Autotask CEO: VARs Need Hybrid Of Products And Services

Autotask attracted more than 500 VARs and MSPs to its Autotask Community Live conference this week in Miami, Fla., where CEO Bob Godgart introduced new features, new partnerships and new strategies for the professional services automation platform company.

Godgart spoke with's Scott Campbell about what's new with Autotask, including the company's recent VARStreet acquisition, and where he sees the services industry going. The following are excerpts from the conversation:

What are some of the product enhancements you're announcing this week?

Even before the VARStreet acquisition, we were building a tremendous amount of product, programs and partnerships. The challenge is helping resellers swallow it all. There's so much. We talk internally, more, more, more all the time. But we need to figure out how to help resellers swallow the more of more.

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We've spent the last several months putting together new programs for VARs to take advantage of. Last November, we started Autotask Academy, with Lenny DiCostanzo as the "dean." We've created all kinds of basic training materials, Webinars, videos. We've increased the amount of stuff that's there. We have a number of free programs, boot camps that are live in multiple locations, live via Webinar. We've also opened a set of programs called Autotask Answers, which are a series of town hall meetings that we do a couple times week. People send in questions and interact among each other.

We've also been strong in community. Around November [2009] we started user groups. We've been doing two new user groups a month. We're already at a dozen, including a couple of international groups, and people are asking to be leaders. We'll probably have 30 to 40 by the end of the year.

We also did what we called a Top 10 project. We asked everyone to send us their wish list of the top 10 features they want to see from Autotask. It turns out everybody's top 10 was different. There was not a lot of consistency. But we can categorize them into 3 areas: turning time into money, turning product into money and automating more business processes. Some of those will be included in the next release, which will go out after the first week of May, after the new billing period is over.

Before we get to VARStreet, what's new on the partnership front?

With partnerships, we have gotten to the point where we have a number of developers building apps on top of our API. Companies here like Vlad Mazek's s One Web Now, Proactive IT, Travis Austin's MSPIntegrations have built a half dozen cloud-based managed services apps through Autotask. We're excited that we've built out this developer community. Next month we're putting together Autotask Marketplace. It's like Apple's Apps Store. We've got enough third party and integration platform apps now that we have to catalog them. That will be a tool now in VARstreet.

Next: The Services Pendulum Swings Back

When you acquired VARStreet you made the point that the pendulum has swung too far towards services and that VARs need to pick up some of the product business that they either haven't touched or have dropped. Why is that?

You need to do that, even though margins are thin on hardware. Is there a downside focusing on service? The downside is you don't have the ability to scale. You let other competitors get in, which can cause issues if you're only a services business. There's a couple of different models at work now. You can be a company with a lot of product but little services, or a lot of services with little product, or a hybrid of the two.

We did some research through Ryan Morris at [Everything Channel's] IPED and found that product companies between $15 million and $50 million had $500,000 on the bottom line. Services companies with $1 million to $5 million had about half a million in profit too, maybe a little more. But when you go to a hybrid company, with $10 million to $30 million in revenue, you'd see several million on the profit line.

If that's the case, why doesn't everyone do it? Because it's hard. It requires two different skill sets and a big back office to process product orders. It's time consuming if you don't have a strong backend tool. That's why we bought VARStreet. We have the automation tools to make it profitable to sell hardware.

What percentage of your partners here at Community Live do you think are using the hybrid model now?

That's a good question. I kind of think about 25-30 percent now, but I don't know if any do it effectively. There's a lot that may sell a little bit of product. They're selling it now when they have to or because they're worried others might take their customer. We can help them more drive to the bottom line, with more control of their customers, and it's automated. Then you start to talk about if you sell product, you can drive services. Services drives managed services. Your managed services can go back and drive product for upgrades, refreshes.

In summary, what's your message to the Autotask partners here and to the partners that couldn't be here?

Take advantage of the programs we've put in place. We want to help you automate the business, help you automate the business processes with Autotask, customers with Taskfire and products with VARStreet. A lot of people come to conferences with good intentions, but when they get back to the office nothing happens. We've given them a book and I'm going to ask them to write on page one what tasks do I want to automate in 2010. Leave with10 things and implement one every