When ConnectWise CEO Jason Magee kicked off IT Nation Connect 2019 in Orlando, Florida, the event marked a key inflection point for the IT channel and MSPs (managed IT services providers) worldwide.
Now Confirmed: ConnectWise acquires Continuum, ITBoost.
Here's a day-by-day update -- ahead of and during the conference. Check back daily for the latest conference news and analysis. Also, check out 10 MSP market disruptions that may surface at IT Nation.
ConnectWise IT Nation 2019: Pre-Conference Analysis
This portion of the blog was published October 21, 2019. Additional updates, starting Sunday, October 27 through present day, are further below.
1. MSP Market Feels Saturated (But It's Not): No doubt, some segments of the MSP industry are feeling quite crowded. As I've stated before, the sell-to model (from technology vendor to MSP) is quite mature in North America. Check around and you'll discover that most recent RMM (remote monitoring and management) and PSA (professional services automation) deployments are now rip-and-replace projects that involve MSPs jumping from one vendor platform to another, rather than first-time deployments involving newly minted MSPs.
However, the sell-through model (from technology vendor through the MSP to the end-customer) remains quite healthy. Simply put, the best way for any technology or cloud company to reach SMB customers is through MSPs. For that reason, smart MSPs are far from dead amid the IT channel's near-ubiquitous shift to recurring revenue. Big opportunities remain for those who master multi-cloud management; cyber risk mitigation; and automation tied to artificial intelligence.
2. ConnectWise Sell-Through Strategy: While ConnectWise continues to have a strong sell-to position -- mostly involving ConnectWise Manage and ConnectWise Automate, the company also has a growing sell-through strategy -- including organic product development, partnerships, investments and perhaps some new acquisitions. Among the platforms to watch: ConnectWise Marketplace, an online store of sorts. ConnectWise Marketplace features a lengthy list of third-party software and tools across business continuity, collaboration, cloud computing, security and plenty more. Still, it has never caught fire the way Salesforce AppExchange drove cloud apps into the enterprise. I suspect ConnectWise will double-down on the marketplace, potentially competing with some cloud-oriented distributors like Ingram Micro Cloud and Pax8, among others.
3. ConnectWise Acquisition Strategy: The company's growth effort may also involve acquisitions. Private equity firm Thoma Bravo acquired ConnectWise in February 2019. ConnectWise CEO Jason Magee and his executive team, in turn, have been exploring the market for potential tuck-in or strategic acquisitions.
We haven't heard anything firm, but the two potential targets to watch, ChannelE2E believes, include:
- ITBoost: We’ve heard occasional rumors that ConnectWise may acquire ITBoost, an MSP documentation and password management software company that competes with Kaseya’s IT Glue and SolarWinds Passportal. Neither ConnectWise nor ITBoost have publicly commented about M&A chatter that we heard starting in July 2019.
- Continuum: Another occasional rumor involves ConnectWise potentially acquiring Continuum. Speculation about such a business combo briefly surfaced back when Thoma Bravo acquired ConnectWise in February 2019 (see item 5 in this interview). Thoma Bravo has also owned Continuum since 2017. And speculation about a potential Continuum company sale surfaced in June 2019. More recently, Continuum CEO Michael George has been predicting that the MSP software and technology platform industry will undergo another wave of consolidation. In ChannelE2E's opinion, it's easy to see how Continuum's NOC (network operations center) and SOC (security operations center) businesses would align with ConnectWise's software business. But we haven't heard anything firm on this. And ConnectWise already has a NOC partnership with IT By Design, which also attracts occasional M&A rumors...
And just to reiterate: The two potential acquisition targets mentioned above are mostly speculative...
4. ConnectWise Cybersecurity Strategy: Actually, it starts with a risk mitigation strategy. ConnectWise has spent more than a year telling MSPs and IT Nation ecosystem members to lock down their own companies before looking outward to sell cybersecurity services. The recommendations include embracing the NIST Cybersecurity Framework.
So what's next on the security front? The likely answer involves a new Technology Solution Provider Information Sharing and Analysis Organization (TSP-ISAO). Magee and ConnectWise CISO John Ford have been in touch with third-party vendors. Their goal: Recruit and welcome all companies — including rivals — into the TSP-ISAO to help raise industry defenses, and thereby benefit all MSPs.
ConnectWise has been formulating the TSP-ISAO plan since 2018 or so. The wheels were set in motion when ConnectWise invested in Perch Security in October 2018.
5. Other Areas of Potential M&A: We may see additional M&A deals within the MSP platform ecosystem shortly before, during or after IT Nation. Among the companies and rivals to watch:
- Barracuda Networks: Which has quietly emerged as a large provider of MSP-focused security and data protection tools.
- Carbonite, which is scheduled to announce quarterly earnings on November 12. The cloud backup and disaster recovery (BDR) provider also owns Webroot. A new partner program is expected in early 2020. But Carbonite has also been the subject of takeover rumors amid some recent weakness in its data protection business along with the search for a new CEO. We wouldn't be shocked if ConnectWise parent Thoma Bravo gave the company a look. PS: Axcient, another data protection specialist, has also been been the occasional subject of recent M&A rumors...
- Datto, which is hosting the DattoCon 2019 Paris Conference on October 21-24.
- Kaseya, which is hosting the Connect IT Europe 2019 Conference on November 4-7.
- SolarWinds, which is scheduled to announce third-quarter results on October 30. During a Q2 earnings call, SolarWinds CEO Kevin Thompson essentially said the company remained in the market for more acquisitions -- but he also warned analysts not to over analyze the statement. In my mind, that means SolarWinds is ready to make the right acquisition at the right valuation if such a deal emerges...
6. Other Stuff to Watch:
- MSP M&A strategies, valuations, etc.
- MSP industry entrepreneurs who are emerging as angel investors.
- ConnectWise Founder and former CEO Arnie Bellini -- his current focus as a ConnectWise advisor and his role in the broader IT market...
- PS: If you're new to the MSP market, read this blog from September 2019 and this blog from February 2019 for a primer on all the M&A and strategic alliance activity.
ConnectWise IT Nation 2019: Sunday Oct 27 Updates
This portion of the blog was published Sunday, October 27, 3:45 p.m. ET.
7. ConnectWise-Continuum Combo?: More rumors about ConnectWise acquiring Continuum surfaced Sunday. Some folks suggest a deal will, indeed, be announced at the conference. See item 3 further above for the earlier chatter.
8. MSP Management Dashboard: CWDash, a business intelligence application for ConnectWise Manage, now has 6,000 MSP customers, parent company ForzaDash says.
9. Communication Services: bvoip at the conference will showcase the 1Stream 2.0 Voice Integration Platform Release, code named Flash. The platform offers deep integrations with CRM, ERP, PSA business management applications.
10. What's Next for Continuum?: A look at Continuum's business journey, leadership team, milestones and next potential moves.
Monday: Oct 28 Updates
11. M&A - Managed Security Services: Fortinet has acquired enSilo, an endpoint detection and response (MDR) security company. Fortinet's MSSP (managed security services provider) partners will gain enhanced MDR (managed detection and response) opportunities, the companies say. Fortinet works closely with a range of MSP-friendly platform providers. The company had a major presence at the recent Continuum Navigate 2019 conferences in Las Vegas and Pittsburgh. And Fortinet will also have a major presence at IT Nation Connect 2019.
12. Partnership - Cisco Systems and Perch Security: Details are here from MSSP Alert.
Tuesday: Oct 29 Updates
13. Data Protection - Momentum: MSP360, which offers multi-cloud backup services to MSPs, grew revenues 60 percent in Q3 2019 vs. Q3 2018. Also, product activations rose 40 percent during the period. Actual revenue and income figures were not disclosed. MSP360, formerly Cloudberry Lab, allows MSPs to manage customer backups across Amazon Web Services, Microsoft Azure, Google Cloud Platform (GCP) and other cloud systems.
Wednesday: Oct 30 Updates
Keep checking back for ongoing updates throughout Wednesday...
14. ConnectWise CEO Jason Magee's Keynote: It's set for about 5:00 p.m. ET today. Stay tuned for updates.
15. Password Management: Keeper Security has launched KeeperMSP. which provides "comprehensive password security services tailored for managed service providers (MSPs), managed security service providers (MSSPs) and their customers," the company says. Partners can purchase Keeper directly from the ConnectWise Marketplace. We're checking to see if or how KeeperMSP against Kaseya AuthAnvil and IT Glue, and SolarWinds Passportal,
16. DevSecOps: Refactr has unveiled the Refactr Platform, which can be used by internal IT, security, and IT service providers teams to "centralize, standardize, and modernize their delivery practices through IT as Code using the latest in infrastructure-as-code, configuration management, and security automation tools," the company says. The offering is a rebranding of the company's Cloud + Security Architect Platform. Also, the effort gains Refactr’s playbook.cloud container sandboxing backend with a focus on "providing an agile, radically simple DevSecOps automation platform," the company says.
17. MSP Documentation: IT Glue, owned by Kaseya, has unveiled four product features that enhance the MSP documentation platform with "advanced functionality on passwords, live editing, host-proof hosting, and network documentation," the company says. Among the new capabilities to watch: Office Cloud Editor, which enables live online editing of Microsoft Office documents directly within IT Glue.
18. Managed Breach Detection: Huntress Labs, a provider of managed breach detection for MSPs, SMBs and enterprises, has unveiled Assisted Remediation. The new offering automates the execution of targeted remediation actions, Huntress Labs says. The company has been at the forefront of protecting MSPs from ransomware attacks, as well as documenting the threat landscape around such attacks.
19. ConnectWise Acquires Continuum, IT Boost: Confirmed.
Thursday: Oct 31 Updates
20. Angel Investors at IT Nation: ChannelE2E hosted an off-the-grid angel investor meeting. That's all I can say about that...
21. Data Protection: Axcient has launched X360, a converged MSP platform that provides single sign-on and a common user experience across Office 365 backup, protected sync and share, and BCDR (business continuity and disaster recovery). This is the latest in a growing list of technology milestones under CEO David Bennett, a Webroot veteran who joined the company in March 2019.
22. Cloud Distribution - Microsoft Azure: Pax8 has agreed to distribute Nerdio, a platform that allows MSPs to more easily monetize and manage Microsoft Azure cloud services.
23. Partnership - Intermedia, ConnectWise: Intermedia and ConnectWise have inked a strategic partnership. The two companies will deeply integrate Intermedia's Unified Communications as a Service (UCaaS) and Call Center as a Service (CCaaS) offerings with ConnectWise's software. Intermedia, which is private equity owned, also is working closely with Continuum, which ConnectWise is acquiring. Hmmm...
24. Send Me Your IT Nation News: And of course, rumors are also welcome: [email protected]. And keep checking back. We'll update this blog throughout the conference.
Friday: Nov 1 Updates
- M&A Discussion: Catch the 10:30 a.m. session featuring Tim Brewer (CEO & Co-Founder, Functionally); Mike Hoffman (Principal, Thoma Bravo); Jay McBain (Principal Analyst- Channels, Partnerships & Alliances, Forrester Research); Arlin Sorensen (VP of Brand and Ecosystem Evangelism, ConnectWise) and me.
- Our on-site interviews wrap around 5:00 p.m. ET.
- Stay tuned for daily updates and a show wrap-up.
