ConnectWise MSPs Want A Better Product

As the first name in MSP operating tools comes under new leadership, ConnectWise’s customers say the popular, but long-in-the-tooth PSA tool is showing its age: “Slow costs me money.”

ConnectWise top partners say the ITSM juggernaut must focus on its core MSP product, Manage, and deliver on the multi-year technology promise it made to unify its tools under Asio if it hopes to survive in an increasingly “fickle” market.

“The only way they’re going to win is they need to increase the pace at which they’re playing. These small little startups are eating their lunch,” six-year ConnectWise partner Jason Slagle, president of Toledo, Ohio-based MSP CNWR Inc., told CRN. “The channel is fickle.”

Like roughly 45,000 other MSP customers Slagle uses ConnectWise Manage to run his IT services business and he sees a company being picked apart by smaller competitors and not adapting quickly enough to stop them.

[RELATED: ConnectWise CEO Jason Magee Out, Forcepoint CEO Manny Rivelo Takes Helm]

CNWR technicians spend their days working inside the 21-year-old software, which tracks customer tickets, the time techs spend solving those tickets, and documents how they fixed the problems. This is the product that was simply known as “ConnectWise” when company founder Arnie Bellini created it and installed the first instances himself.

Slagle said it is an “amazing” product – with one big limitation in 2024.

“The thing that’s losing them customers, I think, is that it’s slow,” he told CRN. “Slow costs me money. If my techs spend an extra three-minutes waiting for ConnectWise on every single ticket we work, that’s costing me hours each day just waiting for ConnectWise to do what it’s doing. That’s legitimately money out of my pocket.”

For him to work around the pain Slagle, like thousands of other MSPs, uses one or many bolt-on products to fill the gaps that have appeared as the platform has aged.

Slagle uses Nilear to make it faster. ConnectWise partner Mark Essayian in California uses IT Glue for better documentation. Dustin Bolander in Texas, who has been loyal to the platform for 15 years through two MSPs, uses Timezest so his techs can make appointments inside Manage.

“It would be really nice to buy the PSA and not have to spend another $60 a month per tech on tools to make the PSA do what I need it to do,” Slagle told CRN. “The PSA should do that already! Why does it not natively have a scheduling engine? Why do I have to go buy Timezest?”

‘The company is spending minimally on R&D’

ConnectWise is owned by private equity powerhouse Thoma Bravo, which bought it from Bellini in 2019. Last year Thoma Bravo put ConnectWise up for sale to a handful of private equity buyers.

One of those funds prepared a report on ConnectWise’s revenue and operating costs ahead of a possible purchase. The research, obtained by CRN, noted that ConnectWise’s fastest growing products were not the operational tools that made its name and MSPs use to run their business.

It was their security products.

Since ConnectWise bought cybersecurity firm Perch in 2020, the revenue it gains from security has leapt by double digits: 23, 34, and 41 percent growth each year in 2021, 2022, and 2023, respectively, the fund noted. Meanwhile, its legacy lineup of RMM, PSA and Automation tools showed “lag” with 12 percent growth, their research showed.

“(ConnectWise) is betting on security to carry the team, meanwhile the company is spending minimally on R&D,” the fund’s researcher wrote in a “Transaction Data & Commentary” document.

Last week ConnectWise announced that Jason Magee, who had led the company for five years, had stepped down and was replaced by Forcepoint CEO Manny Rivelo. In addition to the new CEO, since May the company has brought on a new Chief Financial Officer, Rik Thorbeck, and Chief Business Officer Aziz Benmalek to run go-to-market operations.

Rivelo pushed back on the idea that the company isn’t investing enough into its core products.

“I don’t think that’s the case, to be perfectly blunt,” he said. “If I find otherwise as I’m digging into the business, rest assured we will fix that because the core of what we do is RMM and PSA. Everything else sits around that and leverages the power of those tools. So we want to make sure we get that to market. So if I feel there’s a need to reprioritize to my point number one of prioritizing for Asio, then I’ll do it.”

The Tampa, Fla.-based company spent $41 million or about 6 percent of its revenue on R&D in 2023, the documents noted,10 percent on general costs and $124 million on sales and marketing as 2023 sales reached $690 million for year-over-year growth of 13.5 percent.

ConnectWise’s margins are holding at 75 percent since 2020, while its EBIDTA comes in at the “mid-30s,” the report said.

“Operating in a fairly penetrated market with several jump balls, tougher win rates in well-covered markets… Net-new logo opportunity is not meaningful here: instead, company must drive (average selling price) growth longer term,” the fund’s researcher wrote in a footnote.

That potential investor – which CRN is not naming to protect the confidentiality of the source of the document – ultimately passed on the deal.

‘The next change that is coming is going to bigger and faster’

In 2009, Craig Fulton started a 14-year career with ConnectWise that saw him rise from product consultant to eventually hold two C-level roles, chief product officer and chief customer officer with the company. He left two years ago to work as an advisor on brand and M&A at Evergreen Services Group.

Fulton praised Magee’s five-year run as CEO for the hours he saw his boss working late on behalf of the MSP customer, taking on tough issues on their behalf and giving his time freely to partners who asked.

Fulton said the incoming team needs to return to helping MSPs run their businesses.

“The new leadership needs to focus on being a product-led organization that obsesses with partner success,” he told CRN. “It’s felt very sales driven. Delivering on Asio is key. The partner base is ready for the long-awaited unified platform.”

Pete Melby, CEO of Denver-based New Charter Technologies, one of ConnectWise’s largest customers, said the work that Magee started with Asio will reap dividends, but it may take time.

“The products are the things they really need to bring home,” Melby told CRN. “I know they’re investing significantly in their code base and making it truly next-generation. The problem with that is that it takes a while to develop good software. You don’t get there overnight. There’s been this period where we’re waiting for the results from the actions that we’ve seen in the last couple of years.”

Mebly said what he has seen of the progress so far is very encouraging. He said the investment shows that ConnectWise is serious about competing in the long term.

“I think they have the right focus, but it comes down to execution,” Melby said. “MSPs are going to change a lot in the next 18 months. It takes 18 to 24 months for vendors to change anything. So it ends up they have to guess where we are going. The next change that is coming is going to be bigger and faster because of AI.”

Rivelo echoed that days later telling CRN that it’s incumbent on ConnectWise to listen to its MSP partners.

“Our success is completely tied to the MSP community, which is why listening to MPS is priority number one,” he said. “If we give them what they need and we anticipate their needs, and we are there before they even know their needs, then we’re going to be successful. That’s job number one.”

Huntress CEO Kyle Hanslovan also sees a revolution coming to the MSP tool space. And not just with the emergence of smaller players, but a larger, existential threat from Microsoft.

“This next leader better have a strong product plan,” Hanslovan said of the new ConnectWise CEO. “Intune is moving into this … It’s not very good for partners right now, but let’s be real. They have the talent through Copilot to democratize automation and to move into all these places that ConnectWise wants to be.”

Ellicott City, Md.-based Huntress has been a frequent business partner and occasional critic of ConnectWise regarding security practices. Hanslovan said the company has performed an impressive turnaround in security. Now it needs a leader who understands how to make a better product for MSPs amid the push and pull of private equity’s demands.

“What I think has to come from leadership is not just being aware of competition. This needs to be someone who is a product-focused, product-led leader who is going to come out there and build what is best for their partner base,” Hanslovan said.

ConnectWise also recently announced it had finalized a roughly $500 million acquisition of backup software provider Axcient, as well as the purchase of SkyKick.

N-Able CEO John Pagliuca told CRN that the internal distractions caused by merging those acquisitions while undergoing a leadership upheaval is an opportunity for N-Able’s go-to-market teams.

“I’m not going to speak directly to what’s going to happen at ConnectWise because I don’t know,” Pagliuca said. “What I can tell you is that when you acquire new companies, when there is a leadership change, by definition, there’s a focus on organizing internally as opposed to keeping your eye on the prize of the customer. Their priorities are going to be inward focused. Figuring out where the rest rooms are and what the business priorities are, while our focus is going to be on the customer.”

Zac Paulson is director of products and strategy at ABM Technology Group, an IT services and consulting firm based in Fargo, N.D. He has been a ConnectWise partner for about 15 years, growing two MSPs with Manage. He hopes the company brings innovation and focus back to the PSA platform that MSPs rely on.

“Personally, I feel like ConnectWise’s last five years have been all about growth in products and services that are adjacent to the PSA business,” he told CRN. “I'm hoping that a focus back on the core business of PSA becomes a greater priority. Unfortunately, the acquisition of Axcient leads me to believe they will continue to go wider versus deeper on what made them great in the first place.”

Long-time ConnectWise partner Matt Hilderbrandt, founder and CEO of StrataDefense, which provides MSSP services to banks in the upper Midwest, said part of the new direction needs to include granular talk with MSPs about product and services.

“In terms of winning market share and regaining fans, it doesn’t hurt to focus on delivering industry-leading service to show your partners that you hear them,” he said. “Follow that with focusing on doing what they were really good at, serving the needs of the MSP, which is what made them the market leader for so many years and can return you to that place, which will not happen overnight, but deliver consistently on that and it will reap rewards.”

Dustin Bolander, who runs Clear Guidance Partners, an MSP focused on law firms, finance, engineering and high-compliance industries, wants to see a ConnectWise that remembers how to help MSPs run their shop.

He said under the leadership of Bellini he felt like a partner.

“If something was impacting our business, it got fixed first and a long-term solution figured out later,” he said. “Right now, I feel like a customer most days, not a partner … I should not have to work so hard to fix ConnectWise’s mistakes or spend 14 months renegotiating a signed contract. The products are still solid. The new acquisitions seem like a great fit. Start treating your partners like actual partners again, not a line on a spreadsheet.”

Melby is optimistic that the work ConnectWise is doing now will give MSPs the most modern platform on the market.

“When they endeavored to do this rebuild, they knew it would be hard because you’re not going to have much to show for it for awhile, but the security will be there,” Melby told CRN. “So they haven’t had much to show for the work that they have done the past few years. So they need to finish what they started with, getting the secure, modern codebase. That’s what we are counting on them for and it’s a longer game – which is terrible for return on investment.”