Bonus Post: ConnectWise CEO Jason Magee on Hyperautomation, Partner Satisfaction, and More

Last week, ConnectWise hosted a partner conference under the name Automation Nation for the first time since 2018. This Automation Nation though, unlike its predecessors, was entirely dedicated to artificial intelligence and robotic process automation, as well as the AI and RPA solutions ConnectWise introduced at last November’s IT Nation Connect show, ConnectWise Sidekick and ConnectWise RPA.

Shortly before the event’s conclusion, CEO Jason Magee spoke with Channelholic at length about why AI and RPA are so important to MSPs and ConnectWise itself, how much ConnectWise is investing in those technologies, why he’s elevated the IT Nation partner community to business unit status under the leadership of a newly appointed senior vice president, why partner experience looms even larger than AI on his agenda for 2024, and much more. Here’s a lightly edited version of that conversation.

Channelholic: [EVP and GM of Business Management] Jake Varghese told me yesterday that helping partners understand and get started with AI is one of ConnectWise’s top two priorities right now, and that the only other thing that’s up there with that is re-platforming your solutions on Asio. Is that how you see it too?

Magee: The short answer is yes on that. If you look at anything new, there’s an adoption curve, learning curve, whatever you want to call it, that goes along with it. Look at some of the more recent stuff, cyber, and we’re still going through the, call it, adoption phase because not everyone is on the advanced cyber threat protection solutions and platforms and so on. So you’ve got to marry up the new tech with training and enablement, i.e. Automation Nation, bringing that back and making sure that we’re doing our part to enable [partners] to be successful with it.

So yeah, I agree 100% with that. The other thing is they’re still trying to all understand the data component of AI. There are a lot of unknowns, especially with ChatGPT and what goes out in the wild versus not, and so on. So there’s a bit of education around that as well that I think slows down some of the adoption.

Channelholic: So there’s a bit of reassurance you’re doing in terms of how much risk a partner is exposing the client to?

Magee: Well, it’s not necessarily true risk. It’s based on what they’ve heard and read about ChatGPT, which is not what we have1, so they’ll always have that hesitation. So that plays into the training, educating them as to what we have, why they want to use it, and what it could do for their business. It’s just another element to it.

Channelholic: Hyperautomation and AI aren’t the only or the first big initiatives ConnectWise has embarked on since you became CEO, but they might be the biggest. How strategic does this feel to you? Is this a bet the business kind of thing from your standpoint?

Magee: The short answer is probably, but let me explain a little more. Our history is embedded in automation. Everything we’ve ever done has been automation. From PSA, to RMM, and everything in between, and all the things around the platform and integrations of other vendors, it was all about automation, streamlining things, making it easier.

So when I say in short the answer is yes, it’s because we are that company. If we don’t invest and make this bet on this next level, next phase of automation, call it hyperautomation, then that becomes a threat to us, because we are a company about automation. That’s everything we’ve done in our history, using automation and platform and tools to eliminate silos of chaos and so on. This is just the next phase of it. So it’s continuing to carry on the journey. If I wasn’t going to make that bet, it would be like I’m not carrying on the journey, the legacy of what ConnectWise stands for.

And look at the message that we’re delivering here this week: Huge opportunity for productivity improvement. Many MSPs in their own right are small businesses, SMBs, with razor-thin margins and EBITDA margins, gross margins, all that within their business. So anything that companies like ConnectWise could do to help improve their productivity, which leads to profitability improvement, is a huge win. So yeah, it’s definitely a bet that we’re placing.

Channelholic: In some sense, then, this is both radically new and very consistent with your lineage.

Magee: And our whole investment thesis around Asio from years ago … was all about automation, AI, machine learning, taking it to a whole new level. So this isn’t something that we’ve been working on since ChatGPT and AI went mainstream. This has been in the works for three, four years, actually longer than that but three, four years of actual development and work being put into it and investment. So you’re talking about years’ worth of investments already. I’m sure more years of investments to come.

Channelholic: How much R&D investment have you made and do you contemplate continuing to make around AI and RPA?

Magee: it’s probably safe for me to say tens of millions. Not quite a hundred million, but it’s significant. And yeah, again, if you go back to what we’re truly about around automation, that’s a lot of our R&D budget every year for everything we do. So it’ll continue to be a large investment that we make.

We’re able to do it a bit more, I would say, creatively, more flexibly because of the Asio platform and the components like workflow, RPA, the AI engine and all that stuff. It allows us to do a lot more on top of those since they’re now core entity services within the platform. So we’ll be able to do a lot more. But yeah, it’s a go forward investment for the foreseeable future as long as ConnectWise exists the way we do today.

Channelholic: What does [your private equity owner] Thoma Bravo say about your AI strategy and your pace of innovation on AI?

Magee: They’re a big supporter. That’s why they allowed us to invest tens of millions of dollars in the Asio platform. And again, this wasn’t something that we thought of when it all became mainstream … So they’re huge supporters of it and they’re extremely excited about where we’ve taken it and what we launched at IT Nation Connect. If you look at Thoma just in general, they’re usually on the forefront of [new] technologies, and this is definitely one. I believe they’ve made other investments. I know they’re looking at other investments, whether it’s their Growth or the Flagship funds and everything in between, but it’s pretty big for them.

Channelholic: Has there been any incremental investment in the last year when, obviously, AI exploded and they’ve been looking at it more intently?

Magee: Well, again, I mean the tens of millions that I’ve spent on this, all that’s huge support from them, and I would say probably 25% of that overall spend has come in the last year. And we did accelerate a piece or two because of all the hype that was forming, so we did throw probably more at it last year than we originally were expecting.

But yeah, it was a significant investment last year that Thoma Bravo allowed ConnectWise to make, and it continues. Obviously, it’s a collaborative approach with our budget process that we do with them. So things like Automation Nation, that’s a net new investment. It’s not like we killed another show. We’re not closing down [IT Nation] Secure, not closing down [IT Nation] Connect. We added another thing called Automation Nation. Although we had that brand … this is a net new add.

So even from putting that in the budgeting process and them kind of going through their checks and balances, asking why is it important and so on, what is it going to do, they understand the importance for us to educate our partners and what that means, because if our partners are getting it and they’re adopting it, and if they grow and become more profitable, that’s how ConnectWise grows and becomes more profitable.

Channelholic: To circle back to the beginning of the conversation, one of the top two priorities is partner enablement around hyperautomation. How much money are you putting into that?

Magee: The overall budget for the IT Nation community and all things in that business unit went up like 29%. It’s definitely a significant jump in investment that we’re making. Everything we do there is catered around investing into the partners for enablement, thought leadership, helping them grow.

Channelholic: Why did you turn IT Nation into a business unit, put a senior VP/GM in charge of it, and increase the budget that much?

Magee: Because it’s that important. It’s one of the most important things we do for the community and our partners, and without it being its own organization, sometimes things get lost and then we’re less than perfect for that community, for the things they expect. So it’s about elevating the importance of IT Nation internally so the experience and everything we do externally will be felt in probably a multiple magnifier.

Channelholic: And that incremental spending is not all in the service of the hyperautomation initiative, correct?

Magee: All things is what I’m saying. So IT Nation is the Evolve groups, it’s Secure, Connect, it’s now Automation Nation, a lot of thought leadership and other things that we bring out to the community and everything in between … A lot of companies probably have [community] just lumped into the marketing organization. Sometimes when that happens and they’ve got to make decisions for sales pipeline generation, sometimes things like that may get impacted. They’ve got to deliver over here, so maybe they will shift time or resources in a different direction. This way IT Nation is its own separate P&L and management structure that can run based on how they need to.

Channelholic: The top two priorities are Asio and partner enablement around AI. Is there anything else within the company right now that feels particularly strategic to you and is getting extra attention?

Magee: When I look at the goals and priorities that I rolled out for the company [this year], partner experience is probably the biggest focus for a couple of reasons. Not just because it’s its own goal and priority and pillar under our objectives this year, but there are so many initiatives and tasks under the other pillars that are all partner experience-related. You look at ConnectWise, you look at others, we’ve done a lot over the last couple of years. And I’m pretty transparent, we’re less than perfect. So this year we’re putting hyper focus on the experience so our partners have a little bit easier time to work with and interact with ConnectWise.

Channelholic: If you were to summarize the partner experience challenges that you hear about most often and that you’ll sort to the top of the list, what do you have in mind?

Magee [chuckling]: I don’t know if I could get it down to a short list. Look, we’ve acquired many companies, so I would say the facets of back office stuff where we needed to merge and integrate data and information and so on is probably the biggest thing. That’s what our partners feel when they call, whether it’s an account manager, partner success, where they want to chat with the finance team on a bill they received. I may have someone not looking at the latest and greatest or most up-to-date info because we don’t have all of the systems integrated or migrated over. So that’s probably one of the bigger ones, I would say, that impacts a lot of aspects, including speed and just the overall back and forth between us and a partner.

Channelholic: When I spoke with Jake yesterday, he characterized the change in AI from 2023 to 2024 as a change from experimentation to implementation, that there’s a little bit more seriousness, more of a methodical, programmatic approach to your AI strategy and how you’re going to pursue that. Does that feel right to you too, and is that consistent with what you’ve been telling everybody about how the company needs to approach AI this year?

Magee: I would agree. It’s not worth debating are we at the tail end of the experimentation and early adoption. Regardless, it’s all early because we’re a year into it from a ConnectWise standpoint and just overall. AI has been talked about for, I don’t know, dozens of years just in general, and now there’s stuff that’s out there that brings that to a reality.

We’re still going to go through a lot of education though. So I think we’ve got a couple of year journey until people truly, fully understand what it will bring to them. There are things that are going to be a lot easier to understand and be adopted a lot sooner. Other things are going to take a little bit of time.

Channelholic: What are you hearing from the partners here in your interactions with them? What’s their feedback about where they are on their journey and what they think about Sidekick and [ConnectWise] RPA in the few months those have been available to them?

Magee: Just in conversations, I’ve heard really great things. The typical stuff that you get from a handful too: ‘Hey, I wish there was more advanced content.’ We didn’t know if there were going to be any advanced users, and we had two or three of them. But for most of them, it’s the beginning part of that journey. Some of them just onboarded ConnectWise RPA in the last month or so. So this is getting them using the product and know-how. And RPA is going to be the one where they’ve got to make investment. They’ve got to envision what they want to have done and then go build it out, whether they do it, hire a third-party consultant, or leverage ConnectWise.

Then you have Sidekick, which is more out of box type stuff. And those that are using Sidekick are extremely pleased with it from the conversations I’ve had in terms of something as simple as getting a summary of a ticket saves a lot of time. You’ve got lots of emails and sometimes you’ve got to go to the bottom of the email just to get the original context and so on. So imagine being a technician and you’ve got back and forth and things coming in from all different aspects into the ticket. Just being able to get a simple summary is saving the techs a whole lot of time.

So again, anecdotally, they’re loving what they have in Sidekick. Pretty good feedback on the roadmaps that Jake showed over the course of the week on what’s coming for Sidekick. And it’s not just about the tech, it’s also about the back office and all other aspects of the organization. And RPA, they like the concept, they’re just getting started and they’re using this [event] to kick themselves off on that journey.

Channelholic: So there’s a general challenge around reorienting an MSP’s business for hyperautomation and maybe a specific one around RPA in terms of figuring out how to build and optimize the workflows in that product?

Magee: Yeah, because it’s not just build. It’s not like, alright, I’m going to open up my laptop and start doing. You’ve got to know what you want to do before you open up the laptop to go build. Again, if you go to the roadmap, simple thing, a simple tool. Here’s my HR, here’s my finance, here’s the front of house, the technicians or technical account managers or whatnot. And then you just start listing things that are repetitive tasks, right? Start with that before you open up the laptop, and then you could say, alright, let me do that one today. And then you think about how you’re going to pull that one off and automate that repetitive task and so on.

Channelholic: Looking down the road over the next three to six months or so, what are going to be the top priorities for where you personally are spending your time?

Magee: Just in general around what ConnectWise does for the partners, that’s first and foremost, which is I look at our core solutions, making sure that they are doing what our partners need and expect.

Also, continuing to keep a high priority and focus on all things cyber. Yes, you’ve got AI, automation, all this stuff at a whole new level, but we can’t forget that there are threat actors out there still doing what they’re doing and leveraging actually some of the automation tools to make their jobs easier to breach us all. So all things cyber, whether it’s our stuff internally protecting us and our infrastructure, our code base, everything for our partners, all that stuff, or the solutions that we partner with and help our partners get implemented into their customers.

And then the hyperautomation to increase the productivity and profitability for MSPs. So those are hands down the core priorities there that I’m focused on.