First, a bunch of disclaimers: I know ConnectWise, LabTech and Quosal each are best-known for their on-premises software platforms. Numerous PSA (professional services automation) and RMM (remote monitoring and management) software providers have larger cloud installed bases than ConnectWise and its investment-backed companies. And I realize ConnectWise suffered some cloud bumps from time to time.

A Longer-term Strategy

But here’s where things get interesting: When ConnectWise launched the ConnectWise Capital investment effort roughly two years ago, I thought the initial strategy was flawed. ConnectWise itself had a small (though growing) hosted presence at the time. And LabTech — one of the first ConnectWise Capital investments — had openly stated that it was an on-premise play, leaving potential partners to explore the hosting side of the equation.

My conclusion at the time: ConnectWise CEO Arnie Bellini was artificially limiting the valuation of his own company and the ConnectWise Capital companies. Think of it this way:

• In the past five years, scores of cloud and hosted software companies have attracted millions of dollars in venture capital. Plus, most of the major IT IPOs (initial public offerings) since 2007 or so have involved cloud and social media companies.
• In stark contrast, how many on-premises software companies have attracted big investment dollars on the way to a successful IPO in the past five years or so? Off the top of my head I can’t name any such players.

Cloud Comes Into Focus

Fast forward to the present and the ConnectWise cloud story is stronger. An educated guess: Quick math suggests cloud revenues alone are large enough to land ConnectWise quite high on the annual Inc. 5000 report, which tracks the most successful privately held companies in the U.S. Now, toss in the growing Quosal and LabTech cloud strategies and you’ve got an interesting strategy coming into focus. Over time, I suspect we’ll see the ConnectWise, Quosal and LabTech cloud services come closer and closer together — but that’s merely a hunch from me.

I realize the overall ConnectWise cloud strategy takes some hits from time to time. ConnectWise insists its software was designed for hosting during the ASP (application services provider) wave more than a decade ago. But some readers are quick to point out that rival Autotask built a successful $20 million business purely on the cloud, and ConnectWise was forced to respond. Moreover, Autotask CEO Mark Cattini — on the job about a year now — prefers to compare Autotask to Salesforce.com, NetSuite and other SaaS-centric players that have launched successful IPOs.

So where is ConnectWise ultimately heading next? Plenty of folks have asked me if CEO Arnie Bellini is planning an “exit” strategy or a potential IPO. I don’t have the answer. But I do know this: If the ConnectWise, Quosal and LabTech cloud platforms are gaining partners without diluting profitability, I suspect the valuation for ConnectWise and its portfolio companies continue to rise.

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“Last year was our  biggest growth year since 2006 — back during the early days when it was hockey stick-type growth,” said Wensley. “Our customer base was up 45 percent. We were ahead of plan on new customers and our biggest budget number success was with existing customers.”

Roughly 55 percent of Level Platforms’ latest MSPs are opting for the company’s cloud software rather than the more traditional on-premise software package, Wensley added.

Retaining Partners

Perhaps the most important data point of all: Wensley said Level Platforms’ customer churn rate was at an all-time low, though he didn’t disclose the specific figure.

Customer churn can be especially painful in the managed services market, where some MSPs jump from one software platform to the next, hoping to find a magic bullet cure to their business ailments.

Surprises Nearing Launch?

So what’s next? A range of partner and R&D efforts. On the partner front, Level Platforms will stay close to its 50-member Partner Council. New hire Dave Sobel, a former MSP and Microsoft MVP, will be introduced to partners during an upcoming Level Platforms roadshow.

Sobel sold his managed services business, Evolve Technologies, to Network Depot — a Washington, D.C.-based neighbor — earlier this month. “Dave brings all the intangibles to the table for us,” said Wensley. “He has run a managed services business so he can really engage with our partners. But he has big value internally here as well. Having him sit at the table as we do [software] roadmap planning is high-value.”

What’s on the roadmap? Watch for Level Platforms to emphasize mobile device management (MDM) in 2012. The grapevine says a services push could also be coming as well. Rumor has it a couple dozen MSPs have been testing a Level Platforms help desk and NOC solution. If true, such a move would potentially position Level Platforms against Continuum (formerly Zenith RMM) and the growing N-able/NetEnrich partnership.

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According to our records…

• Autotask Community Live is set for June 10-12 in Orlando, Fla.
• LabTech Automation Nation is scheduled for June 11-13 in Orlando.
• Just to make things extra geeky, we believe Microsoft TechEd also is that week in Orlando.

Generally speaking, the scheduling conflict/overlap between Autotask and LabTech isn’t a big deal for attendees. While both companies serve MSPs, their products don’t compete head-on.

But Autotask rival ConnectWise has an investment in LabTech. And a large number of MSPs that run LabTech also run ConnectWise. So it’s safe to say Orlando will be packed with two PSA crowds in mid-June — the LabTech camp filled with ConnectWise users, and the Autotask camp. And yes, some MSPs use LabTech and Autotask in tandem. The Autotask and LabTech platforms have integrated since at least October 2009.

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The discussion goes something like this: Some MSPs have called on Kaseya to “shift development focus… fix the core modules not add more modules.” I often hesitate to say much about forum discussions, since they often represent very vocal views from a small number of people. But in this case, the thread seems to be generating some healthy debate about how Kaseya should march forward with R&D.

Kaseya’s Perspective

In response, Kaseya CEO Gerald Blackie has weighed in and assured MSPs that Kaseya has R&D resources focused on both existing and new code efforts. Blackie wrote:

“With respect to the overarching question of whether Kaseya should spend more time on the core vs. its add-on modules I will reiterate what I have said many times in the past. Our development teams are hard at work on all aspects of the code. We operate on the basis of development teams. There are development engineers, product managers, quality assurance personnel and product marketing in the day-to-day product development efforts. We have teams working on both the core and current modules as well as teams working on new code that has not seen the light of day. Its a balanced approach that yields a continual set of improvements to the software both existing code and future code.”

Blackie went on to describe multiple enhancements that are reaching MSPs, including a Kaseya Network Monitor offering that’s free to the company’s MSPs.

Growing, Evolving… With Some Challenges

Kaseya has evolved dramatically over the past two or three years. Generally speaking, I believe the company earned a large, loyal following of MSPs and all seemed well through around 2009. Despite continued growth, 2010 involved multiple challenges — including the major K2 platform rollout, a push beyond on-premise computing into the cloud, and emerging competition from LabTech Software, funded by ConnectWise Capital.

At some points during 2010, some MSPs felt as if the company was more focused on the enterprise market than the MSP market. But in the past six months or so, I believe Kaseya has sharpened its MSP focus. I most recently met with Blackie during CompTIA Breakaway in August, and he described a range of ways Kaseya was marching forward with MSPs. And community leader Brendan Cosgrove is constantly in touch with Kaseya’s MSP ecosystem.

On paper, Kaseya’s modular software approach makes a lot of sense to me. But I don’t have a feel for each module’s quality or potential price points for each module. A few vocal MSPs have asked Kaseya to polish some of the modules. Blackie has responded. Does the chatter end there? We’ll be listening.

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Below I will quickly review each consideration and what MSPs can do to help go “five for five” in meeting them.

1. Consider the Core: ChainLink advises SMBs to consider the core of their business (such as manufacturing, distribution, etc.), and so should MSPs. Businesses with different core functions will use ERP solutions in much different ways, and a “one size fits all” approach will not suffice. ChainLink also says many SMBs handle their core processes with a best-of-breed solution and employ ERP systems to manage finance, so MSPs should brush up on their financial systems and services management, as well.

2. Obtain Industry Insight: Similar to the core functionality consideration above, SMBs and the MSPs serving them also need to consider the specific needs of their industry. Some industries inherently involve an extended demand chain of partners who all need to connect with enterprise systems, others do not. MSPs need to look at the broader industry factors of an SMB client beyond their core functionality.

3. Plumb Functional Depth: Certain key functions may need more depth, depending on the individual client. For example, an international company will need multi-currency capabilities in their transactional systems. MSPs should be proactive and include targeted functional depth in their initial sales pitch, rather than waiting for a client to tell them what areas need deeper capabilities.

4. To Cloud or Not to Cloud? That is the question for today’s businesses of any size. MSPs should again be proactive and do advance research so they can best advise potential clients of whether ERP systems should be delivered via cloud from the very beginning. Cloud-based or not, solutions should be delivered in a manner that is easily scalable and flexible according to evolving client needs.

5. Pricing: Pricing is listed fifth but that in no way reflects its importance to an SMB decision on choosing an MSP. Especially considering the state of the economy and the generally tight budgets of smaller firms, MSPs need to make sure their services are affordable for their client base. ChainLink advises many on-demand ERPs do not charge for maintenance during the contract period, meaning MSPs must offer superior maintenance and perhaps some other creative perks to offset this potential client savings.

For cloud-related ERP services, check out our sister site — Talkin’ Cloud — for ongoing coverage written for VARs, MSPs and cloud services providers.

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Nearly 65 percent of top MSPs claim to offer MDM for tablets and smartphones, according to preliminary data from our fifth-annual MSPmentor 100 survey, which runs through December 23, 2011. But even I have to concede: I think the figure is inflated.

Sure, We Can Support That (But How?)

Generally speaking, I think most MSPs are in reaction mode when it comes to managing tablets and smartphones. In most cases, support is likely a manual process, and I bet most MSPs don’t have any documented businesses processes for securing and safeguarding tablets. Moreover, I suspect most MSPs have yet to figure out how they’ll charge for mobile device management (beyond existing support contracts for notebooks and netbooks).

Further complicating matters, there’s a potential disconnect between traditional managed services software (RMM providers) and MDM software providers. The leading MDM software providers, according to Gartner Inc., include Good Technology, Sybase, AirWatch and MobileIron. Additional “visionary” companies worth watching include Zenprise and Symantec, Gartner adds.

Can RMM Software Companies Get In the Game?

Side note: I frequently downplay the importance of Gartner’s Magic Quadrant research, which sometimes looks like a vendor-funded popularity contest. But RMM software providers appear to be glaringly absent from Gartner’s view of the MDM market.

A complete MDM solution, Gartner claims, addresses five business needs:

1. Software Distribution — The ability to manage and support mobile application including deploy, install, update, delete or block.
2. Policy Management — Development, control and operations of enterprise mobile policy.
3. Inventory Management — Beyond basic inventory management, this includes provisioning and support.
4. Security Management — The enforcement of standard device security, authentication and encryption.
5. Service Management — Rating of telecom services.

Further complicating matters, I think some MSP-centric software companies are overlooking the MDM tidal wave. For instance, many cloud backup providers can’t yet protect tablets.

What’s On the Way?

Still, there are signs of progress. At the IT Nation conference earlier this month, I heard chatter about LabTech Software‘s emerging strategy around MDM. A few days ago, Level Platforms CEO Peter Sandiford mentioned his focus on MDM for 2012 to me. And at the N-able Partner Summit a few weeks ago, CEO Gavin Garbutt said MDM capabilities would surface with N-able N-central software by mid-2012.

Meanwhile, Kaseya recently delivered MDM software to its MSP partner base. Gerald Beaulieu, director of product marketing at Kaseya, says MDM software must address seven challenges for MSPs. They include:

1. Visibility — allowing MSPs to “see” smartphones and tablets as easily and as effectively as MSPs see and manage servers, PCs and network infrastructure.
2. Provisioning — allowing MSPs to provision applications and services for smartphones and tablets, particularly email and WiFi.
3. Security — ensuring all devices are locked down even as they allow end-users to be productive.
4. Recovery — remote wiping capabilities are important if you want to delete data from lost devices. But MSPs need to track mobile devices with GPS-like services, while also leveraging alarming alerts to help a “lost” device be discovered by those who are within earshot of the device.
5. Backups — to protect applications and data, including automatic profile backups.
6. Reporting and analytics — to help MSPs discover what’s on a device, and how a device is being used.
7. Integration — the ability to plug MDM platforms into RMM software and IT automation software.

MDM Pricing Strategies

Let’s assume your RMM platform gains MDM capabilities. Or, perhaps you choose to leverage a third-party RMM platform. You still need to figure out an MDM pricing strategy.

When the MDM trend first surfaced, I assumed MSPs would simply include MDM as part of an “all in” fee (per user, per month). The best MSPs, it seems, are charging $100 to $150 per user per month for all-in services, covering everything from remote management to security and cloud storage, asserts TruMethods, a consulting firm that works with MSPs.

Still, it sounds like most MSPs are mulling a per-device monthly fee for MDM. Indeed, more than 60 percent of MSPs attending a recent Channel Expert Hour webcast (hosted by MSPmentor) said they are leaning toward per-device monthly fees for MDM. And Jerry Fetty, president of Smart I.T. Services, a guest speaker on the webcast, says he charges per-device, per-month for MDM.

How much? Fetty says his rule of thumb for MDM is half the price of a traditional monthly PC maintenance fee.

Maybe MSPmentor Is Wrong — And Right

So perhaps MSPmentor is off the mark when it comes to MDM pricing — per-device pricing seems to overshadow my per-user thesis.

But this much I do know: All of the major RMM software providers are striving to accelerate their MDM software strategies. The Bring Your Own Device (BYOD) trend will accelerate as executives and employees open up new tablets this holiday season. Many of those tablets will make the journey from employees’ homes into corporate offices in January 2012.

Will MSPs — and their RMM software providers — be ready? Or will MSPs be forced to seek MDM software solutions outside of the traditional MSP software market?

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After playing phone tag and email tag at IT Nation, Sandiford and I connected on the phone last week. Among the items I asked about:

• Level Platforms’ expanded tagline: See All. Manage All. Service All.
• Venture capital and private equity: Will Level Platforms look to raise more money?
• The SMB market: Big enough opportunities for MSPs and software providers going forward?

The Story So Far

Generally speaking, I sense that Level Platforms hit some turbulence in 2009 and 2010 trying to fix software bugs and stabilize its platform, called Managed Workplace. The turning point came when Managed Workplace 2011 debuted in early 2011. Designed for both on-premise and the cloud, I think Managed Workplace 2011 rewarded patient Level Platforms partners — and attracted new partners — because the offering just worked.

Frequent MSPmentor readers know that I typically don’t talk about a software platform’s quality (or lack of quality) because I don’t directly test or run the software myself. But Level Platforms’ partner base has been very vocal about the software’s overall quality.

Changing Landscape

That said, competition continues to intensify in the MSP software market. Whether you call it industry convergence, consolidation or expansion — things are changing fast. Recent examples:

• GFI Software acquired Monitis for its systems monitoring software in October 2011.
• Kaseya acquired Intellipool, a network software monitoring company, in May 2011. More recently, Kaseya launched a network monitoring module.
• LabTech Software, funded nearly two years ago by ConnectWise Capital, continues to sign up roughly 100 MSPs per month.
• N-able Technologies raised an undisclosed amount of private equity in October 2011.
• SolarWinds confirmed an MSP push in October 2011.
• MSPmentor hears about a new mobile device management (MDM) company at least weekly, which may trigger a long-term showdown with RMM software providers.
• Zenith Infotech sold Zenith RMM to Summit Partners in September 2011.

Dollars and Cents

In recent weeks, some folks have asked me if Level Platforms is looking to raise money to accelerate its own growth. Based on my conversation with Sandiford, it sounds like he’d be open to raising money if the right opportunity came along — but I didn’t sense that he’s out in the market looking for investment partners.

If I had to guess, Level Platforms has a stronger cash position now than at this point in November 2010, when Managed Workplace 2011 was still under development.

Meanwhile, Level Platforms remains focused like a laser on its core market — MSP software in the SMB market. And Level Platforms continues to sign up roughly 50 MSPs or more per month. On the international front, some folks seem to be overlooking Level Platforms’ relationship with Tokyo-based Hitachi Electronics Services Co. The relationship allows Level Platforms to work more closely with service providers in Japan, Sandiford asserts. More recently, Level Platforms launched a certification program for its MSP partners — a move that’s somewhat similar to a similar effort Kaseya announced for its MSPs earlier this year.

I’d also watch for Level Platforms to increasingly focus on Mobile Device Management sometime in 2012. And Sandiford remains upbeat about Level Platforms’ focus on cloud management — though many MSPs are still trying to figure out which third-party cloud services, if any, to monitor for end-customers.

Bottom line: The more the MSP market changes, the more Sandiford sticks to Level Platforms’ mission — helping MSPs to see all, manage all and service all in the SMB market. Generally speaking, it’s safe to say that strategy yielded strong results and partner loyalty in 2011. I wonder if Level Platforms can deliver another upside surprise in 2012.

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7. Sales Quotes and the Cloud: Quosal CEO Kent McNall says the company is working on Quosal Web (final name to be determined). The platform, expected to debut around Q1 2012, will allow VARs and MSPs to develop sales quotes for customers using a web browser and Quosal running on Windows Azure. I’ll be sharing some more thoughts about Quosal, QuoteWerks and the broader sales quoting software market in a few days.

6. Big Growth: Gross revenues at Reflexion, a cloud-based provider of email security and compliance solutions, will be up roughly 47 percent in 2011 vs. 2010. But what’s the big-picture story at Reflexion? CEO David Hughes and VP of Sales Scott Barlow shared numerous details during ConnectWise IT Nation. I’m still organizing my thoughts into a deeper blog.

5. Partner Education Kits: ConnectWise has developed partner kits to help VARs and MSPs master Help Desk, Sales, Human Resources, and The Modern Offic. The kits are available to ConnectWise partners via the “ConnectWise University” site at http://www.connectwise.com/PartnerKits.

4. Mobile Device Management: IBM has launched a Hosted Mobile Device Security Management Service. Meanwhile, HTG Peer Groups leader Arlin Sorensen on Friday told me MSPs and VARs should “forget the cloud and focus on the client experience.” Sorensen certainly sees cloud opportunities and challenges, but he was using a dramatic statement to make a concise point: Customers need help managing tablets, smartphones and other emerging devices.

3. Spinning Out: LabTech Software’s Automation Nation conference, help in conjunction with IT Nation in 2010 and 2011, will spin out into its own conference in 2012 (June 3-5, Orlando, Fla). But LabTech will also have a heavy presence at IT Nation 2012.

2. New Offer: When Kaseya acquired Intellipool in May 2011, the move signaled a new direction for Kaseya’s network monitoring strategy. The effort accelerated a few days ago when the Kaseya Network Monitor (KNM) 4.1 module surfaced. Kaseya claims KNM 4.1 will help MSPs to monitor network devices from Cisco, Juniper, HP and others. It also monitors Windows, Linux, Mac and Unix. Kaseya is offering KNM 4.1 for free this quarter to MSPs that have current maintenance contracts.

1. Getting Even Cozier?: In recent weeks, a few people have asked me whether GFI Software will acquire Autotask. My answer: I heavily doubt it. I think Autotask CEO Mark Cattini wants to grow Autotask as an independent company. Meanwhile, I think GFI typically acquires smaller software and SaaS companies. Some sources even suggested that MSPmentor started a rumor GFI planned to buy Autotask. Not true; we simply reported that Autotask has been speaking at GFI conferences in Europe and North America. We never suggested — publicly or privately — that an M&A deal would surface. If anyone knows otherwise please let MSPmentor know…

That’s all for now. MSPmentor will be back soon with deeper interviews culled from ConnectWise IT Nation last week. In the meantime, thanks for visiting MSPmentor and joining in the conversation.

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1. True Integration?: Check GFI Max’s solutions portfolio, and you’ll notice that the lineup for MSPs now includes:

• asset tracking and inventory management
• automated maintenance
• email archiving
• email security and continuity
• frontline defense
• managed antivirus
• patch management
• remote management and monitoring
• cloud and website monitoring

That’s a pretty comprehensive bullet list of services. But some of the services involved GFI Software making acquisitions. Alistair Forbes, general manager of the GFI Max business unit, has previously told MSPmentor that the acquisitions have been seamlessly integrated into GFI Max’s software portfolio. (Though he concedes: The integrations take time.)

Each time a new acquisition is completed, GFI Max works to extend key capabilities like single sign-on and single dashboard management to the newly acquired platform. I realize some of that effort remains a work in progress. But how do MSPs rate GFI Max’s integration efforts so far? Frankly, MSPmentor has to do a better job checking in with the GFI Max community to get a feel for user feedback.

2. Big Audience?: And in recent weeks, Forbes has claimed that GFI Max is no longer a niche player in the managed services partner market. Without sharing specific deployment figures, Forbes seemed to be suggesting that GFI Max’s community of MSPs — and GFI Max’s installed base of managed end-points — now ranks among the largest in the world. We’re still poking around to try and get a feel for GFI Max’s installed base and growth rates.

3. Key Channel Leaders?: GFI Software CEO Walter Scott is outspoken and focused. He’s overseen an aggressive M&A strategy, including the recent buyout of Monitis, which develops cloud-based network and systems monitoring solutions. Meanwhile, Forbes has emerged as the point person on GFI Max, traveling the global to help engage MSPs on a range of fronts.

But we’ve also got to engage Andy Langsam, a veteran of ScriptLogic and Quest Software. Langsam joined GFI in June 2011 as executive VP of worldwide sales and operations. I believe he replaced Pat Hume, who joined GFI Max in February 2011 but left by August 2011 to join Convio as VP of worldwide sales.

So how is the partner program running under Langsam’s leadership? We need to check in with him.

4. Key Partners?: Autotask is the only third-party SaaS company listed as a partner on the GFI Max conference agenda. It looks like Autotask CEO Mark Cattini and Senior VP Len DiCostanzo are confirmed to speak at the GFI Max conference. I believe Cattini previously spoke at a similar GFI Max conference a few weeks ago in Europe.

The GFI Max conference is located a few miles up the road from the big IT Nation conference, hosted this week by ConnectWise. For the first time ever, the IT Nation event is open to non-ConnectWise partners. I’m curious to see if any MSPs running GFI Max and Autotask in tandem head over to the IT Nation event. I’ll be searching for more answers when I arrive at IT Nation on Nov. 9.

In the meantime, MSPmentor is reaching out to Alistair Forbes for his perspectives on the GFI MAX user conference, which is kicking off now.

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Logan briefly touched on System Center 2012 during an ASCII gathering of SMB-focused VARs and IT resellers in New Jersey today. Also today, Microsoft posted two blog updates on the System Center 2012 strategy. The updates appeared on STB News Bytes Blog and the Microsoft Server and Cloud Platform Blog.

According to Microsoft:

• For private cloud, the company has released betas of the 2012 versions of System Center Service Manager and System Center App Controller, as well as a Release Candidate (RC) of System Center Orchestrator. The apps are designed to manage both applications and infrastructure.
• For client management, Microsoft released the RC of System Center 2012 Configuration Manager and System Center 2012 Endpoint Protection, which help IT manage PCs, mobile phones and tablets.

At the ASCII event, Logan didn’t mention if System Center 2012 will also support Google Android. And I haven’t had a chance to take a really close look at Microsoft’s stated directions yet. But it’s a safe bet Microsoft has gotten the message: The modern IT world is cross-platform and pushes far beyond Windows PCs.

So what’s next? MSPmentor is watching for continued synergies between System Center and Windows Intune, Microsoft’s cloud-based PC management platform. Windows Intune, which recently reached its second major release, focuses entirely on Windows systems management. But Microsoft has publicly stated that Windows Intune will gradually taking on more and more System Center capabilities.

During previous conversations with Microsoft, the company has told me that Windows Intune remains Windows-centric. Still, I suspect Windows Intune will ultimately become a cross-platform cloud service, perhaps even supporting Mac OS X, Android and iOS (iPhones and iPads) along the way.

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