Managed Services Shakeup No Surprise

It was inevitable. Sooner or later a shakeup would take place at one of the managed services vendors, and now it has happened.

Mark Scott, co-founder and CEO of N-able Technologies, stepped down from his post in what the company called a strategic decision by its board of directors.

N-able Chairman Gavin Garbutt, also a co-founder, is assuming the CEO post while the company searches for a replacement. Rob Rose, the chief strategy officer at Cognos, replaces Garbutt as chairman.

The sudden changes may come as a surprise, but when you take into account the amount of pressure that always accompanies the expansion of any young market, you accept such changes as unavoidable.

Companies must find their place and prove themselves while fending off competitors that have an equal appetite for growth. Resources are tight and missteps can easily lead to the “Graveyard of Unfulfilled Potential.”

Ottawa-based N-able’s board wants to ensure the company’s potential does not go unfulfilled, but its vision of how to do that differed from that of Scott’s.

The board wants to remain focused on managed services, while Scott had visions of diversifying into other technology areas, such as CRM.

The board has a point. N-able is a six-year-old company in a young market that will likely undergo a fair number of changes before settling into maturity. As the market ambles toward maturity, managed services companies will have plenty of chances for reckoning and course adjustments.

Some inevitably will combine through mergers and acquisitions. The market now has about a dozen managed services platform vendors, and it will not be able to sustain that number forever. A wave of consolidation likely will start within a year.

Which companies do the acquiring and which get acquired will hinge on what those vendors do today. Value and focus are key factors, and they are intricately connected.

N-able’s board has decided the company will heighten its value by keeping the focus on its managed services core.

Through managed services, channel companies remotely take over various IT functions at customer sites, from basic monitoring to security patch management to backup and disaster recovery. Customers are billed monthly for the service.

The movement to managed services is nothing short of a profound transformation in the IT channel, and that is something Scott well understood.

Managed services: threat or opportunity? Click here to read more.

Under his leadership, the company developed and added to its platform, built flexibility into partner offerings and championed the “managed hardware” model. The latter requires service providers to calculate future hardware costs and factor them into the monthly customer fees.

N-able also faced down some challenges. About a year ago some partners grumbled about the complexity of implementing the company’s technology. N-able answered by putting more emphasis on supporting partners in making the transition to managed services.

The grumbling hasn’t been silenced entirely, but the company’s decision to stay focused is a positive step. It’s important to know what you want to be when you are trying to execute.

N-able just happened to offer the first high-profile executive shakeup, but more are sure to follow in the managed services space, as competitive pressures intensify and the market evolves.

It’s inevitable.