Much at Stake for MSPs in Merger of Datto and Autotask
Now that Autotask and Datto are being merged, there's a lot of speculation concerning the impact that combining two of the larger suppliers of platforms relied on by many managed service providers (MSPs) will have.
Autotask made a name for itself providing a platform for managing MSP operations. Datto is best known for proving data protection services that many MSPs resell. Datto recently expanded the scope of its efforts to include network and file sharing and synchronization software.
It's clear there's a potential to start consolidating any number of IT services by integrating within a common MSP management platform. Pete Rawlinson, chief marketing officer for Datto, says while the combined company will clearly pursue those opportunities, care is being taken to make sure the core MSP management platform remains open, including being able to continue to integrate the technology services provided by Datto with third-party professional services automation (PSA) platforms.
Collectively, the two companies provide services to 13,000 partners serving more than 500,000 small-to-medium (SMBs) in 125 countries. The deal itself is being driven by Vista Equity Partners, a venture capital firm that first acquired Datto and then turned around and merged the company with Autotask. It's not clear to what degree Vista Equity Partner is committed to the combined entity. There's certainly an opportunity to create a MSP conglomerate by acquiring additional companies and technologies. But venture capital firms typically want to recoup their investments by either taking a company public or, more often, selling the company they invested in to another entity at a premium.
In the meantime, mergers such as this don't tend to happen in isolation. Chances are high that other providers of MSP platforms will soon move to aggregate IT services as well. The bigger issue facing many MSPs now will be determining to what degree it makes sense for them to roll their own services versus simply reselling one provided to them. The latter approach most certainly has a certain amount of appeal because it significantly reduces the capital expenses of being an MSP. At the same time, however, it's much harder to differentiate a service when it's the same one every other MSP offers. The one other thing that will be important to remember is that it will be much tougher to compete on price against rival MSPs that are using a standard platform delivered at scale by a vendor.
Naturally, each MSP will need to decide for itself to what degree it may want to standardize on a suite of integrated services. But whatever the path chosen, there's never been a more important time for MSPs to decide what ultimately will differentiate them in an increasingly competitive market.