Staffing MSPs for Growth

Presented by Redmond Channel Partner Magazine

Sponsored by Kaseya

Nov. 6, 2012

Participants

� Scott Bekker, editor in chief, Redmond

Channel Partner

� David Castro, director, marketing, Kaseya

Partners & Service Providers

� Howard M. Cohen, columnist, Redmond

Channel Partner, consultant & former MSP

Agenda

� Rules of Thumb for MSPs – Scott Bekker

� Metrics from 12,000 Partners – David Castro

� Panel Discussion – Howard Cohen, David � Panel Discussion – Howard Cohen, David

Castro and Scott Bekker

� Audience Q&A

Rules of Thumb: Big Picture

� Central Insight for MSP profitability:

Dedicate the fewest possible hours to support

the most possible recurring revenue contracts.

� How do you staff MSP growth? Slowly and

thoughtfully

Founding Employees

� The Professor (technical genius)

� Thurston Howell III (numbers person)

� Movie Star (charismatic salesperson)� Movie Star (charismatic salesperson)

Technical Employees

� Customer service people (entry level)

� Highly sophisticated engineers

� Remote management tools specialists� Remote management tools specialists

� Emerging: SLA management experts

Business to Technical Headcount

� Two sales paths for MSPs

� Sell through solution providers

� Sell to end customers

Sell Through Solution Providers

� Reduces need for headcount on the business

side

� Can be a great way to scale quickly

� Must strenuously avoid appearance of

potential channel conflict to succeed

Sell to End Customers

� Need more marketing and sales employees

right away

� Business to technical employee ratio will be

higher

When to Think about M&A?

1) Need capital for new hires

2) Need capital to expand into new geographical

markets

3) Need capital to expand into new business

practices

4) Owners’ energy level

Endgame: Importance of Growth

� When selling an MSP business one metric

matters most. Is it?

� Technology and equipment

� Employees

� Accounts

� Recurring revenue contracts

• Enterprise-class IT systems management for everybody

• Key Facts– Founded 2000 & privately held, no

debt, no external capital requirements• Consistent, profitable revenue growth

– 33 offices worldwide in 23 countries

About Kaseya

– 33 offices worldwide in 23 countries with 450+ employees• 12,000+ customers

• Millions of assets managed

– 6 patents issued for IT service delivery processes & remote IT management processes• 37 patents pending

– Common Criteria (EAL2+) certified and FIPS 140-2 security compliant

– ITIL v2 and v3 compatible

MSP KPIs: A Few 2012 Observations

More than 20%, 21%Less than 5%, 20%

Service Level KPI: 58% of Kaseya MSPs Improved IT Asset Uptime

by 10 to 20% or More

Between 10% and

20%, 37%

Between 5% and

9%, 22%

Source: Survey of 1,098 Kaseya Customers

IT Asset Management Efficiency Improvement

(per Technician)

More than

300%, 21%

Profitability KPI: 60% of Kaseya MSPs Improved Technician Efficiency by

More than 100% but Only 25% Use Cost Basis in Their Pricing Strategy

How Pricing Strategy Determined

CEO, 33%

Value Based,

15%

300%, 21%

By 200%, 17%

By 100%, 22%

Less than

100%, 40%

Source: Survey of 823 Kaseya Customers

CEO, 33%

Price Match,

27%

Cost Based,

25%

Services Mix KPI: The EARNINGS Generated from Managed Services

And Project Work or Resales Are Quite Different

• MSPs are more profitable than VARs

– MSP typical gross margin is 50-80%

– VAR is 5-10%

• Pure-play MSPs are more profitable than mixed-model MSPs

– Pure play MSP average gross margin is 75%

Source: Survey of 311 Kaseya Customers

– Pure play MSP average gross margin is 75%

– Mixed MSP is 55%• T&M work is 24%

• Project work is 44%

• VAR resale is 8%

Firm Valuation KPI: MSPs are 3x to 10x More Valuable Than

Traditional VARs

Varies $200 to $3,000

$80/PC $275/server

$100/hrAverageDeal Size

KPI / Status Break Fix Reactive Proactive Managed

Source: Survey of 148 Kaseya Customers (who merged or acquired others), SCORE Assn. (2011), and Service-Leadership Inc. (2011)

<50%/tech 70%/tech50%/tech 90%/tech

<10% 70%50% >75%

< 0.2 1.250.3 > 2.0

Gross Profit

Utilization

Firm Valuation

Panelists

� Scott Bekker, editor in chief, Redmond

Channel Partner

� David Castro, director, marketing, Kaseya

Partners & Service Providers

� Howard M. Cohen, columnist, Redmond

Channel Partner, consultant & former MSP

� More Information from Kaseya:

� For a free live product demo

www.kaseya.com/mspdemo

Audience Questions?

� For a free trial

www.kaseya.com/trynow

� To speak with us

www.kaseya.com/contactme

@kaseyacorp/company/kaseya/KaseyaFan community.kaseya.com