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ConnectWise seven years ago reached the conclusion that so many other companies looking for growth do: It needed good technology to run the business.

“Seven years ago we ran into a brick wall,” recalled ConnectWise President Arnie Bellini. “We just couldn’t run the business effectively.”

Being an IT services company, ConnectWise, of Tampa, Fla., naturally turned to technology for the answer. The company needed software that would manage and automate such functions as CRM (customer relationship management), project management, billable time records, service call scheduling and invoicing.

“We searched high and low for a solution that would accommodate our needs,” Bellini said.

The search was fruitless. Ironically, although technologies such as CRM and ERP were gaining traction, nothing that was available suited the specific needs of a VAR or integrator. So the company decided to build its own system, which it now markets to other VARs, integrators and service providers as ConnectWisePSA.

ConnectWise’s main rival, Autotask Corp., of Rensselaer, N.Y., noticed the same dearth of IT business management software after it went into business four years ago to develop a system for professional services automation. The company decided instead to focus on channel companies, for which it has developed a Web-based IT services management solution.

Autotask and ConnectWise have relied primarily on word of mouth to market their technology, but they have started to promote it more aggressively as an increasing number of VARs and integrators shift at least part of their business to a managed services model.

Under this model, service providers become their customers’ virtual IT departments by maintaining their systems remotely. They use a platform from vendors such as N-able Technologies Inc., Kaseya or Level Platforms Inc. to do the remote monitoring and management. The platforms interface with the ConnectWise and Autotask software.

The transition from product sales-focused resellers to solution providers with a strong focus on services increases the complexity of running a channel company, said Autotask CEO Bob Godgart. As result, the need to find efficiencies in running the business becomes that much greater, he added

“We’re at a point where there’s a real transition in the market,” Godgart said. “We’re really seeing an increase in complexity.”

It will no longer do for IT services providers to run their businesses on rusty technology or, as was the case with ConnectWise, with homegrown systems cobbled together from disparate applications that don’t necessarily communicate with each other.

ConnectWise’s experience was far from singular. It’s the channel’s dirty little secret, a 21st Century version of cobbler’s shoes syndrome: Too many VARs, integrators and service providers run their businesses on inadequate systems while preaching the latest and greatest to customers.

“Most of them hide what they use to run their business from their clients. They’re not practicing what they preach,” said Bellini.

But doing so is risky and can affect the bottom line.

“Automating the workflow within your office and around your managed services offering is not negotiable. A missed service ticket is not only bad customer service, but it’s also money and opportunity left on the table,” said Bill Stewart, vice president of marketing at N-able, Ottawa.

Bob Vogel, chief marketing officer at Autotask, said many channel companies that still use ill-fitting homegrown systems don’t realize they now have better options. When they see what the Autotask software can do, they are quick to embrace it, he said.

“The business we’re in is to help IT services companies and integrators do business better,” he said.

The driving concept behind Autotask’s software, Vogel said, is to give users a single point of access to all key business functions, such as managing projects and customer relationships, recording billable time, invoicing, and scheduling, assigning and keeping track of service calls.

“It’s important to have it all in one place,” Vogel said.

Bellini said ConnectWise became a software vendor, in addition to its main business in IT services, by accident. After developing ConnectWisePSA, the company demonstrated it to other channel companies at a seminar. At the end of the session, attendees swarmed around Bellini to talk about the software.

“We didn’t intend to sell it,” Bellini recalled. “We intended to use it to grow our business. What we found is that there’s a decent market for it. Most people have their own homegrown system, but they don’t like keeping it. They don’t like maintaining it. They’d rather buy something.”

Bellini said ConnectWise now has about 350 partners, who pay $795 per user for the software and have the option of monthly payment plans

Autotask charges $40 per user monthly, with a five-user minimum, for its solution.

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CM IT Solutions, an IT services provider based in Austin, Texas, with more than 130 franchises across the country, is standardizing on the Autotask software. David Minker, president of CM IT Solutions of Boston, said he has been using the software for five months and already marvels at how he was able to get along without it before.

“At this point it’s seamless, it’s part of my daily operation,” he said. Previously time-consuming functions, such as invoicing, have become much easier to manage because they are automated, he added.

“It’s had a major impact on our bottom line. You don’t forget to bill stuff, and it makes it easier to track our engineers’ time,” he said.

Godgart said Autotask’s mission is to continue automating business functions as the company develops new features for its software. The latest addition is a field service scheduling and dispatch tool that the company says makes it easy to schedule service calls with the appropriate technician in an acceptable timeframe.

The company also is working on a Web services developer kit that will allow integration with third-party applications.

ConnectWise, meanwhile is preparing for its first partner summit, scheduled for Nov. 2 to 4 in Tampa.