Managed service providers (MSPs) offer essential support to customers and should be recognised with higher margins, according to Kaseya’s CEO
Fred Voccola said that compared to other services used by small and medium-sized enterprises (SMEs), such as legal and accountancy, MSPs are paid less despite playing an equally important role.
He said, “We have been on a journey for ten years. And there’s one mission that we have been on, the one North Star, the one guiding light that we’ve been going after, and that is to fix what we believe is wrong in the MSP industry.”
The main issue arises when comparing MSPs to other outsourced service providers.
“If we think about the customers of MSPs, small to mid-size businesses around the world, most of them have three outsourced service providers that they use. They use their legal providers, financial/tax providers to count audits and tax stuff, and IT and security providers for the MSP. Without question, the MSP is the most important and most strategic business partner of all SMBs because without the MSP, their business systems, their industrial systems, they not only do not work but they’re not protected or secured from the huge macroeconomic existential threat that’s coming from ransomware gangs that are targeting SMB,” he said.
He said an MSP’s job is ten times harder than the solicitors’ and the financial providers’. That’s not disrespectful to the lawyers and the accountants. It’s just the MSP that does up IT [which] is a lot harder, and it’s getting more complex.
“The average profit margin of an MSP in the UK and worldwide is 10-12 per cent. The average profit margin of law firms is 37 per cent, and accounting tax firms is 35 per cent. That’s not right. What an MSP does is so much harder and so much more valuable. Why on earth are their profit margins a third as much? Our mission as a company has been to address them,” he added.
The firm recently launched its Kaseya 365 offering, which is described as the first step in a four-step process to improve MSPs’ positions.
Kaseya 365, launched eight weeks ago, already has 4,000 MSPs globally, covering five million endpoints. It offers subscription services, including patch management, antivirus MDR EDR, anti-ransomware rollback and detection, and backup.
“Kaseya 365 is our subscription [offering], which we think is the first step of a four-step process to fundamentally change the unit economics of the MSP industry forever,” he said.
Voccola aims to gradually improve MSP margins with each new development, with more planned for later this year.
“Our platform IT Complete if Casaya powers a customer and they’re spending half as much for their software kit provides them with about five to 10 more points of profit margin,” he added.
Through the Kaseya platform and all of its AI-based automation, we can help the engineers be 20-30 per cent more efficient. That puts another five to 10 points of profit margin.”
“An MSP powered by Kaseya should be able to achieve a 30-37 per cent profit margin. That changes the world for MSPs. That’s our mission, and that’s what we’re trying to do,” he said.
