2021, With Mike Puglia & Nadir Merchant of Kaseya

Hello, I'm Dan Thomas Shefsky and this is the connecting it podcast.

Welcome to the connecting it podcast. I'm your host, Dan Thomas Shefsky and joining me today is Nadeer merchant GM and CTO of it glue. And also with us is Mike Puglia, chief customer marketing and strategy officer for Casia. Hey guys, thanks for joining me today, as we're going to dive in and talk about 20, 20 and 2021 predictions. Great. Nice to be here. Uh, thanks to the Deere for joining us and thanks Dan for hosting it. Yeah. Likewise, thanks Dan, for, for hosting. And I'm super excited to be here. Yeah, this is going to be great. So guys, let's, let's go on. As we look back at 2020, what parts of the channel saw the most success? Yeah, I'll take that first. I think that, you know, everybody, um, you know, ran into issues certainly in March and April when they moved the world to work remotely, to, to move the world, to be work from home now to be hybrid environments. And I think that, you know, that Q2 was a really tough quarter because everything was focused on moving all their customers, employees home, and it was all hands on deck, you know, 24 seven, uh, all, all week long, all night long. And you know, that that really hit both for customers and the MSPs themselves, the channels, you know, participating in all that. And I, I like to say that, you know, it was probably the biggest technology migration. If you think about it in my lifetime that the whole world moved home, the channel helped them do it. Um, you know, then we saw once that was done in a matter of weeks, you know, success was really around, especially MSPs who already had plans already were involved in technology around leveraging the cloud around cyber security, people who had backup and disaster recovery and business continuity plans. They were able to really succeed when that happened, because they could move them home and then they had solutions ready to go. Uh, that would help them stay in that new environment. No, absolutely. Yeah. We saw a lot of that. I mean, security and cloud. I mean, definitely like you said, Mike, you know, MSPs were a big part of getting people to work from home in a, in a short period of time. So a lot was put on them. Uh, you know, what do you guys feel like from a, the channel that maybe what struggled vertically focused, uh, MSPs in industries that were particularly hard hit? Um, definitely struggled the most, you know, look at restaurants, um, the travel industry, um, hospitality, you know, there are MSPs out there that focus specifically on some of those areas and definitely that that's definitely a struggle for them. And those that were able to pivot the most quickly were able to recover from that. Um, the, the easiest, yeah, I mean, we, we, we saw our, you know, a fair amount that kind of really verticalized over the years and some of them not, you know, not on purpose, it's kind of the business evolved over the years where they started becoming experts because they had more and more customers in hospitality, or I've talked to quite a number that were focused on a not critical care medical, but, you know, the day-to-day the physical therapy clinics, the ophthalmologist, the dentist, and when they were closed down, um, you know, there was no work remotely or work from home for that on the other hand, a lot of in the, the non-critical medical and some of the others, uh, you know, they started leveraging technology like telemedicine to, to start to come back quickly. But you know, other areas, some MSPs were really hard hit if they, if they didn't have any, any generality across their customer base.

Yeah. No, those are great points. And I think, you know, like Nadeer, you were saying, and Mike A. Little bit on the verticals. I mean, we're even seeing that now as some of the States and countries are seeing the second round of COVID, I mean, some of these verticals being shut down again, uh, just are they going to make it, so, I mean, it's, it's really making, you know, the MSPs diversify their portfolios. If you were in a, in an area that was hit the hardest,

Um, Oh, go ahead. And the counter to that is there's other MSPs that were vertically focused that actually accelerated and did really well because they had a lot of these clients that could work from home and then they had project work to go enable them. And, um, they were able to generate a lot of project revenue, uh, pushing people to work from home and, and helping them be successful.

Yeah. So, I mean, that kind of leads us in. So do you guys think 2021 is going to be a better year for the channel than 2020?

Uh, I think that, uh, there's always hope right to, so I think it's going to, uh, probably start slower than, than we expected, as you just mentioned kind of, uh, a second wave. There's now light at the end of the tunnel with a lot of news recently about vaccines and setting timeframes. I think if we go back into the March and April timeframe, which seems like years ago, I don't think we expected that we would still be at this at this point in time. You know, we were looking at all right. Well, when we get to later in the summer, end of August, September, October, and we're past this and, you know, frankly, we're not past it. Um, so I think there is absolutely light at the end of the tunnel. I think the second half of 2021 will be a really good, uh, but the first half is still going to be very tight. As budgets at the end, customers are tight and fighting the types of services they can really help their customers, uh, is going to be where they make. Hey, you, you kind of saw some of the big bellwethers in the technology industry, which kind of foreshadows, you know, what's happening out there. Cisco, you know, gave guidance of, uh, negative sales, uh, negative down, done negative sales, but you know, down about, you know, nine to 11% in Q1, uh, Dell on their, uh, you know, business and commercial side is forecasting down. So I think this is unfortunately going to have, you know, a tail that will go into the beginning of 2021, but hopefully there'll be a lot of pent up demand as, as vaccines. And we start to get back out there again. Yeah. I think holistically, when you look at 2021, it'd be hard for it to be worse than, than 2020. This has been a pretty rough year, but I think you're right, Mike, I think will be a bit of a slow burn. Um, and then, uh, really pick up in the second half of the year.

Yeah. So going into that, then that's talk about that for a minute. So what are the services that MSPs will need to offer in 2021 to thrive in this new normal? And are there any services that maybe become less important in 2020?

Yeah. I mean, I think that a lot of what we're doing now, even when things open up and get back to, you know, what we call normal, um, things, uh, a lot of what we're doing now is going to stay right. There's going to be a lot more companies that will be open to work from home. There'll be companies that embrace hybrid and many that just say, I don't want to pay for an office anymore. And I think, um, a lot of the services that are helping people work remotely now are still going to be extremely important going through next year. So I think security becomes really, really important as the network becomes much harder to secure when you're dealing with people's home networks and you don't control the entire network and all the kit, um, that's on there. Um, and then, uh, remote management tools to easily deploy software remotely when you can't physically access the machine is going to become, um, are going to continue to be extremely important. Yeah. I mean, absolutely. I think what we're seeing now, and when you look at some of the industry reports, um, there's big opportunity, uh, because I think what's, what's really happened is the MSP's customer, you know, maybe the non-technical business executive business owners, they're seeing that, you know, we've got a new way of doing business. You know, it's not it's remote work, but it's also new business models that they've, that they've really adopted. And so I think where we're going to see that, you know, who adopts things that, that Mo that map to that, right? Are we ready to roll out the cloud, uh, security they're hearing day over day, they may not know the technical details, but every time they knew they turn on the news, they hear something and they're turning to MSPs and saying, look, I may not understand all of this, but how do we make sure that this doesn't happen to us given this new work environment and all these, you know, to some extent the new technologies and the new business models that they're using, I think Nidia, you hit it right on the head that a lot of these things aren't going back, um, and it's not just zoom meetings. You know, I have a family member that, uh, they own a physical therapy clinics. They leverage, uh, an MSP and they're using a telemedicine app now that their MSP found for them. And about 75% of their appointments are over that app. And about 25% are in person for social distancing, but he believes when we get back to whatever the normal is in 2021, uh, even if it was, you know, they're probably going to see about 30 to 40% of their appointments will be over that app because they've gotten used to it. They've gotten comfortable people. They don't have to see them in that business, every appointment, maybe every third appointment. So probably in those people, don't have to leave work and spend an hour in traffic, getting there and getting back. So that's just one example, but a lot of that is going to happen. And if MSPs are adapting to these new remote technologies, being able to manage them, uh, being able to shift to the cloud and being able to cover the cybersecurity, uh, things that's gonna make a big difference. I think specifically what you're going to see or where things aren't going to be the same is any kind of technologies that are based around, you know, on-premise physical work, right, where I'm going to have a server in the closet. You know, those, we're seeing a huge dip, um, in server shipments of, I think it was more than 11% while actually VM-ware and cloud adoption is up, uh, as much, if not more than that. So anything due to do with being on prem is probably, you know, we've reached that tipping point where we're going to be moving forward to cloud first for everything work from anywhere. Um, and that's where you're going to see it, um, on the security side of the fence. I think what you're going to see is a big move on protecting the human being, right. We spend a lot of time, uh, putting, protecting laptops, protecting firewalls and VPNs to protect networks. You're going to see a lot more technology and credential monitoring, uh, training event users, insecurity, awareness complying with various regulations. And so there's a lot of opportunity on that front as well.

No, absolutely. Because there are spot on there. And one of the things we're hearing too is just even now is the identity access management, you know, with all my employees, working from home, I want to control their identities. I want to control what they can log into and what they can't log into. Um, so I think you guys definitely nailed that in terms of what's going to grow and, uh, you know, like the on-prem stuff, Mike, like you were saying, definitely seen that as a decline in MSPs are, are shouting that out. So, uh, great feedback there. So let's get into this next topic. You know, cyber criminals, I feel like this is a topic that never goes away, but cyber criminals in 2020 took advantage of many opportunities that the pandemic presented to them, including a large number of individuals working remotely on devices and personal networks. Like we've talked about a few minutes ago, what do MSPs need to do to protect their clients in 2021? I know we talked a little bit about some of them, but it's a good question. We hear it time and time again, people are working on home computers, their own iPads, um, you know, lots of different things. What, what do they need, what are MSPs need to do?

I think that the biggest thing here is it's not even a specific action, but a way of thinking, we have to think of security as a continuous problem, right? It's not, this is not a Senator. And forget it thing. You can't just, you know, set your firewall and set your, your, uh, role-based access control and you're done or set password controls or whatever controls you want to put in place. You have to be constantly evolving because cyber criminals are constantly evolving. This is a massive industry now, right? It's something like 10 times the size of the drug trade or something crazy stat like that I saw recently. Um, so you know, these criminals are going to continue to get more and more sophisticated just as, um, you know, when you protect physical goods and the more that you protect them, the better the criminals get a break in that same thing with cyber. So, um, we need to be constantly evaluating our security controls and continuing to push up our standards and get better and better as new tools and new technology become available to help us to protect us, um, to protect against the advancements in the cyber crime. Yeah. I mean, absolutely. It's, you know, it's, it's a, it's a new world, right? It, you know, started before really the internet and everything to go after somebody, you know, to, to break use, to physically have to break into a company. And then with the internet, everybody built walls around, you know, around the castle, if you will. Um, and now people, you know, are out in the world, you know, not in the office, not on a VPN and that's happened for a long time, but now it's everywhere. And it's so relatively easy these days to target people, you know, we've got LinkedIn, you can look up any company and basically build an org map of all their employees or everybody on LinkedIn, you know, their email and you can reach them at any time because their name's right there and you could figure out, you know, there's only three different combinations, so people are accessible regardless of any walls you put up and you know, how do they get there? You know, what are they accessing? You've got to make sure the training is embedded into these people. And then you've got to look at it as, you know, what you've been hearing. The big Nate, big thing that's really being pushed is, you know, the term zero trust, right? Because you can't just trust the network you're on, you can't trust the device you're on. Um, you've got to look at it, like Nadeer said, like in a different way that you're, you're, you've got to protect against everything, um, where you are and you can't rely on physical and network boundaries anymore.

No, absolutely. And I think, you know, you guys talked a little bit about this, but, you know, since remote work is not going to go away in 2021, MSPs will likely continue be stretched as they help their clients remotely navigate it issues on numerous devices, different networks. What can MSB MSPs do to reduce the risk of burnout amongst their own teams? I mean, cause they are, they're getting pulled in so many directions now and they used to send a tech on site and now they're supporting hundreds of people at home. How do they protect their teams from burnout?

Well, I think you saw a lot of burnout, uh, you know, as we got through the spring and then then into, uh, our summer in North America. And I think it comes down to, you know, really two things. One is, you know, automate, automate, automate, or is that three things. Um, and, and number two is what technologies can I use to gain efficiencies, right? The automation is one kind of efficiency, but you know, I, I once heard the term of, of someone saying, you know, 10 years of a great economy, hides, hides a lot of warts and it does, uh, you know, we're able to, uh, you know, we have more people, you know, adding head count is always difficult, but it happens. We can throw more people at the problem and, you know, with the money was flowing and we budgets were flowing and we could hide those by, by human, you know, human adding human interaction. And I think that, um, you know, you've got to look at what are the things that can be automated to get the work off of the frontline technicians, because most MSPs out there and most people in the channel, you know, are planning to add a lot of head count and the work is going to be higher. And so you've got two choices, you know, I, I've got to deliver things at a lower cost and I have to make people more efficient and I can make people more efficient by automating a lot of the things that they do. They will thank you for it. You know, if, if 80% of the time they do one thing and, uh, that's all the problem, um, they get tired of that mundane work. So automate as much as you can. And I think number two, Nadeer, maybe you can talk, you know, coming from your background with it, glue, making everybody more, more efficient in the daily jobs that they do, making information available no matter where they are. So they have a consistent baseline. Um, and they're not running around spending their day searching for information. Yeah, absolutely. You know, we, we often talk about, um, uh, efficiency for the benefit of driving down cost and making our businesses more efficient. But, you know, in the context of, of making or improving employee burnout and employee satisfaction, there's a big benefit there as well because technicians get frustrated when they have tools that don't work when they don't know how to do their jobs. Um, when they have to look in five different places to find a simple thing, like a password or, um, uh, information about how to solve some specific problem, right? So driving operational efficiency inside the business can not just drive down costs, really drive employee engagement and allow them to spend their effort on things are actually interesting to them and also helpful for the business, right. More important tasks than simply, Oh, how do I solve this problem? That's relatively straightforward. That's very well put that's great advice. And, uh, definitely think MSPs need to look at that automation. They need to look at documentation and just consider their teams as they go into 2021. How can they make it better for their team? Because if they're making it better for their team, more than likely they're making it better for their clients. So, uh, great advice. Um, so this is a, a pretty big topic. We keep hearing a lot, um, and, uh, compliance. Um, it's an aspect that, uh, we've discussed on this podcast previously with a couple other people and, uh, you know, and we expect the need for compliance services to grow in 2021. Um, how can MSPs, who may feel hesitant about compliance take advantage of this opportunity and what technologies do they need to address? Um, I mean, how do they address this growing field? Yeah, I mean, our automation here, I think is a big key to this and, you know, using tools that automate this process. So they don't have to do all of the heavy lifting of the, um, managing the, the compliance frameworks and making sure that the customer is fully compliant, uh, tools like compliance manager have the entire, um, set of, uh, of controls you need for multiple different compliance frameworks built into the system. So you don't need to be an expert in them. And then it automates the audit process. So you can get the overwhelming majority of your audit done with a fully automated scan of a network. So checking out tools, I can say a compliance manager can really help with that. And of course, um, Dan is, as you're well aware, part services can help them with actually selling compliance, right? So if you've never done a compliance still, you don't know how to go out and drum up business for it, or, um, actually close a client hard services that content library that can really help drive, um, your business in, in, um, generating demand for compliance services. And then of course, um, uh, closing out the deals as well. Yeah. I mean, you, we've kind of seen over the last two years, really a number of things happen in compliance in general, MSPs have even if they they've always been involved in compliance, right? Usually they're responding to a request from their customer for some audit data, or if you have this or give me a report on this, um, and it's really an opportunity to step up and provide it as a service, you know, as a name service that you can build and can be profitable. And the things that have changed over the past couple of years is there have been many compliance requirements, right? That have been out there for years. I mean, HIPAA is from the nineties and a variety of others, but everybody had to be compliant, but nobody ever really checked except at the bigger, you know, the, for HIPAA, for example, the large hospitals, no one really looked at the small dentist office or things like that. Now the regulations and the auditors have come back and really gone downstream. Another thing that your thing is businesses who do busy, you know, who have business or business to business, they get requests all the time. So to transact with one of their customers, they're asking them, you know, they're giving them booklets of information, please demonstrate how you meet this compliance requirement or they can't do business. You know, they're just passing that on to their, to their, to your customers. And so there's a great opportunity. The second part that's happened, um, is there more compliance requirements? We saw the rise of GDPR in Europe, which has kind of leftover into the U S where now you've got California laws, New York shield laws, and you're going to have many, many others along the way. And so there's a real opportunity to help customers and to leverage us as the deer said, tools that can walk you through it in human readable format. So you don't have to kind of like TurboTax. I'm not an expert in IRS forms, but it can guide me through it. Um, and then fill out the forms and I can work off of those. So having tools that can guide you through it. So you don't need a whole staff of people that have vast experience get going. You know, the first step is do your own MSP, you know, do that audit. You're going to have to show it anyways and then start to roll it out to your customers. I had one MSP, I'll just tell you in. He said, look, given the economic conditions, there are three things in life, death taxes and compliance, and he was half joking, but his point was even in a down economy, there are certain things that you don't have a choice on. If you're a company, you know, you, you can't say we're in a recession, so I'm not going to be, you know, HIPAA compliant or GDPR compliant. It has to be done. And so those are some of the services you look at, whether they're just a requirement, not, you know, a need or desire.

Yeah, no, I agree totally on that with both with what you guys were saying, and you know, something we're seeing in the marketplace now with compliances is that MSPs are winning deals. And most of the time you're going up against two or three competitors and people are trying to look at the difference and go, what's the difference between these three MSPs and the ones that are having compliance into their proposals and a part of their managed service offering, uh, definitely are winning. So I think you guys are, are spot on, um, in, in how they can take compliance manager and really accelerate their MSP in 2021. Got a final question for you guys in terms of predictions, uh, as we go into 2021, in terms of the M and a space in the MSP space, what do you guys think this is going to look like in 2021?

I think it's going to be hot. I think that, um, most of the large MSPs that are roll-ups that I talked to in the summer were kind of hands-off, they're kind of wait and see by late summer, early fall, they were getting ready to start buying again. And I think that trend has continued all throughout the fall and into early winter. Um, I, I think that we're going to see a lot of M a activity I'd agree, a hundred percent, uh, there, it was going fast before COVID, uh, it is, you know, slowed a little bit, but a lot of people are using this as an opportunity and the market has changed, right? It's, you know, years ago it was a question of, uh, you know, what's an MSP. And then we went into the phase of, for small to mid-sized businesses, which MSP should I be using? Not even a question of, should I, or should I not? And now we're seeing, you know, you've seen everybody in the MSP market has seen the roll ups, you've got the large, I guess you'd call them super MSPs. You've got MSPs that are national or multinational that are kind of franchise. And you're seeing these regional roll-ups and, you know, we will have the standalone specialized, local MSP, but, you know, the competition gets higher and higher, the more, you know, regional and national, uh, you know, players that are out there. So I think you're going to see people join even the smaller ones joined forces and do roll-ups because it just makes sense in this kind of competitive environment,

A lot of predictions, lots of, lots of good things. It sounds like the channel is going to continue to be a happening place in 2021. Uh, Mike and the deer. I want to thank you guys. Thank you both for coming on and sharing your insights. Appreciate having you on today. Well, thanks, Dan. It was great to be on. Thanks. Dan has a lot of fun. Yeah. And, uh, Hey everyone. Thanks for listening to the connecting it podcast. Make sure you subscribe and rate us five stars on the iTunes store until next time, have a great day.