The 10 Biggest Managed Services Stories Of 2016

Securing A Lucrative Future

Vendors and distributors spent 2016 rolling out tools for MSPs to strengthen their capabilities around security, cloud and the data center.

Amazon Web Services beefed up its ranks of managed services partners, while power management players Eaton and APC by Schneider Electric wooed solution providers with new managed services rollouts aimed at bringing recurring revenue opportunities to the channel.

For their part, solution providers invested heavily in managed services as well, acquiring specialty managed cloud and data center partners, leveraging automation and artificial intelligence to streamline routine processes and improve performance, and boosting their support around key public cloud providers.

Read on to relive all the key managed services moments of 2016.

(For more of our 2016 retrospective, check out 'CRN's 2016 Tech Year In Review.')

10. MSPs Double Down On Recurring Revenue To Stabilize Cash Flow, Attract Suitors

MSPs must grow their base of monthly recurring revenue and initiate conversations around business issues rather than technological issues to increase their valuation, according to industry leaders.

The Network Pro has grown its monthly recurring revenue from $30,000 five years ago to $300,000 today by meeting more qualified prospects and having conversations around business results. The MSP sets its price point above the competition so that the conversation with end users can be focused on boosting productivity rather than cutting costs.

Moving from project-based to subscription or annuity services completely changes the relationship between the solution provider and the customer, said Continuum CEO Michael George, providing greater stickiness and boosting client retention. Potential acquirers like to see annual growth rates of between 15 percent and 20 percent, and EBITDA of between 10 percent and 15 percent, George said.

9. Walls Separating PSA, RMM Tools Have Come Tumbling Down

The divide between professional services automation (PSA) and remote monitoring and management (RMM) has been obliterated by two leading industry players that wanted to create a more comprehensive tool.

ConnectWise said in November that it has brought its PSA, RMM, quote and propose, and remote desktop capabilities into a single user interface. This will provide MSPs with a more consistent experience, reduce the number of clicks needed to navigate between functions, and ensure the same keys carry out the same function in every program.

Autotask in April unveiled a unified IT business management platform that combines PSA and RMM capabilities to provide real-time asset management and consolidated analytics for devices and services. The vendor said its unified platform delivers real-time, bi-directional synchronization and reporting for improved efficiency and business insight.

8. MSPs Boost Cloud, Data Center Prowess Through Strategic Acquisitions

The industry's leading MSPs went on an acquisition spree in 2016 to strengthen their cloud, data center or vendor-specific expertise.

Carousel Industries, No. 64 on the 2016 CRN Solution Provider 500, acquired Atrion, No. 196 on the 2016 CRN Solution Provider 500, to take advantage of its robust, Cisco-focused managed services practice. Infrastructure management MSP Ensono purchased 270-person cloud platform provider Attenda to bolster its capabilities around VMware, Amazon Web Services and Microsoft Azure.

MSP powerhouse Synoptek purchased the IT services business of EarthLink, No. 35 on the 2016 CRN Solution Provider 500, for $29 million to obtain the data center infrastructure necessary to support customers from coast to coast. AWS pioneer Datapipe, No. 105 on the 2016 CRN Solution Provider 500, purchased Adapt, the United Kingdom's fastest-growing MSP, to beef up its overseas capabilities, skill sets and talents around cloud services.

And Cal Net Technology Group, No. 454 on the 2016 CRN Solution Proivder 500, bought inhouseIT to get more technical expertise and a private cloud service that relies on a local data center to enhance speed and flexibility.

7. Channel Unleashes Automation, Artificial Intelligence To Boost Services

Solution providers, distributors and vendors alike have turned to artificial intelligence and automation to streamline routine processes, reduce data center downtime, and sell multisourced cloud offerings.

CompuCom, No. 23 on the 2014 CRN Solution Provider 500, launched in July what it said was the first-ever artificial intelligence (AI)-based managed service aimed at preventing midmarket data center downtime. The new offering runs on Amazon Web Services and uses machine learning and cognitive computing to uncover IT problems and quickly remediate them.

Kaseya released a platform in September that allows its users to buy and sell the scripts, reports, templates and agent procedures needed to automate processes. This will help MSPs better allocate their resources by having staff do things that automated procedures can't address on their own.

And Ingram Micro launched an automated offering in April that enables partners to sell both distributor-sourced and vendor-sourced cloud offerings off a single platform. The on-premise software needed to do this can be configured in less than five hours and runs on a single solution provider server.

6. Two IT Service Management Superpowers Join Forces

SolarWinds purchased LogicNow in June to combine it with SolarWinds N-Able -- LogicNow's remote monitoring and management competitor -- to boost capabilities and scale.

The infrastructure management vendor said its acquisition of LogicNow creates a complete portfolio of automation, security, network management and service management capabilities for MSPs. The combined company has 20 offices in 11 countries that serve some 20,000 MSPs.

The acquisition was backed by a consortium of investors led by New York-based private equity giant Insight Venture Partners. Silver Lake and Thoma Bravo said they planned to up SolarWinds' investment around cloud, hybrid and MSP environments when they purchased the vendor in October.

5. Vendors, Distributors Seek An Edge In Managed Security

Leading vendors and distributors have invested in building, partnering or integrating their managed security offerings to provide their customers with a richer and more complete set of tools.

Avnet in November launched a managed security service focused on providing SMB and midmarket customers with intrusion detection, vulnerability assessments, and security incident and event management (SIEM). D&H Distributing partnered with AVG in August to unlock its best-of-breed antivirus, threat detection and managed services tools for the distributor's SMB channel.

NTT unified its security subsidiary brands into a single managed security services company in August, and standardized its capabilities around asset inventory, vulnerability management, policy compliance and web app security in October. And RapidFire Tools introduced a software appliance that allows MSPs to more easily identify internal threats to their customers' networks.

4. Power Management Vendors Aim To Drive Recurring Revenue Growth

The IT industry's leading power management players both jumped into the managed services fray this year with offerings and programs aimed at boosting recurring revenue opportunities for partners.

In January, Eaton launched a software offensive aimed at driving software, services and recurring revenue for midmarket data center-focused partners.

With the launch of the new Intelligent Power Manager (IPM) software version 1.52 on Feb. 1, the data center business unit of the $23 billion behemoth launched a "monetizing software" initiative aimed at driving high- margin software and services sales growth for partners.

Meanwhile, a new managed services program from APC by Schneider Electric, launched in May, is aimed at driving more recurring revenue for partners.

The program includes a new managed services certification, market development funds, and an 8 percent discount for bundling APC Smart-UPS, network card and one- or three-year extended warranty.

With the new program, APC has integrated its Smart-UPS power management and monitoring into managed services platforms such as ConnectWise, N-able, Kaseya and AVG. The managed services platforms provide partners with the ability to monitor an installed base of as many as 3 million APC-Smart UPS devices.

3. Amazon Web Services Expands Managed Services Reach

Amazon Web Services has been working hard to beef up its partner ecosystem, growing its ranks of MSPs by more than 130 percent over the past year, channel chief Terry Wise said at the company's recent Re:Invent conference.

Partner-driven engagements are growing faster than the overall business, and the largest partners are growing the fastest – Premier Tier partners in the past year increased revenue four times faster than Advanced Tier partners, Wise said.

This comes as AWS reported 55 percent sales growth in the most recent quarter to $3.2 billion with operating income doubling year over year to more than $1 billion with margins of more than 31 percent.

2. Channel Builds More Managed Capabilities Around The Cloud

Leading solution providers and distributors began leveraging the cloud in 2016 to provide outsourced managed IT or boost their support around leading public cloud providers.

Insight Enterprises, No. 15 on the 2016 CRN Solution Provider 500, launched an offering in May that allows SMBs to outsource a portion of their IT to Insight so they can focus on core business objectives. The managed cloud offering provides around-the-clock U.S.-based support, mailbox migration services, an expanded administrative dashboard, and IT administration of Microsoft cloud solutions by Insight's experts.

SoftwareOne, No. 14 on the 2016 CRN Solution Provider 500, rolled out transaction, billing, advisory and migration capabilities for Amazon Web Services in November tied to its automated cloud platform.

And Tech Data debuted in October an analytics dashboard on its cloud platform that displays Microsoft Azure consumption and sends notifications when usage exceeds set thresholds.

1. PSA, RMM Vendors Fight Fiercely For Mind-Share In Managed Security Market

PSA and RMM vendors are looking to serve as MSPs' one-stop shop for security, with some vendors preparing to launch offerings and others deepening their capabilities with new tools or services.

Autotask launched a fully automated endpoint backup offering in September that will address the heightened vulnerability posed to endpoints by ransomware such as CryptoLocker. The tool provides continuous backup without requiring users to save files to the F: Drive.

Kaseya launched a cloud-based identity and access management offering in May that enables end users to gain authenticated and security access to both on-premise and cloud applications from virtually any device.

And Continuum said in September that it has been working for more than a year on a comprehensive security offering that will help MSPs define, monitor and manage a multilayered system of defense. The RMM vendor will also build out a security operations center so that it can quickly remediate customer issues.