With the new year in full swing, I’m noticing a whole bunch of trends around us that I wanted to elaborate on.

Automation 2.0 is Here

We were right. Automation is the shiniest of all tools. And the VCs are literally salivating at the mouth. They can’t get enough.

I’m running into conversations all day, every day. New security companies that are offering automation-focused security delivery. Capabilities that have existed in enterprise for a decade but until now have been bereft of the channel.

For example: security orchestration across EDR and MDR toolsets. Automatic correlation from logs and endpoint activity. Driving down analyst-hours and shortening the incident response time gap.

That’s the promise, anyway. I’ve yet to see anyone consistently prove it.

Speaking of proof: same with IT automation. After all, Rewst just raised another $31M making their total raised capital at a staggering $59 million. Super cool. Huge congrats to that team of wickedly talented folks.

That easily places Rewst at a $100M+ valuation. While all that glitters is clearly a rewsty-gold, it also brings along some serious new requirements. A 2x or 3x revenue growth is required from here on out. It won’t be easy. But investors are clearly sold on automation being the future.

Can Rewst, Pia, and other automation 2.0 platforms continue to survive and thrive? Will there be a plateau among high-performing MSPs only? Are average sized MSPs too small to handle the complexity? VCs have taken a huge bet that there’s no plateau in sight.

They’re probably right.

But you never know. I’ve yet to see a single MSP tie in actual profitability back to their automation investment. I don’t mean: “This series of tasks that used to take 40 hours now takes me 12 minutes.”

I mean actual profitability. Tracked back to each client. Actually showing growth in the margins. Not saying it’s not happening. But are we accounting for everything else that comes with automation? Things like:

1. Shifting towards more high cost Tier 3 + automation engineers? (Usually 2x-3x the cost of Tier 1 ‘s — have we just shifted human capital cost upward all in the guise of automation efficiency?)
   

2. Higher cost of more expensive RPA platforms — these things ain’t cheap!
   

3. Increase in build-out, tuning, and maintenance for automations

Each of these need to be fully accounted for as well. And how can we prove they don’t impact profitability? Only one way: Show me the margins. Prove profitability at customer-by-customer level.

I’m not saying don’t buy an RPA. Or a security-focused SOAR. But I am saying… do the math. Track the cost increases. And push hard towards tracking profitability down to minute customer detail.

Has the Death Knell Rung for the RMM?

Speaking of profitability and automation… what’s the deal with RMMs? Are they dead or at least an endangered species?

Absolutely not. Many RMM providers are thriving. But not all.

Interestingly, in conversations with large PE’s, there seems to be a lot of smoke that a certain RMM with an owl’s logo has been hemorrhaging churn. The rumors are that security growth is a positive, but there’s been significant churn to more modern RMM’s like Ninja One.

Who knows. I don’t have that data. But I do know that RMMs aren’t going anywhere. No one should be looking at a RPA as a replacement to RMM. At least for the next half-decade, the RMM is here to stay.

But this all now finally makes sense why some of the larger Strigiformes persuasion have made such a heavy push to RPA-ify their legacy tools. And resurrect automation-focused conferences. All grasping to keep the flag planted as the standard bearer for automation among MSPs.

Will it work? We’ll find out.

But suddenly, this all makes sense at what’s happening inside of the market. It explains the upheaval and change over in senior management. The concern to rush to relevancy before it’s too late. (And maybe a fear of impending doom? Nah… not that bad. Let’s not overplay this hand.)

Perhaps some of the larger channel companies have gotten caught too lax and are truly seeing revenue suffering at the hands of true innovators.

Automation Isn’t All for 2024

MSPs need to go far beyond automation to be successful in 2024. So far I’ve spoken with over 100 MSPs in the last 3 months and one thing has stood out:

MSPs are ready to revolutionize their onboarding, training, and consistency for all employees. The truth is, MSPs have realized they have the cheat codes to winning: a nearly limitless supply of young, can-do, eager to prove themselves talent.

But talent without experience.

So how do MSPs fix this problem? How can they shift to world class customer experience? The ability to upskill all employees into success? And standardize their learning with accountability built-in?

Right now, they really can’t. Not without committing a quarter million dollars or more at this problem.

That’s why folks are coming to life when they see what we’re building at Empath. Literally every sneak peek we’re giving, folks are crazy interested in diving in with us.

There’s so much more to say about employee learning and upskill. But every MSP we talk to sees this need. If you’re interested in taking this journey with us, reach out to us at https://www.empathmsp.com/ and we’d be glad to give you a tour, too.

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Alright folks! That’s all we’ve got! As always, I’m curious to hear your thoughts. So much going on and so little time to say it. Until next time my friends!