoring and management software), PSA (professional services automation), BDR (backup and disaster recovery) to automate their businesses -- and their customers' businesses. Most of the early MSP software work involved on-premises infrastructure and MSP service desks.

So what's the next wave? Take a look at technology companies like AppDynamics, LogicMonitor and New Relic, along with some key offerings from the likes of CA Technologies (yup). Then, turn your attention to total service providers (TSPs) like TekLinks.

Original Thesis: DaaS

When we were ready to pull back the curtain on ChannelE2E, two of the people we checked in with were LogicMonitor's Service Provider and Channel Management guru Andrew Morgan, and TekLinks VP of Managed and Cloud Services David Powell.

My original thesis: About two years ago, I assumed all MSPs would offer some sort of hosted desktop -- desktop as a service (DaaS) -- as part of a natural progression from PC monitoring to software management. Basically, DaaS was the end game. In some ways I was right. There are some key players (example: independenceIT) that offer DaaS (and lots more) to partners. In some ways I was wrong. I'm not sure if we'll see a huge market for third-party hosted desktop services when so many of us already use basic Google Apps and Office 365 from the established giants (um... names like Google and Microsoft).

New Thesis: DevOps & Sustained App Innovation

So where's the real MSP opportunity? Actually, it's at the application level and it involves DevOps -- the best practices that allow customers to continually maintain and enhance their applications to improve business performance.

CA Technologies Channel Chief Alyssa Fitzpatrick refers to that as the Application Economy. More details about the MSP opportunities will arrive at CA World 15 later this month.

Meanwhile, LogicMonitor, TekLinks and several other DevOps-obsessed MSP experts are set to host a panel at IT Nation called "Bursty or Thirsty?" At first glance, the panel is about creating a successful cloud strategy as you weigh private and public cloud options like Microsoft Azure, Amazon AWS and more.

But here's the thing: If you to poke and prod TekLinks and LogicMonitor a bit, you can learn "why" they're so obsessed with the right cloud choices. The answer leads back to... wait for it... DevOps and application-level work for MSPs.

Here Come Next-Gen MSP Tools

Of course, whenever there's a business challenge ("monitor and optimize customer applications") there's a tool set to consider. And that's where the next generation of RMM options enter the picture. Only, they really aren't RMM solutions.

A few examples:

1. LogicMonitor focuses on SaaS-based performance monitoring, and helps larger, more mature MSPs to push beyond their classic business models. The company's channel advantage: MSP relationships are in the executive team's DNA. They don't need to "learn" the channel.

2. New Relic is a hyper-growth company that's pushing beyond application performance management to infrastructure management. New Relic's Q2 2016 revenues skyrocketed 69 percent to $42.9 million. The company just acquired Opsmatic, a startup focused on infrastructure monitoring for DevOps teams. Read that paragraph again: New Relic has monitoring tools focused on the application and infrastructure level for DevOps in today's cloud world. It's a simple message that many traditional RMM providers better pursue... fast.

3. AppDynamics provides real-time application monitoring, is growing like a weed, has raised roughly $300 million to date (including a new round of $83.4 million) and just hired former Adobe digital chief David Wadhwani as its new CEO.

First Mover MSPs to DevOps

Meanwhile, investment money is flowing toward total service providers like Synoptek and TekLinks, two of the first channel partners to make a run at the DevOps and application-level monitoring opportunity. On a larger scale, Equinix -- the $2.5 billion cloud interconnection giant -- acquired Nimbo earlier this year to address customers' enterprise DevOps needs for Hybrid clouds.

Now that you have some context, let's take a second look at that LogicMonitor panel at IT Nation. The participants are:

Yes, I plan to crash the discussion. I'm not all that interested in "how" to choose a cloud provider. That's a 2010 conversation for most MSPs at IT Nation. I know the general answer is either Azure or AWS... or perhaps even IBM SoftLayer. I'm far more interested in how MSPs will manage and monetize DevOps and application monitoring for customers... I think the panel has the answers.

Don't Forget the Risks

Now that you know the good news, let's look at the risks. Many of these next-generation tool providers are growing fast but losing money. For instance, New Relic had a GAAP loss from operations of $15 million in Q2 2016 despite the company's rapid growth. Also, AppDynamics hasn't gone public yet and some promising startups in the market didn't survive on their own. One example involves BMC buying Boundary's technology assets after that company apparently ran out of money.

Moreover, there's always the classic MSP challenges as we shift to DevOps and an application-centric mindset. They include:

ChannelE2E will go hunting for answers at IT Nation.