Episode 12: SASE and the Cloud in 2024
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Erick and Rich explain why SonicWall buying Banyan Security suggests bigger and better things ahead for SASE in secure SMB networking and how to create positive brand image for your company. Then Derik Belair, CEO & co-founder of cloud management and security vendor Augmentt, joins in to discuss the current state of the cloud market and opportunities for MSPs in 2024. And finally, one last thing: how local residents of Grand Haven, Mich., called attention to a giant pothole badly in need of repair by building a living room inside it.
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[00:00:00] And three, two, one. Blast off, ladies and gentlemen. Welcome to another episode of the MSP Chat Podcast, your weekly visit with two talking heads talking with you about the services, strategies, and success tips you need. To make it big and manage services. My name is Rich Freeman. I am a co host of the show.
I’m also chief content officer at Channel Mastered, the organization responsible for this podcast. I am joined this week by your other co host, Erick Simpson, our chief strategy officer, my friend and colleague of many years. Erick, how you doing? I’m doing fantastic, Rich. It’s a brand new year. I’m excited to, explore what 2024 has in store.
For MSPs and the MSP industry. I am totally with you. I’m not a hundred percent certain when people will be hearing and, or, and, or watching this episode. We’re recording it on January 4th. We took a week off there for the holidays. We had a break. It was awesome. But I’m right there with you, Erick.
Just rearing, roaring to go into 2024. I think it’s going to be a great year. Yeah, I think so. And just from the early indications that we’ve already. Collected and collated at channel master. Just tracking all of the events so far that have been announced. It’s looks to be, back in business baby for a live events and conferences for the channel.
No kidding. I I’ve been adding events to my calendar this week and I’m gonna be on the road a lot in in February and March and beyond. And really looking forward to it. It’s, it, I come off the road typically in November and I, it’s a couple of months before I go back and it it’s a long wait.
I do love getting out there mixing it up on the road. Yep. Yep. It’s I’m excited to get back out there and do what we love doing best. Let’s pivot and talk about the news of the week. What do you got for us, Rich? Yeah, I got something good for you. And just FYI for folks later on in the show speaking of doing what we love to do, we’re going to talk with Derek Valaire CEO and co founder of Augment about the cloud market and cloud opportunities.
So stick around for that, but yeah, let’s talk about our story of the week. And it comes to us from SonicWall. Which very cleverly grabbed everyone’s attention first week of the year. It’s been a thin news week, but SonicWall has made another acquisition. Regular listeners, folks who are familiar with SonicWall will recall that just a few weeks ago in November, SonicWall announced that it had purchased Solutions Granted, an MDR vendor.
Now they have announced that they’ve acquired Banyan Security, a SASE vendor. Now again, we’re recording on January 4th. By the time people are enjoying this podcast, they’ll be familiar with a lot of the details. Let me zero in on two things that I think are significant about this particular move by SonicWall, most significant.
And first of all, it is not a small thing that SonicWall is adding SASE to the portfolio. SASE is secure access service edge. Basically, it’s security technology for the cloud delivered portions of an end user environment. In the age of remote work, hybrid work SaaS first cloud first business models the traditional business at SonicWall, which is firewalls for the traditional office perimeter and so on, still a very important part of the picture for a lot of companies, but there’s a lot going on above and beyond that right now.
And interestingly enough I, as we’re recording this, I interviewed Bob Van Kirk their CEO over at Sonicle just a few hours ago. And he said that the idea to add SASE to the SPAC was really inspired by most prominently, input from MSPs. So this was something that they were thinking of doing, but a lot of their MSP partners said we really want you, need you to do this.
And so they prioritized it a little bit. And this ties in. A few episodes ago, Erick, we spoke with John Tippett from Citricom about the SMB networking market, how the needs of SMBs around networking has changed in the era of cloud first and hybrid and so on. And what John was talking about is SMBs needing SD WAN.
It turns out this was new information to you, but SonicWall firewalls have had embedded SD WAN for a long time. Now they’re adding SASE. And this is a half step into the networking space for SonicWall so that they can do that dynamic combination of SD WAN and SASE that SMBs increasingly need.
And this is going to be something network vendors and security vendors are paying more and more attention to. The other thing again this is the [00:05:00] second acquisition by SonicWall in two or three months. And it speaks to a larger strategy that SonicWall has been pursuing. They are building a platform and that is the word that they continually use when they talk about it here.
Building a portfolio full of heavily integrated products that are designed to be used together and cover the spectrum from endpoint protection, threat intelligence SASE, SD WAN firewall, you name it. And the idea there, basically, is that what MSPs increasingly want and need is Fewer vendors, vendor consolidation, greater simplicity getting more and more of those products from fewer and fewer vendors.
And that’s something SonicWall has been investing very heavily in. And again, this is something that you’re seeing other vendors in and out of the security space do as well. Interesting move from a strategic standpoint at SonicWall Erick, and a sign of the times in certain ways as well.
It absolutely, certainly is. A side of the times as you and I continue to report on, the things that are changing and moving in the technology industry. Rich, I’m, give me your thoughts on this, but I’m starting to see for each category of vendors that we cover.
I’m starting to see this table stakes bag of deliverables that each one feels needs to be included in their portfolio to serve the needs of their partners and their partners customers. We’re seeing things like, Sazzy, we’re seeing things like managing.
Cloud platforms and applications from consolidated dashboards and things like that. We’re seeing a lot of this, that it feels to me like everyone is moving in this direction because that is what buyers are buying today, post pandemic. And that is what MSPs, like you said, MSPs are asking Sonic Ball to add this functionality because that is what their buyers are buying.
And I guess from where I’m sitting, Rich. The MSPs that aren’t taking note of this and looking at where the industry is shifting, it’s not because it’s because that’s what buyers are buying and if they’re not evaluating their stack and their deliverables, and like you said, consolidating vendors like eliminating this vendor sprawl and these platforms sprawl to make themselves more efficient and more strategic and profitable, then they’re going to miss the boat as the industry continues to shift.
In this direction. What do you think? Yeah, it’s a really interesting question because there is this age old issue in the tech industry broadly and in SMB technology specifically. There’s the whole question in any market of the integrated play versus the best of breed play. And best of breed, obviously, is I, I know I need a technology in these eight categories.
I’m going to go with. Shop across those eight categories. Find what I believe is the best product in each of them. And that’s what I’m going to buy. And I need these things to be integrated. I’ll do the integration. I’ll take care of that through APIs and so on. And then the integrated play basically is I may or may not be getting the best of breed product and all that categories, but if I’m getting them from one vendor, they come to me pre integrated and that’s going to be more I’m going to get more value out of that those connections and it’s going to be easier to deliver and easier to.
Port and so on. And the vibe that I’m getting, I don’t have data to back this up. I don’t know for sure if this is true, but if you to your point, if you watch what the vendors are doing, the vibe that you get is there is a shift in the MSP landscape right now towards that more integrated approach that that I’m sure there are still plenty of people out there who believe in.
firmly in a best of breed strategy. But more and more MSPs like the idea of fewer vendors easier vendor management, reduced overhead, tighter integration. And so I don’t know that an MSP is necessarily missing the boat, is going to be in trouble long term if they don’t get on. That integrated approach bandwagon, and if they stick with best of breed, but I do think there will be increasingly a question that they’ll have to ask to the extent that it’s true that in a, an integrated fewer vendor play there’s less overhead easier integration, simplicity, et cetera, that implies Lower administrative overhead and so you do wonder if there’s going to be a competitive issue around margins and around pricing and so on, given some of the relative inefficiency about Best of Breed going forward.
Yeah, I think it’s a larger conversation than we have time for here, but a couple of things come to mind for me. Number one is. Yes, there is a need to be efficient and profitable in order [00:10:00] to compete effectively against, all of the MSPs competitors that are out there when it comes down to the final buying decision from the buyer that is looking at two MSPs that without knowing exactly what the technologies are that are backing their deliverables because we like to, white label this stuff and make it our own and call it, our version are, good, better, best.
Product, but at the end of the day, if it’s a, a pretty even competition, the deciding factor will be that monthly fee at some point. So I think that’s one thing that I think about. And then the other thing that I think about, Rich is, yes, I think that the majority of MSPs are looking to simplify and do more with less.
Because of the cost of doing business is so high right now, but I think that also is influenced by the maturity level of that business at that moment in time, because the partners that I work with as they mature and become more strategic and more successful and more profitable, they will shift to a more best of breed type of an opportunity for these different services and solutions, because at the end of the day, they’re You know, they, like you said, they want to have that choice.
What they feel is best for their client. And sometimes a prepackaged bundle of services and solutions, is good for specific customers and maybe for a specific period of growth or maturity in an MSP. But as we become better at what we do and become more. Strategic and more valuable to our client, to a client with that relationship, meaning we can charge more money.
That means that we are selecting different solutions. So maybe we get away from that and become a little bit more specialized as we grow and mature. In the enterprise we typically see the selection for what’s being used to manage the technology in the enterprise. are typically not a huge bundle of prepackaged services from one vendor.
We typically want a little bit more control because we want to be able to be agile in terms of, changing things out as we need to. And it makes it tougher to do that when you’ve got all your eggs in one or a couple of vendors baskets. And you make a really good and important point, too, which is there’s a lot of nuance to this on a market to market kind of basis.
An MSP who might feel much more confident about a best of breed approach to RMM plus PSA plus documentation, etc. In a market like security, where there’s some real expertise involved, and a lot of MSPs don’t necessarily have that in house, there is more, relatively speaking, of an advantage to getting everything at once from a pre integrated stack and a single vendor.
And so if you’re leaning more heavily, On a third party, and this is why MDR is taking off, because a lot of people, to some extent or another, are doing that. Security might be a little bit different than some of the other market segments that we talk about, but Great stuff interesting way to kick off the new year for SonicWall.
Just FYI, the Banyan Security brand, as far as I understand, is not going away. And in fact, the leadership team and the dev team is sticking around with SonicWall as well. But as long as we’re talking about brand, Erick, let’s transition over to your tip of the week, because it’s all about brand as well.
And great segue, Rich. And, one of the ways that we distinguish ourselves As MSP solution providers, service providers, I T professionals is not only based on the services and the solutions that comprise our portfolio and how well we deliver that service. But it’s also defined by our brand image.
And that’s what I’d like to take just a few minutes to talk about this week. And brand image is a little bit different than brand identity. And so I’ll start there. So brand identity is crafted by the organization itself. This is, what we as an organization feel our brand identity is and it encompasses things like.
Our product portfolio, how we price our logos, our marketing campaigns, etc. So that’s our brand identity that we maintain the brand image on the other hand, it’s sounds a little bit seems a little counterintuitive rich, but it’s based on the public’s perception of who we are. And I think sometimes MSPs have a challenge in portraying, in aligning those two things.
So the image the identity that we have, we want to present that in a positive brand image to, to our audience. And the reason that this is so important is it defines and distinguishes [00:15:00] us. amongst our competitors to our target audience. So just a couple of quick, tips on identifying and establishing the image that we want to portray.
That is what we want our prospects and clients to perceive our value proposition to be. So number one, you’ve got to know your target audience. You can’t be You know all things to all people as we’ve talked about, many times on this program rich we’re not trying to serve a clients and b clients and c d e n f customers.
We want to serve The clients that see us as being very valuable to their organizations. They’re that are in a growth mode that want strategic value, not simply keeping things running. They want guidance. And this is where we get to exhibit our expertise through delivering a strategic, valuable service.
So this is the audience that we want to identify with. We don’t want to market to everybody. We want to market to our ideal prospects. So once we identify. Who that target audience is, which now is when we begin to identify their needs. The needs of today’s buyers are going to be this move toward the cloud, like we’re always talking about.
Cyber security, the stories that we’re covering now, hybrid workforce support. But more than that, they want to have virtual CIO, virtual CTO, virtual CISO. So these are some of the things that we see buyers interested in today. What is our brand’s value proposition in addressing those needs? We need to define that.
And then we need to come up with in a consistent and concise communication and branding strategy. This goes far beyond our logo, but it does include things like our logo, the fonts we use on our website and our marketing materials, I’ll leave behind. Everything should be consistent and convey that value proposition to our target audience and thereby.
Establishing that brand image. Yeah it’s, really great and important stuff. And it gets you into a subject area that is not terra firma for a lot of MSPs. Marketing in general, I think is not terra firma for a lot of MSPs, but brand and image management and brand image management in particular.
It’s worth pointing out that one of our channel mastered colleagues, Lisa Shore, is in fact a specialist in brand and image management. We’ve spoken about that with her on the podcast before. And she can talk about that at length in, in great detail and nuance. There’s a lot to it. But I think you’re really zeroing in on the key point which is that it begins with the customer.
And it begins with what the customer, you, your company is targeting and going after what you know about them, what they value, what they watch for, what they need, what they want, and then how you present yourself to them in a way that’s going to convey the message, we are aligned with you and your needs and your requirements and so on.
And it, it presenting yourself to them sure that’s in the slide decks and in the sales. Pitch that you deliver in a conference room and so on. But like you said, there’s a whole lot more to it than that. In terms of the look and feel of your website and the logo and all of that, everything that conveys in an unspoken way, all of the things that you are trying to say to your customers based on what you know is going to do most resonate with them.
Yes, and this is, and we just talked about the very tippity tip of the iceberg here, Richard. If you have the opportunity to run into Lisa Shore at one, any of the many events that she’s at or see one of her webinars or just chat with her in the hallway, she will tell you how deep This brand and image goes, it goes all the way down into how we answer the phones, the email communications.
Once you are a client of the MSP, how the technicians and the account manager speak with the, with the clients and in the whole, it’s very deeply ingrained in the culture of the organization and from top to bottom. So again, just a few things to think about when you’re trying to formulate.
Kind of your brand image. And remember, it’s different than your brand identity. You want your brand identity and identity to be reflected in your brand image. And so that way when someone is first a new client of yours, you’re actually delivering on that brand promise that you’ve been promoting to them through your marketing and sales efforts while they were still a prospect and that creates stickiness, it creates, long term client relationships, trust, and loyalty.
And it makes it very difficult for them to, to go to a competitor that is not doing as good of a job in this particular aspect of client relationships that you are.[00:20:00] I absolutely love it. This is really great stuff. I’ll leave people with a homework exercise. How about that? If any of this feels a little bit abstract to you, think of to yourself one or two or three companies that you do business with and really like doing business with.
It could be vendors, could be somebody totally out of it. But think about companies that you like, you trust, you do business with, and then ask yourself, what’s their brand image and what are they doing? To convey that on their website, in their communications with you, et cetera, because there, there could very well be some lessons for you to learn, or if nothing else, just a way to get a feeling for what it is that we’re talking about here.
Awesome stuff, Erick. We are going to take a quick break here, folks. When we come back on the other side, we’re going to be joined by Derek Voller. He is the CEO and co founder of Augment, cloud management cloud security vendor, and a perfect person to speak with about conditions in the cloud market and to get some tips and advice from on really optimizing your cloud offering and maximizing revenue and profit.
In the cloud. So stick around. We’re going to be right back with Derek Blair
and welcome back to part two of this episode of the MSP chat podcast, our spotlight interview segment, Gartner expects global spending on public cloud computing to hit 679 billion in 2024 and a trillion in 2027. And they say you’re going to have to wait until 2028 before cloud computing ceases to be a disruptor and transitions to merely being a necessary part of how businesses compete.
So there is clearly a lot of money, a lot of growth, a lot of change still in cloud computing. But where, exactly, and how can MSPs best take advantage of that? Here to discuss those and some other topics with us is somebody who is eminently well qualified to get into that with us. We’re very glad to have him with us on the show.
His name is Derek Belaire. He is the CEO and co founder of Augment. Derek, welcome to the show. Hey, Rich, thanks for having me. Hi, Erick. Yeah, always a pleasure. Awesome. Derek I want to get into Augment and what Augment does in just a moment, but I think it’s helpful for our audience before we do that, if we talk a little bit about you and your background.
Because like my co host, Erick you were pretty much present at the creation of Managed Services as we know it today. So tell folks a little bit about yourself, about your background before Augment. Rich just wants to age us, Derek. That’s all. That’s it. Every time I look at those dates, I’m like, how vulnerable was that?
Yeah a quick background on myself. I helped my business partner’s name is Gavin Garbett. We started a company called Enable Technologies back in 2000. At the time, the goal was real simple. It was to help System integrators and value added resellers really get into reoccurring services and leveraging technologies to be able to, stop rolling the truck so much to go in and, earn service revenue and try to do as much of it remote and really pivot the business from.
From from a very, labor intensive operation to something where technicians could through a lot of scales and through tools deliver services in a, in a remote, highly profitable manner. We spent about 13 years at Enable building out the RMM platform.
We sold out to SolarWinds in 2013 Gavin went off and did a couple more ventures. I stayed on to SolarWinds and really tried to see that MSD business, that enabled business unit through. And in 20, late 2019 Gavin and I decided to put the band back together and really help deliver on something that You know, we had seen as a, as an emerging area of interest, which was around SAS and Microsoft cloud security and management.
We always felt that there was a natural sort of pivot that was going to happen from on prem hardware, software and infrastructure towards cloud. And we tell that the RMM. Platforms were in a great position to be able to capitalize on that. Unfortunately at Enable and SolarWinds at the time, they were really focused on their core business.
And we saw the opportunity and Gavin and I decided, you know what, why don’t we why don’t we, start a new business and really help these MSPs make that pivot and help them through that transition. Yeah. One of the really interesting things, I remember covering the launch of Augment back in 2019.
And I remember you and Gavin both telling me The original idea for this company, not the name and the specific product lineup, I assume, but you guys had the original concept and saw the need for what Augment does today, back in 2013, a decade ago, when you got out of, or he certainly got out of Enable, which is really interesting.
So let’s talk about Augment. What exactly does Augment do? Yeah, so at its purest form, what we are is a SaaS [00:25:00] security and management platform designed specifically around the Microsoft ecosystem. So if you think of MSPs, historically have been reselling licenses of Microsoft. Installing Microsoft at the customer environment, certainly back in the old days, small business server.
I’m definitely aging myself with that little reference, everything around managing Microsoft, the setup, the configuration, the users we always felt that there was a real opportunities for MSPs to be able to leverage, a tool multi tenant tool to be able to do that. In a much more efficient, much more scalable, much more secure fashion and really what our solution does at its simplest core is it will help the MSPs connect all of their customers Microsoft environments into one central environment.
And from there, the MSPs can do all of the IT administrative tasks, whether it’s onboarding, Boarding, setting security standards, setting security baseline, everything around making those Microsoft tenants, those hundreds of tenants that they manage secure, fully managed from one central place. Yeah, that’s a very I think it was a very prescient.
Position that you were in back in the day. And yes, the call out to small business server. I remember we landed so many of those, even though back in the day, Derek, it’s we’re putting all our eggs in one basket on this box and we did that. And then after Microsoft decided no, we want to split it back out into separate, servers.
We, we landed that too. That was a pretty it was a great growth curve. And we learned a lot back in the day, but absolutely, as we’re looking to this migration to the cloud here, and we’re recording this just right after the new year. So happy new year, everybody. What are the biggest trends changes or developments coming out of 2023.
And now this is again, positioning it for everybody. We saw this tremendous accelerate acceleration toward the cloud. Being the catalyst was really COVID, right? When everybody had to accelerate these migrations. So coming out of COVID, 2023, this, cooling off period, what do you see the biggest trends, changes or developments based on what you’ve seen in 2023?
And where are we going in 2024 and beyond? Rich kind of gave us these statistics from Gartner, which are very, impressive eye opening. But how do we boil that down to today’s MSPs and give them a little bit of guidance? Yeah, certainly what we’re seeing out there and we saw that very predominantly in 2023 is that MSPs, have a growing stack of tools that they’re using, every day to service their customer.
And that tool stack has grown. Exponentially throughout COVID in 2023 and MSDs are paying a lot for that. And so now they’re in a position where they’re saying, when I need to really understand, what am I paying for? What are all of the tools that I have? They all understand that security is the area that they’re pulling, being pulled into.
That’s what the end customer is very concerned about. That’s what, that’s where the money is. But they’re in a position where they need to understand, reevaluate the entire tool stack and really try to understand, what are the core service offering that they’re providing to the customers, historically, a lot of again, networking on premise hardware and software, and then that slow shift through the, or I would say accelerated shift through COVID away from physical infrastructure, more towards cloud, but the MSPs have a tough decision to make, they have a baggage of tools that they’ve used, throughout many years that has served them well, that is It’s expensive and that they need to reevaluate a time.
And then there’s two sort of of areas of opportunity for them. One is around cloud management. Then the other one is around, I would call SAS. Now, they tend to be very similar, but there is a big opportunity for MSPs to get involved in, in, in infrastructure and hosting and helping, customer with Azure and those types of environment.
And then the other one is, it’s really around the applications. Hardware is moving to the cloud software, moving the SAS. There’s an opportunity to get involved in both. But it’s a lot of work from an MSP’s perspective, because again, they have a limited amount of areas that they can spend on tools and they’re having to do a bit of a a tool rebuild.
So that’s what we’re seeing. A lot of our partners saying is where do you fit into my stack and. Are you seeing other MSPs using this piece and this piece and what are people changing towards? So it’s a tough time for MSPs a lot of decisions that need to be made But also a lot of opportunity past that transition.
Yeah, I think from where we’re sitting, we’re you know I’m gonna i’m gonna double down on what you just said about, the stack growing, you know I call it this technology sprawl this vendor sprawl this billing sprawl this it’s getting tougher and tougher for MSPs Not only to, bill accurately and shorten the time to invoice.
And that’s typically the, big headache at the end of every month is trying to consolidate all this billing together, but then there’s also this sense from the MSP that says, wow, I have to catch [00:30:00] up to where the puck is going to be right. Wayne Gretzky used to say. And that means that I have to be very I have to almost have this crystal ball to figure out where my clients want to go.
And in that process, we’re seeing this, they feel that they need to add more solutions, adding more costs to their stack. And what I’m seeing, Derek, is they’re having a challenge. In charging their clients for what it costs to maintain that today. So the clients are in these long term agreements and now we’re switching out solutions, we’re adding things to the stack just to do what we need to do to keep these clients efficient, operational business, continuity, secure, and all this stuff.
And they’re having this challenge from a having that sales conversation to say, Hey, things are different now we have to adapt and evolve. And we need to increase your billing. So what are your thoughts on having that conversation? and what are the table stakes from an msp’s point of view of what’s required for them to have in their stack?
And then how can they get their clients to agree to these increased costs? Because these are operational costs at the end of the day. We’re not just trying to make more money. We’re trying to do what’s right. Yeah, it’s a great point. MSPs talk about that all the time. I would say that from a cost increase perspective.
I’ll say there’s never been a better time to justify a cost increase than this last year and a half. So if you’re an MSP and you’re not raising your prices at the very minimum to, to adjust for inflation, that’s crazy to me. So it’s, it, there is a perfect natural event that is happening for every MSPs to adjust the pricing.
And I’m not talking about, big, crazy price gouges, but really to adjust based on the price increase that they may have suffered from their vendors. So the time is perfect. But the tough part becomes again, as an MSP, if you’re selling, if you’ve got a price point in mind for a bill of service, and you’re trying to add more value and more value to it without either creating a segmentation strategy on your pricing, like a good, better, best, or or some sort of a program with tiers.
And you’re trying to keep a, an all in one pricing. There’s a tremendous amount of pressure by the MSPs to rationalize their stack. To keep moving things around. So the easy thing is to turn around and charge the customers more. The harder thing is to create segmented packages that you’re going to market and sell independently to capture the rising tool costs and to capture the opportunity or what’s often even harder.
is to constantly be looking at your stack and constantly be changing the tools as features and functionality overlap. Because every vendor has a roadmap of tools that, that tends to encroach on other technology. And before you’re paying for solutions that kind of do two thirds of each other.
So it’s a very difficult challenge that our MSPs face. And they’re constantly asking us. And I think vendors as a whole to say, tell me where you fit. Along this line of products and, help me understand, what I actually need to get this job done, but it’s very difficult because again, it requires sales and marketing experiencing on packaging and pricing.
It requires customer segmentation to understand of all the customers you have, what is it that they need and need to pay for? And on the backend it’s you constantly as an MSP reevaluating your stack and moving. Vendors around competitive pricing edge, functionality edge. So it’s just a lot of work for msds.
And I feel bad because again, we’re a vendor and we’re, we’re telling them you should look at us also. So it, it is a very tough challenge. But I would say start as an MSD start by raising your prices. Every, every one of your customers is dealing with that today. Everything’s on the rise.
You just gotta do it. And that’ll relieve some of the pressure and then it’ll give you. The time to be able to start, looking at your stack and being strategic with the tools that are in there. Yeah I really appreciate that perspective, Derek. I’m a fan of, selling consultatively and selling in bundles, good, better, best.
And then having that maturity to say, we need to be increasing our pricing on a yearly basis, just to keep ahead of the cost of doing business and the cost of inflation. Everything. That we pay for as consumers, everything that we pay for as business owners increases every year to, to adapt to these costs.
And so coming into this conversation as an MSP that says, wow, sounds like a lot of work. I’ve got to now figure out how to create my good, better, best, bundles of services. I now need to be evaluating vendors. On a regular basis to ensure that i’m delivering the right services And then I need to be having these conversations at a very strategic and consultative Level with my clients to be true business partners so that we grow together it seems like a lot we’re not suggesting that you’re you know Constantly [00:35:00] changing out, products and solutions, but you’re always aware Of where that puck is going and you’re evaluating your stack from a is there a way for me to consolidate Some of these some of this and reduce the sprawl maybe Invest more into a particular vendor now that we have a lot more choices than you know The days when you and I were you know at the tip of the spear of the msp movement there, right?
It was there’s only a few things we could do. So we’re just going to do that stuff Now there’s a lot of choices a lot of options. I think the takeaway here is You know that the evaluation of your business relationships with your clients You’re looking for a and b clients and you’re trying to get away from these c customers that are going to nickel and dime you and not want to move forward and put their Organizations and your organization and the rest of your clients at risk by not moving forward and investing in the right cloud management Services, the right it services, the right cybersecurity services.
So it’s we can talk for days on that, but I do appreciate your perspective and I agree with it. You’re absolutely right. It was easy when there was only four or five vendors selling products in the space. You pick the four, then that was it. The tough part we see now is people stick either to a stack way longer than they should at the expense of potentially the service offering that they have, that they offer their customer, or they pivot on tools too quickly.
And then they lose the efficiency that they gain internally by having their techs well honed and, used to dealing with products. So it’s, it is a balance, and you don’t want to be switching out tools all of the time, but you do want to get onto a cadence where you’re trying to understand the pieces.
And to be honest, even we ask a lot of our partners, show us the stack, show us where, where, what tools do you have? What function do they serve and where do they fit on your service offering and where do they match the value and really try to understand, you might love the vendor.
You might love this technology, but if it’s not driving, a strategic growth, if it’s not helping you win business, if it doesn’t create competitive differentiator, if it’s too expensive. It might just be a part of the stack that unfortunately you got to let go of, or you keep it, but you put it in as a premium bundle.
And it’s not part of your core. So it’s tough because that, that stack is where all of their profit, all the revenue. All of their competitive differentiator comes from. And, you’re constantly wanting to adjust it, but you’ve got to have some patience, but also have the ability to say, we’re going to get rid of 10 percent of our costs in our stack every year.
Like it’s just, it’s a rule of thumb. We got to get rid of some of it. Something’s got to go before something. Let’s not overlook the hidden costs that sometimes we’re not. Cognizant of training and retraining our technicians and engineers jumping from platform to platform and things like that.
So that’s, and then as the cost of labor today, right? So again it’s a weighty conversation but I think any mature and growing MSP organization has to be dealing with this on a quarterly basis, just to make sure that they’re looking at the bottom line, they’re looking at profitability, they’re looking at increasing efficiency.
They’re looking at, I. Letting, pruning your garden as Karl Palachuk likes to say, right? Getting rid of customers that just are costing you too much money. Those are not moving forward, right? Yep. Yep. That’s a great point. You’ve touched on this a few times a little bit, Derek, and it’s a topic that’s been a great interest to me.
You look at the big names in IT management, Enable the one you’re most familiar with, obviously, but also ConnectWise, Kaseya Datto, et cetera. Up until very recently, they were pretty much 100 percent focused on the endpoint. And so as SaaS is becoming more and more important for the customer, if you want to manage all those workloads, you’re going to have to work with a company like Augment.
There really weren’t alternatives, but really just within particularly in the last six months, I would say, but, maybe in the last year and a half, Enable has SaaS management now, Datto does now ConnectWise just announced something Kaseya is doing some of this as well. And so I’ve been writing for years about this kind of.
Race to, leadership in SaaS management between these legacy companies with established brands and deep pockets and companies like augment that are born in the cloud, born in cloud management, have a big advance in terms of development and functionality. And so where does that race stand right now from your perspective and how would you advise MSPs to think about that decision making process in terms of do I stick with.
These names I know, or do I invest in companies that got to the cloud earlier than them, like Augment? Yeah, it’s a great question. I’ll answer it a very sort of political way that there’s probably no true solution for everybody. I personally, I’d say, obviously, we’re the choice.
Ignore everybody else. Just send cancellation notices. But the reality is, The vendors like, like augment, like everybody else that’s in this space. First of all, this is a very fast and [00:40:00] rapidly growing space. It’s a space where we’re every vendor is going to get into. There’ll be no, Oh, we do some SaaS management or we don’t do it.
It’s just the natural progression. So everybody is going to get there and every MSP. Is going to be forced into taking some sort of ownership of their customers cloud and sass environments and help protect and manage it. So all roads lead to that sass piece. Hence why we’re all so interested in it. I will say that it really depends on your unique requirement as an MSP.
So if you are looking to really make this a big part of your of your stack of your business offering, if you see that your customers are in need of SaaS management, you’re dealing with customers that have SaaS usage, a lot of cloud applications. They have a lot of security requirements. Going with a pure play will give you the opportunity of having a tool that is 100 percent focused on just that solution.
Dealing with an RMM vendor or a bigger platform vendor will give you the ability to have this as part of a long. Tail of tools. So I’ll say it really depends on what it is you as an MSP are trying to accomplish. Right now it’s a little bit of a land grab for certainly for vendors like us, but also for the MSP offering this out of the marketplace.
So what we’re finding is Two types of MSPs that are very interested in working with a company like ours, the guys that are very innovative that tend to be at the tip of the spear as Erick pointed that, they see the opportunity and they want to establish that expertise and that that, that business practice quickly.
And they’re the guys that will evaluate a, probably a vendor like us, cause they want to. Input on the road map. They want to guide how our product evolves over time and they want to be part of that decision making process. But you also see very big guys that are saying, you know what?
We have, a large amount of customers, a large amount of scale. We, need a solution that is like a a laser focus on this unique problem. We’re not looking for something genErick, but we’re looking for something very focused. And here’s our list of requirements. And again it’s very difficult if you’re a broad vendor like an Enable or Kasai or whoever that has a wide sort of set of technologies to also go very deep on all of them.
So to me, I say, if you’re looking to go deep on SaaS security and management, a pure blade vendor will get you there. If you’re looking to go very broad and shallow, a big vendor might get you there. But the reality is all roads lead to the same, which is. I remember the future to me is all around sass and cloud and all roads will get there eventually.
So you might as well get jump on that train, whatever way you want, as long as you jump on. Another thing that true I think we all recognize of RMM of the future is it’s going to increasingly incorporate artificial intelligence. It’s along with everybody else who does what I do, I’ve been writing a lot about this.
And then in particular. Anytime I interview an RMM vendor, and I’m thinking of the, traditional RMM vendors, I’ll always ask them, what are you doing or planning to do soon with generative AI, and how are you striking an appropriate balance between innovation on the one hand and safety on the other?
You want to move fast, but not too fast. I’m very curious what are your, what is your thinking at Augment about incorporating AI into the tool and balancing innovation and safety? Yeah, we get asked about AI a lot. Certainly if you’re talking to investors, you’re talking to customers, they want to understand, what is the current thinking within the organization around AI, the beautiful thing with vendors like us is that we gather.
An insane amount of data on a lot of data points, so if you connect to, thousands of MSPs and they have hundreds of thousands of customers, and now all of a sudden you’re gathering all of this data, whether it’s data on configuration or data on setup, or data on security posture, that data can be, very helpful when aggregated as a whole, when used.
To make better decision making, so it’s much better for you to rely on the data processing across multiple MSDs and just trying to analyze data on your own. I’ll say that AI, does require a lot of data for it to be very meaningful. And the minute that you give it. Any more power than just understanding and trending data and you allow it to make decisions that tends to be a line that, that is difficult to cross for a lot of people where you put, configuration changes in the hands of an AI based on, on, a data model.
To me, it requires a lot of data over long periods of time to be analyzed for it to be effective. So early AI implementation on a new data set tends to be somewhat. I think a little scarier than something that’s been running in the background for a long time. But we’re fortunate, for companies like us, we’re fortunate that Microsoft does so much AI work.
And so the data that we pull out of the Microsoft tends to have been run through their AI engine. So whether it’s alerts, whether it’s posture, configuration, [00:45:00] recommendation, whether it’s threat identification, we tend to leverage. Microsoft’s ai as a way to get that data and flow that down to the customer but i’ll say that it’s unavoidable, it is such a powerful tool that can you know process such a large amount of data and you know historically you would have hoped that your internal technician You’re really smart guys in your office would have been able to analyze that data and make those recommendation But it’s coming from so many Data sources.
It’s coming at us so quickly and the responses need to be so rapid that you can’t not depend on a I to do some of that heavy lifting. So to me, it’s a tool. It’s not the solution, but it is a tool to help you get to the cause of the problem or to identify a problem much quicker. But at the end of the day, it requires skilled.
People to implement it and to know how to implement the safeguards, but also how to when to, when to trust it and when to go down on it and versus when to potentially take a step back and reevaluate how it’s being implemented at the human powered version of intelligence. I think it’s needed to run the AI tools.
Yeah, it’s yeah, AI is very it’s a slippery slope, right? With great power comes great responsibility. And we’ve seen situations where just saying something. That makes people kind of question that comment can have a big impact on, the perception of an organization and their vision and even their stock price.
It’s such a, it’s such a touchy subject right now. So really appreciate your perspective on that. Now, Derek, before we went live on today’s show, we were having an interesting conversation you and I about, the difference. In how MSPs perceive the tools that they bring into their organization from, and I’m and the conversation was about.
How they perceive a tool that they feel is an operational tool to help them increase their efficiencies and profits and things like that. And then tools that they use, that they feel they can make margin on as they included in bundles and resell to their end user clients, I’m of the opinion.
That we should be making margin on everything that it costs us to deliver service whether or not we feel that it’s something that is in a invoice to a, an end user client or not, if it’s being put in place we, that is an operational cost that we need to recoup at some level, can we kickstart that conversation again and maybe position how you’re seeing it?
partners perceive augment as their operational tool and how, to me, that’s something that we should actually be including in our cost structure and adding margin on and how partners should maybe look at, increasing their cloud margins overall, right? So to me, I look at what does it cost to support that client?
I need to make a target GP no matter what is in there. And that includes labor costs. That includes the. Fully burden labor of employees all of the tools a fractional slice of the cost of all of my platforms etc Can you give us your thoughts on that? Yeah, so I’ll say that if you’re running a service business every cost that you defray as an MSP torch tool, you got to recoup, for you to bury costs into your own profit margin, you’re doing yourself a huge disservice.
And I would say that if the customer doesn’t see the value in the benefit of the tool you’re bringing on, then you probably shouldn’t be bringing on that tool because, unless it’s something truly. Back office for you as an MSP, like your PSA or your accounting software or some marketing tool.
Other than that, it is my belief as a business owner that you should protect your margins at all costs. And if you’re going to be bringing something in, something’s got to go or the price has got to go up. When we started augment, we were very huge believers in the fact that you as an MSP should take that.
That tool costs the augment tool costs and you should find a way to either create a good, better, best offering and put us in there somewhere, raise your prices or just resell. For example, if you’re selling Microsoft licenses, you should mark up the Microsoft licenses and here’s license only and here’s license with services and we fit into that.
I’ll say we tested a lot of models out there. And what we find is that a lot of MSDs tend to create one service offering they, a lot of the MSDs we talked to do not do the tiers, they simply do a one size, one price, and then that has a value to it, and then they put as much stuff in there as they can, knowing that they need to reach a certain margins.
I certainly, I understand why they’re doing that, but again, if you’re not raising your prices, then all it’s doing is chewing [00:50:00] into your business. And eventually you’ll learn to hate the tools you’re bringing on because they’re just eroding you, your potential profits. As a tool vendor, it’s very important to me, for example, at Augment that we do two things.
One is that we provide a certain amount of efficiency on the back end for your techs efficiency either in the ability for your techs to scale, in being able to service more customers, being able to service more end users, being able to deliver a service faster and more efficiently, being able to do it.
And, but that should be like table stakes. That should be, you as an MSP shouldn’t really talk to a control vendor unless that’s going to happen. The real, the flip side of it should be the value it’s going to add to your service offering. And That value that it adds your service offering, I would say if you’re looking at a new tool to bring on, you’ve got to see that tool and you’ve got to be able to envision the price of that service offering going up by at least double that price, if not more.
If you don’t see that tool that you’re bringing onto your stack. isn’t going to be able to help you raise your prices, then it would have to be something incredible on the back end to justify it. And that’s what we tell all of our partners is you’ll buy us and your techs will like it because it will make them more efficient, make their lives easier, but you’ve got to get on a path to raise prices.
You’ve got to create tiers or raise everything at once, or at the very least substitute for something else that you’re paying more. I would say there’s no reason to bring on a tool unless you’re going to raise prices. And while I love partners that say, we’re going to just bake you in, it’s fine. Our techs are going to love it.
Those are the partners. I’m scared of the most, because if you’re not seeing this as a way to make more money, raise money, eventually it may not be today. It may not be tomorrow or in a year from now, but at some point you’re going to be like, why did we bring that tool on? I love that. The techs love it.
But my god, like we’re not getting any roi on that So do not buy a tool if you don’t think you can raise your prices or keep your margins the same Service you’re offering and the easiest way to do that again is the tiering process But if you’re doing one size fits all just raise your prices yeah, and one one thing that i’d like to highlight and everything you just said which I agree with derek is You said hey at least double for any saz Application.
We’re, we used to say 50 percent GP now it’s 60%. I have partners that are shooting for 70 percent GP on their MSP agreements. So we’re seeing that movement. And these are the MSPs that you’re talking about that, that see that this is, Hey, we’re in business to grow and generate a profit, because if we’re not generating that profit.
And that stymies our ability to out market our competitors. That stymies our ability to reward our existing staff to keep them from being poached. That stymies our ability to hire these, costlier technicians as we grow. So it’s a very mature perspective that you bring to bear here.
And the guidance that you’re giving the MSPs is. You need to get paid and make a margin so that you can grow your organization. And you need to deliver these great services to the right clients, because as you grow, now you’re refining your target audience to say, we want strategic business owners and leaders that are on a growth path.
See customers that we may have started delivering service to when we started our company 15 years ago, haven’t grown at all. And what does that mean? That means that. We’re spending more time supporting them because we’re not charging them more as they grow and that’s robbing us of the efficiency to serve more A and B clients.
So yeah, absolutely. And then I, I always tell partners your ability to raise prices will ultimately mean that you’ll be able to service your customer better because you’ll have more margins to hire better people, to bring on better tool, to do the work that’s right. If you’re trying to.
Deliver more services and keep the price the same. Ultimately, that customer will suffer and you’ll suffer as part of the process. Don’t see price increase as a negative things or have that bad conversation. It’s a, this is everything I’ve done for you in 2023. As we entered 2024, our price are going up and here’s what I’m doing.
Above and beyond. And here’s how, we’re going to keep you secure and keep you operating. If I keep my prices low and I don’t ever charge, you’re going to suffer. You’re going to experience some sort of a security breach because I won’t be able to bring on the people, the skills, the talent, the tools to do the job right.
So you’re doing them, you’re doing them a favor by raising your prices because they know that you’re constantly evolving your practice and the services you’re delivering. Listen, that’s probably the biggest thing, I, I tell every FSB, I know it’s a tough sale, but if they just do one thing, it’s raise your prices, just look at the enterprise and how much the enterprise service providers are charging enterprise customers for exactly what you do, it is five or 10 times more.
So raise your prices, please. All right. Good closing advice there. Raise your prices, folks. If you haven’t recently for a lot of good reasons, we just discussed really interesting conversation, Derek, we really appreciate you making time for us. If folks in the audience right now, they want to get in touch with you, [00:55:00] or they want to learn more about Augment, where should they go?
Easy, go to Augment. com and that’s Augment with two Ts, so nice and easy. Fantastic, again, thank you very much, Derek. Folks, we’re gonna take a little break now when we come back on the other side. Erick and I are gonna chat just a little bit more about the subject matter we just discussed here, maybe have a little bit of fun as we wrap up the show.
Stick around, we will be right back. Alright,
and welcome back for the final segment of this episode of the MSP Chat Podcast here. Erick and I, I’m gonna sum up my, my thinking, my main takeaway from our conversation with Derek in nine words. Raise your prices. I think it’s pretty clear that’s really what Derek wants people to be thinking about.
And, in the context of what Augment does, it makes perfect sense, right? Because, and you and Ian in particular had a lot of conversation about this. If you think about that Augment software cheaply as a management tool and something where the value is inside your organization, then it becomes hard to think about raising my price.
my prices to accommodate this tool that I’ve added to my personal technology stack. But there, there is a very important customer facing element of what a tool or a set of tools like Augments does, right? Like that ability to discover all of those SaaS apps that are in use in a customer environment out there, all of that shadow IT, those rogue solutions.
You don’t know where they are, and therefore you don’t know if they’re secure or not. The ability to discover that stuff, the ability to secure that stuff once you’ve discovered it, the ability to get smart about where the end user is spending their money around stuff, all of that has value to them, to the customer.
That’s an additional service, additional value add that you’re providing, and you should be you should be paid for that value. Absolutely, and, any MSP that’s had a An architecture firm as a client will understand this point. I’m gonna make very immediately if you look at how they invoice for their work, I mean it is down to it’s almost like an attorney’s office, the sheet of copy paper that they printed, the quote on or the proposal, for architecture firms, down to the nail down to the screw down to every bit is incorporated all of their platforms that they use the time for the project manager, the project coordinators, everything is included in that quote, and they’re able to.
to deliver this and have very satisfied clients rich because they’re not pricing based upon their inputs. They’re pricing based upon their outputs. So the value that they deliver is what the client appreciates, not what every nail and every screw and every, toner cartridge during this nine month, building project takes.
It’s basically. What they get at the end of it, this building that’s ready to move into or whatever it is that they’re developing. So again, what I really appreciate about the little back and forth that Derek and I had about pricing and about making sure that you’re incorporating all of your overhead costs, your fully, burdened labor costs and all that.
And then marking that up to meet your minimum target. Margins, which, today should be north of 60 percent is what I advise. So that was, I really enjoyed that, that conversation and I’ll always ring that bell. And again if we’re, if for no other reason, you should be raising your prices yearly, just to keep up with the cost of inflation and the cost of doing business just as a natural increase.
And I know many partners that have that automatic price increase already built in. to their agreements. So that’s, one thing. And yes, all of these platforms that help us deliver on what today’s end user customers need and are buying are valuable. And again, we’re moving more toward the cloud and we’re supporting hybrid workforces.
And we are delivering data migration to the cloud. And we’re, supporting these cloud applications. So any of these tools and technologies that we can bring in to again, consolidate a little bit, make it easier, integrate with different products and applications, reduce vendor sprawl while still giving us the freedom of choice as we mature and grow as MSPs.
our value adds and we should not shy away from expressing the value of these services and solutions to our clients and having very objective and direct conversations about not asking permission, right? Or a client to increase their rate, but asking forgiveness later on, on January 1st, our rate, our rates will increase due to these factors and [01:00:00] be very clear about it.
And then 99 percent of clients that get that communication from the partners that I work with and encourage them and guide them to do it this way, have no problem with it at all. All you’ve got to do then, Rich, is deal with that 1 percent and then, I don’t say don’t raise their rates, but negotiate something a little bit less than if they need it.
But you’re always going to try to recover your costs and be profitable so that you can be competitive. And I’ll just add one quick little final note from the perspective of somebody who reports on the industry, reports on vendors and so on. There was a really interesting moment towards the end of that conversation where Derek said, one, one reason that he emphasizes raise your prices so much was because the partners who.
I think the word he used was terrify. The partners who terrify me are the ones who don’t raise their prices because a year, two years after they adopt our products, they’re going to come to me and say I don’t know if I really, if it makes sense for me to continue paying for your products. If they do raise their prices, if they do use their ability to help end users manage and, their cloud environment and control cloud spend and so on, then they’re going to see and recognize the value and the software that Augment makes.
And they’re much less likely to have that conversation if it’s just here’s another management tool. I’m spending money on it. Does it really make sense for me? That’s a terrifying thing from the standpoint of a vendor like Augment, which I thought was interesting. That was very, I think it was very observant.
And I think, like many topics that we cover on this program, Rich, there’s a whole lot that we could talk about, to give these MSPs, a little bit more courage in doing this kind of thing. And, first thing, and we touched on this during the interview as well is You know, stop serving these customers that aren’t meeting your GP requirements.
They’re not going to agree to a price increase if they’re not growing. And that just means that you’re using more labor to serve folks that need more of that labor thereby costing you more money than you could apply to bringing on new a clients and releasing them back to industry. But again, More of that on another program.
Folks, that leaves us with time for just one last thing, and it comes to us from Grand Haven, Michigan in the western part of the state. It appears there was, I believe as we’re recording this, still is a pothole in a neighborhood in in Grand Haven, Michigan, a rather substantial pothole.
And I gather it had been there for a while and was big enough that somebody in the neighborhood, to call attention to the problem, took a a recliner, like a living room chair, and put it inside the pot the sinkhole, pothole, out in the middle of the street there, to make a point about, hey, we’ve got a problem here, and it’s a big one a bunch of people in the neighborhood saw it, liked it the chair that originally went in there disappeared at some point, and apparently showed up on like Facebook Marketplace, I think somebody may have stolen it and sold it, but that’s okay, because people were inspired by the concept, and somebody else put a new chair in the hole, and over time, this whole sort of living room set evolved around it, I’m looking at a picture of it here I see stereo speakers and a big screen TV and like a desk chair and people really got into the spirit of what was going on there.
It is really actually very funny if you do look this up out of Grand Haven, Michigan, folks. Pothole Living Room you’ll find it. The other thing I like about it is, that there are ways to let City Hall know that you’ve got a problem. That are just angrier and less pleasant than this.
I love that the people in this neighborhood got their message across. To the entire country here I am in Seattle. I know about it in a way that was very loud and effective, but also very funny. I love that. And is that the answer to a low cost housing? We don’t know, but we don’t recommend, digging holes and setting up shop here, but I think it was a very humorous way To deal with a, could be a very tense and, very bitter situation.
I’m, these folks have been trying to get this pothole fix forever. And all of a sudden what it takes is a little bit of a viral social media campaign to get the attention necessary to get. Folks to take action. Absolutely. Folks, thank you so much for joining us here on the MSP Chat Podcast.
That was all the time we’ve got for you this week. We’re going to be back again next week with another episode for you. Until then, I’ll just point out, if you’re listening to us on audio did you know that there was a video version of the podcast, too, available on YouTube? If you’re interested, you can check us out there.
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MSP Chat is produced by [01:05:00] the great Russ Johns, who is recuperating from some health issues. We wish him the very best. He will be back, I’m sure, quite soon. He is the the mastermind producer behind this program here. He can do the same thing for you. So check him out at russjohns.
com or on the channel mastered website. And by the way, please go to channel mastered. com to learn more about our company and all of the other services that we can perform for you if you are a vendor with an MSP channel. And so once again, we thank you for joining us. We’re going to be back again in a week with another episode until then, folks, please remember you can’t spell channel without MSP.