Seven Comforting Insights from IT Nation 2017

We are all back from IT Nation 2017. With at least one good night of sleep under my belt, here are my insights from this year's biggest MSP focused trade show event.

What were your insights? Let me know your feedback and share below in the comments.

1. ConnectWise, ready for battle As I was departing on Saturday morning for my 6:30 AM Orlando flight, outside the hotel lobby I noticed a well known Datto employee wrapping up the night's revelries with a few smokes with a handful of other conference attendees. Well, I thought, if this is your last IT Nation, you might as well stay up all night and party. You see, Datto and Autotask recently announced their merger, with private equity backing from Vista Equity Partners. ConnectWise made the smart decision to let the Datto sponsorship at IT Nation proceed as planned. And then at the show over the next two days, the ConnectWise leadership proceeded to behave as if Datto did not even exist. Smart move. Mature. Humble, even? In my view, ConnectWise is ready for battle with a larger, more complete Datto-Autotask and I think they have all the resources, maturity, and community loyalty to win the long war. They have my vote. And I think the confident and mature ConnectWise on display in Orlando is precisely the partner I would want as an MSP business owner.
2. Managing Networks and Clouds, and everything in between Has anyone ever heard the word "Cisco" so many times at IT Nation? ConnectWise got a jump on IT Nation 2017 by attending Cisco Partner Summit the previous week in Dallas, TX. At the event, Cisco and ConnectWise unveiled a broad new partnership, which will culminate in the eventual relaunch of ConnectWise Cloud Connect as ConnectWise Unite, with significant new Cisco management capabilities. The new ConnectWise Unite product will manage products like Cisco Meraki, Umbrella, and Spark. You see, the RMM business is not what it used to be. Competition is fierce and price points have compressed. All the big players - Autotask, Kaseya, Solarwinds MSP, and Continuum - are pursuing a platform strategy, where RMM is foundational but delivered in a comprehensive suite, alongside PSA, BDR, and other essential MSP software and services. It's not just that the RMM market has reached a saturation point, it's that the desktop and server are no longer as strategic as they once were. Device and endpoint diversity is accelerating, with mobile, BYOD, and other trends like desktop-as-a-service (DaaS/WaaS) increasing. On-premises servers are being decommissioned and moved to the cloud or to SaaS based applications. So what's left? Managing the network and managing the cloud. This explains the strategic push around Cisco and managing networks. When your desktop is delivered from the cloud or employee identity is governed by Azure AD or most of your most critical applications are SaaS/web-based, network quality and continuity are vital. I like the ConnectWise vision. For the average SMB client, the cloud centric and highly connected world will remain mysterious, confusing, and hard to integrate and that's where the MSP value proposition comes in.
3. Cloud choices and you There was no shortage of vendors and sessions at IT Nation covering cloud technology, software, and services. The main word that comes to mind is diversity. Partners have choices and lots of them. And that's a good thing, in my view. The market remains wide open, with numerous different platforms and delivery models being considered and deployed. Certain battles are won. For instance, Office 365 is now triumphant and the industry standard for cloud delivery of email, calendar, and office productivity applications. Nevertheless, Office 365 procurement, management, backup and business continuity are still far from complete. And numerous vendors like eFolder, ConnectWise, Sherweb and others are filling in those gaps. On the infrastructure-as-a-service market, the scene is still wide open, with Amazon, Azure, and Google Cloud all vying for MSP partner loyalty. It should take five years for that battle to fully unfold. And in numerous other categories, interesting vendors are pioneering cloud management and automation solutions that will help MSPs with tomorrow's business challenges. With hyper-growth markets comes competition, lower price points, and more value, for MSPs and their clients. While it takes persistent study, R&D, and product and service innovation, skies the limit for new cloud services and offerings for MSPs.
4. Bulls, not bears The MSP business model is healthy. Technology continues to transform the world economy. Nevertheless, a cloud-centric world is not simpler and easier for most business owners. Security, data governance, employee productivity, and technology integration are getting more complex, not less so. And this spells opportunity for the IT Nation. Paul Dippell from Service Leadership, as usual, delivered several interesting talks at IT Nation. In his "Future of Best-in-class" session, Dippell shared some of his recent survey results. All the of the trends and feedback pointed to a stronger and healthier MSP channel. While certain predominant business models (PBMs) like product-centric VARs have struggled with profitability the past few years, the MSP market is stable and growing. Margins are healthy, real commoditization risks are low, and smart M&A is helping firms build the critical mass they need for solid exits or the heft they need to reel in private-equity backing. Dippell concluded his talk with some insights around asking business owners that proverbial, "if you had to do it again" question, and for most, they would all start an MSP again. (see lead photo on this blog) More interestingly, for those over sixty years of age, they are 100% "bullish" on the MSP business model. Let's call that wisdom and also quite comforting.
5. Gross Margin Magic: seeking the Picanomics 70% IT Nation is not complete, without a session led by Gary Pica. And in Orlando, he was at it again, randomly calling on people in the audience to talk about their pricing, gross margins, and profitability. Sitting in a Pica session requires a bit of courage, since like a professor in a graduate seminar, he doesn't let you weasel out of his questions. You are on the spot and you must answer. While you get a TruMethods t-shirt out of the deal, you must to share your deepest margin secrets and struggles with the other 150 people in the room. The good news is, Pica is full of answers, not just questions. And what he shared was music to my ears. After nearly two decades of working with VARs and MSPs, I can say for certain too many fight on price or leave money on the table. Pricing should be premium, margins should be fat, and the revenue should be recurring. Pica started and ended the pricing and packaging session by insisting that MSP gross margins should be 70%. Period. Full stop. For MSPs to generate the business value they deserve and the cash flow needed for growth and continuous innovation, you have to start with high and healthy gross margins. MSPs should think about their role as more software, than service, more automation and integration, than hired labor. And therefore, the margins should be more like software gross margins than those seen in labor intensive trades. Healthy margins must be a goal from the start and everything in the business should be built around that goal.
6. IT Nation, dialed in for everyone This year's event seemed well dialed in. The event was much bigger than 2016, with roughly 2,700 MSP staff and another 800 or so vendor and ConnectWise personnel. While the rumors and facts on the numbers is always hard to parse, by my guess, there were 400 more MSP attendees this year. And we felt it on the show floor, with a steady stream of visitors, quality conversations, and leads for the vendor folks. Everyone was happy, based on my informal survey. And the show just seemed tightly run, with a bit less razzle dazzle. That is fine by me, after witnessing a few keynotes start twenty or thirty minutes late in years past. Call me a stickler for the details, but I want to make it to the breakout sessions on time. And as a vendor, seeing more not less partners is always a good thing. I was also very impressed to see lots of new faces. Based upon some unscientific surveys in the breakout sessions, I think ConnectWise is doing an excellent job pushing deeper into their partner organizations and getting new blood to the show. With all the great content and insights, that is a good thing.
7. Teamwork starts at the top, with humility Lastly, we were treated to a keynote session by Patrick Lencioni, author of the new book The Ideal Team Player and numerous others. The thesis of his new book is that we all want to be working with colleagues and employees who are hungry, humble, and smart. Of these three traits, humility really is the most important. In Lencioni's view, humility is all about thinking about others first, before yourself. It is a habit and discipline to put the comfort, confidence, and success of others around you, before yourself. And this humility needs to start at the top of the organization, with the owner or CEO. During Lencioni's talk, I thought about the keynote from a few years back. At IT Nation 2015, Marcus Lemonis encouraged attendees to be vulnerable with their employees and staff. Lemonis checked his own pride at the door and encouraged others to do so as well. He challenged everyone to be vulnerable and open about our own short comings, challenges and struggles. Well, let's just say both keynotes build on each other. For us to be humble, we need to be vulnerable and if we are comfortable with our own vulnerability, we can spend our time really focused on others instead of ourselves. And in that way, true teamwork really needs to start at the top.

What were your own big take-aways from IT Nation 2017? Please share.