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Good News For MSPs: Datto's Rob Rae Sees Huge Growth In SMB Outsourcing

Rae told MSPs at the NexGen conference that they need to focus on evolution, education, and experience if they want to grab their share of a huge SMB IT outsourcing market that will grow 72 percent annually for the next four years.

Businesses, especially SMBs, are more and more likely to outsource their IT requirements, which translates to a huge opportunity for MSPs going forward.

Rob Rae, vice president of business development at Datto, who made that observation at this week's NexGen 2018 Conference and Expo in Anaheim, Calif., said that MSPs who look beyond the technology will be in the right place to take advantage of those opportunities.

And the opportunity is huge, Rae told MSPs.

[Related: Datto CEO McChord On Acquisition Strategy, Being ‘All In’ On MSPs, And The Challenges For Distributors]

Total spending on SMB IT needs in 2018 reached about $42 billion, and MSPs can expect to see an average of a 72-percent annual growth over the next four years, Rae said

More importantly, customers are more than likely to depend on MSPs for their IT requirements, he said. "SMBs have no choice but to outsource IT," he said. "And that is you."

Indeed, that SMB growth is the reason why San Francisco-based investment firm Vista Equity Partners in 2017 acquired Norwalk, Conn.-based Datto, which then immediately set in motion a merger of Datto and professional services automation platform vendor Autotask, Rae said.

"One of the things about being bought by a venture capital company is they do their math," he said. "They see the growth."

That acquisition wasn't about the technology, Rae said. "It's because of our great channel. … We sell only through MSPs," he said. "They took a look at our MSP channel, and saw growth for the future." About 6,000 Autotask SMB partners in 2017 invoiced $7.8 billion in products and services, Rae said.

"The small to medium MSP channel in the United States is larger than VMware or Tesla. … That is why you're seeing a tide of VC investment coming into the market," he said.

The role of MSPs is changing to meet the growing opportunities in three key ways, Rae said.

First, MSPs must evolve and be ready to look at new technologies coming over the horizon. "Question your stack," he said. "Qualify your vendors."

Second, MSPs must focus on education, not only of their own personnel but also of their clients, Rae said. "Stay on top and educate your community," he said. "I don't care if they are your customers or not. Stay on top."

Third, he said, is to remember customer experience is paramount. "People like doing business with people," he said. "And if you get that hook in them, they will never leave you."

Going forward, MSPs will find new opportunities in five big areas, Rae said.

These include using machine learning to proactively manage IT services, ensuring that all data in every one of the growing number of SaaS applications customers use is protected, finding new ways to ensure the customer experience of clients working from home is the same as if they were at an office, taking on the task of turning security including physical security into a service, and making sure user data is protected at the user and not the device level.

Rae's claim that that SMB IT spending is growing 72 percent a year was a real eye-opener for Baran Schultz, CEO of Schultz Technology, a Pottstown, Penn.-based MSP.

Rae was also spot-on in terms of the importance of the need to improve how MSPs work with the end-user community, Schultz told CRN.

"He was really bringing it home what we need to do with clients," he said. "We have always been bringing new offerings to customers via our Autotask relationship. But we know we need to be more efficient with billing and make sure we provide our clients with an easy user experience."

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