The world of managed services is still captivating the announcement that Kaseya is acquiring Datto for $6.2 billion, but before the transaction is complete, the company’s CEO has shared the motivation behind the move and excitement about the transaction.

It will still be a few weeks before the takeover is completed. Datto is currently still an independent company, and so does Fred Voccola, CEO of KaseyaHe has to be careful with his comments.

But even with these limitations, it’s clear that this move was driven by a desire to be the most comprehensive provider of tools and services for the managed service provider (MSP) Channel Community.

the context

Before any concrete conversation about the date Deal can begin, Voccola puts the move into context and reiterates his belief that managed services are the path to the small and medium-sized enterprise (SMB) market, adding that they have a bright future.

“Our view of the world is pretty simple – we believe that small and medium-sized businesses around the world are spending an increasing percentage of their revenue on IT and security every year,” he says.

“The growth rate of SME IT and security spending is growing at about six times the rate of global GDP. Most small and medium businesses source their technology from MSPs, so the MSP sector is exploding. It’s probably the best place to invest.

“Our mission as a company is to provide a platform [and] Software kit that enables Kaseya MSPs to be the fastest growing and most profitable MSPs in the world,” he adds.

The full platform approach is one that Kaseya has taken in recent years, having previously made acquisitions to support that goal. As benefits, Voccola cites the ability to offer a single-source technology that reduces complexity and vendor fatigue, as well as its integration at the workflow level, which is not always an approach elsewhere in the market.

“Of [offering] Workflow integrated, we make the technician so much more efficient. If you think of an MSP, the more efficient a technician, the more profitable the MSP is by default – it’s like the first thing, the better the service, the better the MSP,” he adds, adding that a final attraction of his approach is it is often 30-50% cheaper than the competition.

Why date?

Now that you have a picture of the MSP market and where it sits, the natural question is to look more closely at the plans surrounding Datto to understand what this will add to the mix.

“So why Datto? First off, Datto is a great company; it is equivalent to ‘MSP’. It has great culture, great brand, great technology, great products and great people,” says Voccola.

Understandably, rivals have already started to muddy the waters to try to address concerns from customers — particularly Datto users — that things will change post-deal, but Voccola says the strategy doesn’t include it.

“We will support all Kaseya and Datto products. People say, “Well, you’ll have two PSAs [professional services automation] to RMM’s [risk management models]’. Yes we will!” he says.

The reason is simple – it will make more sense to use the two options than upset the customer by forcing a change. Voccola accepts that it will cost to keep the tech and product support up and running, but that’s a price worth paying when faced with the alternative.

“We do not intend to force people to migrate or choose one or the other. We’re not going to eliminate choice, we’re going to leave choice because all products are supported and all products are integrated into IT Complete,” he says.

What can we expect?

While it’s still too early to talk in more detail about post-closing plans, it’s possible to look at what happened to other acquisitions Kaseya has completed and draw some conclusions.

“With every acquisition we’ve made, we’ve done several things. First, we have significantly increased investment in products and research and development [research and development] and we kept the brand,” says Voccola. “We kept the entire workforce – no layoffs, no mass layoffs, no office closures. In each case, the leadership team of the company we acquired has joined the Kaseya leadership team.

“With every single company we’ve bought, we’ve made their products more affordable [after we bought them] – We have maintained licensing models and made products more affordable literally every time,” he adds.

market reaction

Whenever a deal of this size and importance is announced, competitors seek to exploit it to sow concern among customers, to attract new users and affiliate defectors in the weeks of uncertainty before a deal closes and the strategy becomes more widely known.

Competitors have suggested that MSPs have reasons to question their loyalty. Voccola has seen it and expected it, and he believes his competitors are only doing what they should be doing under the current circumstances.

“Many of my competitors, all 250, are smart, aggressive and good business people. So they’re doing what they’re supposed to be doing, and they’re trying to create more fear, doubt, and insecurity so they can benefit. I am not blaming you. Let them do that. If they haven’t, I [would wonder] what’s wrong with them,” he says.

“It’s my job and our job to get the message out. Since Datto is public, we can’t say every little detail as to why it’s going to be great date and Kaseya customers and for every customer, every MSP out there.”

He adds that Kaseya wouldn’t spend billions of dollars on a company just to screw up what has made it so valuable and popular with MSPs. There is excitement about onboarding more talent, as well as access to more expertise and leadership skills that can be leveraged across the organization.

“Our goal is to take the good and make the whole thing better. Next year will be very fun. Kaseya has a culture where we are customer and employee centric. Over 90% of our managers at Kaseya – manager, director or vice president – come from acquisitions and internal promotions. People really like working here,” he says.

“We don’t buy it to change and break it. I think when people first hear about this, they’re like, ‘Oh my god, what are they going to change?’ [We’re not going to change] because we love Datto,” he concludes.

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