Katalyst CEO: AI Is A ‘Tremendous Equalizer’ For MSPs

‘AI is creating opportunities for smaller organizations to compete in ways they couldn’t before. Historically, larger firms had advantages because they simply had more resources. AI helps level that playing field,’ says Luke Johnson, Katalyst CEO.

Fresh off its partnership with New York-based MSP e4n, Katalyst is doubling down on cybersecurity, automation and AI-driven service delivery while exploring acquisitions and laying the groundwork for a next-generation MSSP.

At the same time, Katalyst CEO Luke Johnson said customers are struggling to separate AI hype from reality as security remains the biggest challenge facing midmarket organizations, even while AI dominates boardroom conversations.

Customers are eager to adopt the technology, he said, but many still lack a clear understanding of where it fits in their business, how to govern it and how to protect sensitive data.

“There’s just mass confusion,” Johnson told CRN. “What’s real? What’s not real? Where do we apply AI in our business? How do we safely do it? There are cyber concerns around what information is OK to put into an LLM, what isn’t, what model should we use, and how do we know what’s happening to the data? Those are questions we’re hearing every day.”

However, he still believes many MSPs are underestimating AI’s potential, “I see it as a tremendous equalizer. It allows organizations to do more than they’ve ever been able to do with fewer resources.”

That thinking is shaping the Charlotte, N.C.-based MSP’s strategy, from internal automation initiatives to future service offerings and security investments. Johnson said the team is experimenting with AI-driven operational efficiencies, evaluating consulting models and developing plans for a security platform around AI and agentic workflows.

“We’re huge believers in the human-in-the-loop concept,” he said. “This isn’t about replacing all of our people with agents. It’s about making our people dramatically more efficient and helping them focus on higher-value work.”

Johnson spoke further with CRN about Katalyst’s acquisition strategy, cybersecurity demand, AI monetization opportunities, industry consolidation and where the company is placing its biggest bets for the remainder of 2026.

Katalyst recently completed its partnership with e4n. What does that relationship mean for your M&A strategy going forward?

Let me start with the partnership itself because that’s really the foundation. E4n is a multi-family office, but they’ve taken a very operator-led approach. What excites us is the ability to tap into their expertise around growing MSPs, scaling operations and leveraging AI-enabled strategies.

When it comes to acquisitions, we’re focused on organizations that are complementary to Katalyst and culturally aligned. We describe ourselves as a digital operations partner because we’re taking accountability for the critical infrastructure that midmarket companies depend on. That means we’re looking for companies that share that same client-first mentality. They may have expertise we already have, such as cybersecurity, networking or Microsoft services, or they may bring capabilities we’d like to deepen, such as AWS expertise.

What’s most important is that they’re serving the same type of customer. We’re focused on the midmarket. We’re not looking for firms built around 100,000-employee enterprises. We’re focused on organizations serving companies with a few hundred employees and similar needs. Geography is nice, but it’s less important than it used to be. Since COVID, customers have become much more comfortable working with providers regardless of where they’re located.

So what are your customers’ biggest challenges this year?

Security remains at the top of the list, and honestly, I think it’s becoming a bigger problem as environments become more complex. There are so many potential solutions available today that organizations are struggling to determine the right path forward. Most midmarket companies don’t have internal teams large enough, or specialized enough, to handle everything themselves. That’s why we’re increasingly seeing co-managed models where internal IT teams partner with MSPs.

Then there’s AI. The reality is that most organizations are still trying to figure out where AI fits into their business. They know they need to do something, but they’re not always sure what that something is. They’re asking questions about governance, security, acceptable use, data protection and practical business applications. The demand is there … the road map often isn’t.

So how do you begin those AI conversations?

We start with a very simple question: ‘What’s the goal?’ It’s surprising how often people don’t have an answer. They know AI is important because they’re reading about it everywhere, but they haven’t identified a specific business outcome they’re trying to achieve.

So we help them step back and evaluate areas where they’re inefficient. Maybe there are manual processes that can be automated. Maybe there are workflows creating friction. Sometimes the first conversation isn’t even about productivity. It’s about governance. Most organizations simply need an AI acceptable-use policy. They want guidance around what employees can share with AI systems, how client information should be protected and how to use these technologies responsibly. That’s often the right place to start.

How are AI and cybersecurity changing customer expectations?

Everything is evolving in real time. I’ve been in professional services for a long time, and I’ve never seen change happen this quickly. If you’re in a services business and you don’t believe AI is going to fundamentally affect what you do, you’re ignoring reality. But I think people focus too much on the threat side of the equation.

AI is creating opportunities for smaller organizations to compete in ways they couldn’t before. Historically, larger firms had advantages because they simply had more resources. AI helps level that playing field. Internally, we’re focusing first on efficiency. We look for tasks our employees genuinely dislike doing and ask how automation can remove those burdens.

Time tracking is a great example. Almost everyone in a billable services organization dislikes tracking time. If AI can automate that process accurately, you’re not only improving data quality, you’re giving employees time back in their day. That’s how we're approaching AI with clients as well. Where can we remove friction? Where can we improve efficiency? That’s where the value is.

As CEO, what keeps you up at night?

Our clients, first and foremost. I’ve spent years building relationships with great customers, and I constantly think about how we continue earning that trust. One thing I hear repeatedly from organizations evaluating a new MSP is that their current provider became complacent. They got comfortable. They stopped innovating and bringing new ideas to the table.

That’s something I never want to happen at Katalyst. I also spend a lot of time thinking about cybersecurity because the threat landscape continues to evolve. And I think about our people because talent is everything in this industry.

Is Katalyst making money from AI today?

Indirectly, yes. Directly, not really. We’ve been investing seriously in AI for about a year and a half. A lot of what we’re doing today is experimentation and operational improvement. Eventually, we’ll have dedicated AI offerings that customers pay for … I have no doubt about that. What’s interesting is that I think many AI services will ultimately be outcome-based rather than time-based. Clients aren’t necessarily going to pay for hours. They’re going to pay for results.

If you tell me AI can make my business significantly more efficient, then prove it and share in that value. That’s a very different model from traditional professional services, and I think a lot of MSPs are still figuring out what that means.

So what does your AI road map look like?

One of the most immediate opportunities is within service operations. When you look at level-one support, alarm triage and routine operational work, there are tremendous opportunities for automation and agentic AI. But we’re very committed to the human-in-the-loop model. This isn’t about replacing people. It’s about helping people process more information, make better decisions and focus their time where they add the most value.

We’re also looking beyond IT. If a client wants help deploying AI-powered sales development representatives or integrating AI into business processes, that’s absolutely something we can help with. The opportunities extend far beyond traditional managed services.

You’re also exploring becoming a next-generation MSSP. What does that look like?

Historically, we’ve partnered with third parties for managed security services. We white-labeled solutions and combined them with our own engineering and customer success capabilities. Now we see an opportunity to bring more of that in-house. What’s exciting is that we can build with AI in mind from the beginning rather than trying to retrofit existing systems. We can design workflows, automation and operational models around modern technologies from day one. The midmarket is incredibly diverse. Customers use different vendors, different platforms and different cloud providers. Whatever we build has to support that reality, and flexibility is critical.

Where is Katalyst investing most heavily in 2026?

Security, without question. The need is enormous, and it cuts across every part of our business, from product sales and consulting to managed services.

The second area is helping customers navigate increasingly complex technology ecosystems, particularly around Microsoft. The Microsoft portfolio has become so broad that many organizations simply need guidance on how all the pieces fit together and whether they should replace existing tools, integrate them or build around them. And infrastructure remains important. Reliable connectivity, branch-office networking and simplifying distributed environments continue to be major priorities for our clients.

What would you like to see more of from your vendors?

Collaboration. Historically, many MSPs built businesses around designing and implementing technology. Today, much of that technology is easier to deploy than ever before. So the bigger question is what happens after deployment. Customers still need help operating, managing and maximizing the value of those solutions. That’s where MSPs come in. So I’d like to see vendors embrace that reality and work more closely with MSPs to ensure long-term customer success.

What’s your view on ongoing consolidation in the MSP industry?

It’s complicated. As someone planning to be part of that consolidation, I recognize I have some bias. Historically, consolidation often created opportunities for smaller firms because some integrations didn’t go well. Customers became frustrated, and that opened doors for competitors.

I understand why consolidation happens, and there are certainly successful examples. The key question is whether the customer remains at the center of the strategy. When organizations stay focused on client outcomes, consolidation can be incredibly powerful. When they don’t, customers suffer. For us, cultural alignment is everything. Even small companies have strong cultures. If you combine organizations with fundamentally different values, priorities and operating philosophies, integration becomes much harder.