EP184 - The Future of Running Your MSP in an AI World with Jay McBain & Ian Luckett

INTRO

In this episode of the IT Experts Podcast, we're going to share with you what we think the future of MSPs looks like.

Welcome to the IT Experts Podcast, the only podcast to help MSP scale to 1,000,000, and if already there get to 5 and go faster at the end of the day, isn't it all about building a business that works for you rather than you for it? I hope you enjoy the show.

IAN

So, good morning, good afternoon, good evening. Welcome to the IT Experts podcast. We hope you're all doing great today. Back on the podcast, we have the channel analytic expert Jay McBain. Good afternoon, Jay. How you doing?

JAY

Thank you so much for having me back.

IAN

No problem at all. It’s always an insight to talk to you. One of these people that I think operate at a very different level to a lot of MSPs in the channel understanding the ecosystem and how that works. And we've had a bit of a chat today. So we're going to, we're going to dive into the future of the MSP. What do we think that looks like and a couple of areas that Jay’s got some really, really interesting views on. But just before we get kicking, get straight into it. Jay, can you just explain to everyone who are you? What do you do? Who do you help?

JAY

Yeah, sure. Absolutely. So I'm analyst in the channel. So I've been around the channel for 30 years in, in different parts and pieces and been in managed services for 25 years just behind the scenes counting things and looking at how things are going. And a lot of the things we're going to talk about today. I work for Canalis, which is a firm that's actually centered around the UK. And is global 120 people like me. Canalis is Latin for channel. So we literally look at partnerships, alliances, ecosystems around MSP. And try to put some numbers behind the opinions that are out there today.

IAN

Excellent stuff and I'm always, I'm always watching and seeing your insights and these big numbers that can make small differences or large differences and kind of the impacts of the tidal ecosystem that we have with the MSP space. Just before we get cracking, Jay we spoke last time about hardware as a service and some of the changes that were going on in the channel. What's happened in your view in the in the landscape of people buying technology, people buying managed services, the receptive list of businesses with their technology kind of since the pandemic in over the last couple of years, what's where do you think this has kind of moved or changed or developed?

JAY

Yeah, I'll lay it down by the numbers. Right now we're at a stage where managed services around the world is $548 billion with a beat, so we're a, we're 1/2 a trillion dollar industry, it's growing at 12% this year in a pretty tough headwind around the world.

And just to give an idea, the world GDP, which is about 105 trillion, is growing just shy of 3%. The tech industry, tech and telco, which is just shy of five trillion, is growing at 6%, pretty much double the world's economy. And managed services is growing by double that 12th. So we're at a mode that in any industry, the 297 industries that we look at, this is one of the stronger industries and we're at demand at a point where customers now outsource some or all of their IT 82% of the time. And when I mentioned that big number 548 billion. There's now 335,000 companies around the world that have at least one managed contract. I reserve myself to call them MSPs. Most of them are still Vars or other business models, but even if you look at 30% of their business being recurring, which I do call an MSP using professional tools now, 860. Listen, last thing I'll say about the numbers, it's now a global phenomenon. You know, I grew up in the early days of auto task. I worked at Autotask. I left autotask with the founder to build another business. So I remember those early days, you know in 99 days but in those small little hotels and having little fights and Joe Panettieri talked about the industry. As it was moving along but suffice it to say, it's reached a level of maturity at this point where now the rest of the world, Europe and Asia and Latin America drive 55% of that number. So what started really in North America, most of the PSA products were in the US in Tampa Bay, in Albany, NY in. Omaha, NE and the RMM products mostly came from Canada ex Nortel and up in Ottawa and things like that. So it was North American up until it wasn't. And now the rest of the world is bigger than North America. It's truly a global phenomenon business.

IAN

So we're in an exciting place. I think that's what we're going to say we're in a high, it's already super exciting place and super grateful to be to be part of the channel helping people out kind of like from both sides of the pond as it would be. Do you think people's businesses end users, their attitudes have changed since the pandemic to take IT and their infrastructure, hardware, software from a kind of a nice to have to an absolute essential is I know that might be a bit of an obvious question, but what are you seeing in in kind of the take up on how important is this now compared with what it was like four or five years ago?

JAY

Yeah, I dropped one of the numbers, but 82% of them think that they need to outsource some or all of their IC's ten years ago that number was 30 Yeah, if you go back to like the 1990s, I worked at them and you remember the craze. If you're old enough that we all thought we were going to lose our jobs to India at the time model and well, now we all think we're going to lose our jobs to Gen. AI usually.

IAN

Yes. Yeah, that was it, yeah.

JAY

But we'll talk about that in a minute. But back then, even all that big outsourcing and moving of staff and big layoffs, that was only 30% of companies. That outsourced at that level and then 30% of companies outsource to managed service providers. I kind of thought that that's where the human psychology threshold. It was until cybersecurity we have the biggest banks. We have the biggest telephone companies, the biggest governments that have now admitted they can't do it alone. Yeah, we just can't hire enough people, the right people. Cybersecurity is a team sport. So with all of the beginning, with EDR and MDR and XDR and all the layers of zero trust and sassy. Everybody's given up right down from a flower shop right up to the biggest bank. Yeah, we need a managed services provider. We need a managed security solution provider. We need a team to go help protect does and that's what the breaking of that 30% threshold was to the point now that they think solving IT problems in most cases is a team sport cloud hybrid edge which is great. And This is why managed services is growing as fast as it is.

IAN

So really the fuel on the fire, the petrol was the need for that security, wasn't it?

JAY

Yeah. And then the psychology, you talked about attitudes. This year we've been predicting this for seven years. So I mean, you could go back to a CompTIA keynote from Todd Thibodeau 7 years ago, and he talked about demographics, people aging out the age of the MSP, the owner principal, the age of our customers. Well back then the prediction was 2024 and guess what, we're in 2024, this is the year. That our majority buyer becomes a millennial born after 1982. And so this is the majority of the $4.94 trillion that businesses and governments will spend on tech and telco is now LED both in quantity of buyer and budget, yeah, by somebody who has a different psychology, different buying behaviors different learning and what MSPs are obviously growing in this area too, and that will reach the maximum owner principal soon. Our buyers are already there. So this is the monumental change that we're going through right now is how to serve this digital first digital only crowd and how to do this in a very, very new and I look back and look back and you wonder where the years have gone sometimes and now you realise that the millennials are actually a lot older than you think they are because you think that these 2030 year old? Kids were not. Actually, the now 3040 year old kids you just turned...

IAN

Hang on a minute. What happened here? So I'm interested. You know, we've got lots of MSP business owners now who are a lot younger, a lot, tech savvy. They are not. They didn't get bought up in some of the manual worlds and they're now coming into an industry where they're leading with the security and the cyber and data security and they've got different attitudes towards leadership, they're probably used to researching and going and finding information online rather than learning it in the books and through working through corporates and things like that. So millennial MSP, business owners, what do you see is kind of like changing and what do you see the I guess the, I guess the opportunities for the millennials. But also you know is that a threat to some of the more traditional MSP outlooks there, what's, what's your view on that?

JAY

Yeah, I don't think it's a threat. I mean, we obviously are selling to baby boomers. We're selling to Gen. X, we're selling to millennials and now we're selling to Gen. Z. So we kind of got 4 generations as buyers right now, just millennials happen to be tipped over 50% as the majority. The fact is, you know, the way it kind of looks and MSP owners, the same type of thing. As an analyst, we look around to see is there evidence is there, you know, actual insights we can glean today from this buyer type. And guess what we can the majority buyer of SAS today, the $250 billion of software as a service has been a millennial. Now for a few years, 75% of SaaS is sold to lines of business. In some companies, the CMO spends more money on technology than the CIO. So looking at the CMO, the CRO looking at the CX leader looking at some of the product leaders, operations, finance, HR. This is where SAS is sold to.

This buyer has been around for a few years, so we now have evidence of what this is going to mean to our buyer, but it's also evidence of how MSPs are going to run. So when I said digital first or digital only, I meant it. Gartner did a survey a few weeks ago at of this cohort, and 75% of them don't want to talk to a human. So you set that in and you see it in different places. Where you see kind of buying changing where somebody will want to go buy a car and spend 28 moments getting really, really smart but want to avoid that last minute dealership 8 hour. Get me a deal kind of sit. When you know the invoice price, when you know the back end rebates that are happening that month, you know how the deal's going to land within $100 because you've already gone and researched the thousands of people who have bought that car in your neighborhood in the last few months. So you know exactly what it is. So forget about negotiating. Forget about everything else it is, what it is.

Now just deliver the car to my driveway and hand me the keys. That behavior is coming into software. It's coming into hardware. It's coming into services. It's this. I'm going to spend the time because the information is out there. And now I'm kind of buoyed by Gen. AI to even further help me get through those 28 moments, become smarter than the salesperson is even become smarter than some of the engineers that are out there. Vendors are about their own products, and I'm at the point where I can just click and procure. And that's why marketplaces are growing at 86% compounded at the moment because they're serving this new, younger buyer. So that's a digital first, digital only. They're also subscription consumption friendly. You know, the millennials grew up with Netflix, they grew up with Spotify music. They also grew up paying a dollar a month for a toothbrush and. And they know they're going to have to pay that till the day they die the subscription economy is totally okay, subscriptions combined to marketplaces like I mentioned.

IAN

Yeah, yeah.

JAY

But one thing that's jumped out, the most important thing, maybe I say about millennials, is here. They're integration first buyers. So we've had, you know, baby boomers and Gen. X, when they write RFP's, things like your service, your support levels, things like your brand reputation, obviously your price, all these things have different weightings on their decision and they weight it all. And then they come out with what they think is a good balanced decision. Well, number one on this now is how well do you integrate into my world, so I'll buy a product 80% as good as the competitive product. If it works better, it's kind of a what does this mean? Well, let me flip back to cars. Apple stood up last year at its iPhone launch and said 79% of people today will not buy a car unless it has Apple CarPlay. I'm sure they meant Android Auto as well.

They didn't mention it. Want to sit down in a car that integrates in their life? Has their music, has their, you know, To Do List and their calendar and all the GPS connections, but they're ready to give over their speedometer. And their climate control to Apple as well, big tech. So you've got that's 79%. So imagine being in that industry $4 trillion industry been around 120 years, you're just taking over a dealership from your great, great grandparents and you're about to lose 4/5 of your buyers because you don't have a tech integration or you didn't do it properly. So MSPs are going to be doing these integrations. MSPs are going to have to fit in that customer's environment, fit in their stack. The average millennial builds A7 layer stack for security to get to 0 trust or sassy. The average millennial buys a seven layer stack around consumption of AWS, Microsoft, or Google. The average SAS deal today, Salesforce, ServiceNow work day, Marketo, NetSuite, HubSpot is 7 layers then the Magic #7 but one other thing and final thing I'll say about this. So hurt is they think of partnering as a team sport. When I grew up at IBM, you know, I grew up in the era where you couldn't get fired for buying IBM. It was just the single throat to choke. It was the company that would back a custom rob our products weren't always the best. They never probably were the best. But it was that single throat that nobody could get fired because I bought from IBM.

Well, that changed a lot where the average buyers, you know, buying seven things, but they also surround themselves with seven partners today on average. So you as the MSP are not competing with six other MSP's. For those, you know seven spots, but they're going to bring in somebody that understands their buyer type, like it could be a CMO. I wanted somebody who understands marketing and my challenge. I want somebody that understands my sub industry, you know, a small bank in Inverness, Scotland. I need somebody that understands my segment again. I have 20 people and I have challenges with, you know, my resources. I want somebody that understands my industry, banking has a lot of compliance governance. I'm in the UK, so obviously there's a geographic element of compliance regulation governance I need somebody understands all the products, the seven layers. I need somebody that like there's 6500 security products. I need the seven that work for me. Then I need to understand all the models. Some people are selling me product LED growth and subscription consumption perpetual. You're selling to me managed service like there's all kinds of things going on. I need to understand how to negotiate this. And how to execute it, hopefully on a marketplace. So that's six other people that don't know the technology like we do but help the buyer get to the outcome that they're looking for. So partnering is a team sport for –

IAN

Yeah.

JAY

Them as well.

IAN

Can you see the MSP space turning into you know considering what you just said about? The new the younger owners and the younger buyers of the of the of the MSP services. Can you see it turn into a point where they will have, you know the buyer will have so much information on their services that they're just going to go onto the website and they'll be it's so, so well educated. It's just going to be like a buy it now because at the moment managed service is very manual, isn't it? Get them on a call, understand their needs. Design a solution. Get them into the contract and come back and kind of away you go. Can you see that that turning into a more of a you know and I mean this positive like a faceless sales process?

JAY

Well, I think it will and that's what the buyer wants. The other thing is the buyers don't like packet. So you know, today we bundle up 20 things in our MSP, you know this week we heard from Paseo, what they're going to offer for $3.99, but as a package. So we think a lot about the 20 layers of our portfolio and then selling that to an uneducated buyer, that's kind of the baby boomer sales pitch well, millennials already been through 28 moments they've already been through your 20 pieces. They already know what you do really well and what. They don't. And when I said they, they're outsourced friendly. You know, they say you know what you can do the help desk better than I can. You can obviously do break fix you can do patching better than I can you can do the MDR because obviously I don't have that and work as a team on that but they're going to pick a part you're 20 pieces and almost like a menu go and choose. The 17 things that they want to outsource. Yeah. And want that to be bundled up. So that's 100 interesting pounds per month per person or whatever it is, but that the MSP that can get to that buyer, sell it digitally, assume you're never going to talk to them through the sales process question. And then go earn one of those seven seats at the table. So last year, when they had to start thinking about Gen. AI, you're already at the table and they come to you and say, well, what can you do? You know, we want to run a pilot. We want to start thinking about it, for example, around our marketing and customer success. What can you do to help? And then they're also going to ask maybe the system. Integrator who's there? I know you can do this as a project, then they might ask some ISP's like what can you do to add into our staff so the seven people around them, they're going to kind of ask the group what you could do and you're going to try to operationalize and throw that into a monthly recurring predictable. Kind of area. But in Gen. AI that doesn't exist today, so they may choose to go with that kind of one time pilot integration, design, architecture implementation, type of project and then once they get it rolled out and see and return, they might turn that into managed services later. But this all comes to this new buyer getting very, very smart about what we do –

IAN

Yeah.

JAY

Know where the profitability is? Know where the where they can truly, with a scalpel, come in and outsource very key things they need and not buy things in the package that they don't need.

IAN

Yeah. Interesting. And let's just flick, Sir. That's who's the seven people in your team and vendor partner relationships. We hear a lot about vendor love vendor. Hey, very traditional businesses locking you into long contracts, poor customer service, all of this great stuff. It's surreal. Do you know what I mean when I say it's a Marmite relationship? You either love it or you hate it, right? Bit of a British thing there. But anyway, it's one of those things and very traditional could be long contracts. They need these tools, right? They need these tools to operate as managed. This and some of them as these monsters are going around acquiring different businesses. We hear talk that just got to shut up guys and get on with it because the products really great, the product really works. This is the only product to do that. This is the only product to do that. There's some new kids on the block which are all nice and flashy and shiny ball and we know that the MSPs like a nice shiny ball. How do you think the vendors could improve their start strategy to get a little bit? I think well, I suppose the question is, do they need more love from the MSPs or do they just go on the basis of? Do you know what I kind of don't not don't care about them? Because I know some really great vendors out there. I'm probably slating them all with one big brush, but it's like, you know that relationship I think is key. If you're going to have someone in your football team who's going to help you, you know, become that MSP and the integrations that we talked about and Gen. AI and the and the way that the millennials work and all of that, you've got to have trust, haven't you? If you're going to, if you're going to start sticking. Something together. Where do you see or what do you think the vendors need to be doing or moving forwards to build some better relationships with the MSPs?

JAY

Yeah, I have a little bit of a controversial view of this because I'm going to answer it from a Wall Street perspective. First, I grew up, as I said, the early days of auto.

IAN

Go through it.

JAY

Ask when you're a small company. The average MSP has eight people and an eight person company loves working kind of with a family style small business too. At the time, Autotask had 300 people. It was seen as family, like you're an auto task MVP. You came to the auto task show down in Miami. It was all kind of a you knew everybody by first name basis, you could send Bob Goddard an e-mail and he would. Send it back. And you know that that was, that was autocast. It was a $20 million company serving a bunch of eight person shops. But you also had another choice. You could go down to the family in Tampa like Arnie and his brother, you know, down in Connectwise, I mean, that was a family company. There's Jeanine Edwards, and there's the whole team, and they're running IT nation, which was bigger than auto task. And that was cool. I think you had a true family company in Omaha with Tiger Paw. You knew the foxholes. You knew what they were building it was great. I mean that that's where the industry was. But guess what? Private equity gets involved and says yeah, holy smokes. Jane McBain is saying that one out of every $10 that's being spent by business and governments today's on a managed contract. These are the people that own the paint and glass. They're the operating system for these folks. You can sell a lot of products through.

IAN

Yeah. Yeah, yeah.

JAY

Well, auto task then goes into dado, goes into a public company and then a public company goes back into kaseya, but the leader of Dado became a billionaire. The leader of Connectwise became a billionaire, and so you're in a mode now where you know people are exiting their business. This is what you want with capitalism. You want companies to get really successful, but when you become private equity. Back and when you become nimble, but when you're going up market, you're trying to get a mid size, you're getting trying to get a larger MSP. It's a different level of scale, of reliable kind of repeatability of processes and clothes and you just don't do well again with the little guy cause you're not a family business anymore. Guess what happens? Capitalism drives innovation, and we have about 25 companies coming in behind Connectwise Casaya and enable to serve. And when you have, you know, Super OPS and Halo and I can name off all 5, you know, they're now kind of that family business, but if they do really well, it's kind of that family connection. Guess what, at some point, they're going to want to go up market and private equity is going to want them to go up market. You're going to lose that. So as an MSP, you got to make decisions you understand when you work with Microsoft and Cisco and others that you're just a number, they have hundreds of thousands of partners like Microsoft has half a million partners. You're literally a number, but if you're a millennial, you're okay dealing with Microsoft, digitally. You don't expect to have a channel account manager. You don't expect to be on their platinum tier. You don't expect to have a gold robe at their event. You're just a number. But you learn how to do that vendor management when, when the other companies go upscale, you got to kind of look at them. They're not going to be Microsoft or Cisco, but they're kind of that mid market and they don't have that same service to support. You're going to lose that first name –

IAN

Yes.

JAY

Basis you're not going to be able to text the CEO. You got to and decision if I'm going to stay, you know, in my business with eight people. And I'm not going to go upscale myself, you know, do I want to jump and be flexible in the tools that I use. And if I rate rank really high, really, the ability to text the CEO and get a response in the middle of the night, you know, we just got to be flexible in the tools we use because over time, over the course of decades, man of service is now 25 years as an industry. Over the course of decades, companies will grow up scale. They'll be private equity owned. Some of them will IPO, there'll be multi billion dollar conversations of rich people in Wall Street. Now that are owned these businesses and they want to buy a bigger yacht. So they don't know the first thing about mental services, old technology.

IAN

They're going to sell stuff.

JAY

But they sure know a lot about money, so just don't be a victim to it, but understand that these things happen and that small little tool that you love right now that's helping you with security. You're partnered with a huntress or a threat locker, or somebody right now, just to understand that they're growing at an incredible clip. Triple digits. And there's three to five years from now, they may not be that same company. They might be getting acquired by Cisco for billions of dollars, so. You should be open to that.

IAN

And I think one of our one of our clients said to us once you know what's I said, what's the secret for you getting into that 7 figure bracket and he said the vendor relationships. And I think kind of being super super focused on this right now is being really clear on, you know, having said what you've just said around understanding the evolution of the partners of the vendors, but also understanding the evolution in the partner, the of the relationships of the people that you're building, cause they're going to move to some of the bigger companies. As well and getting super focused on what do you want out of this relationship with this vendor is it, you know, as we've spoken before is it some MDF getting some getting some help with your marketing? Is it some of that funding which is just sloshing around all over the place, is it long term relationship you know if you if you grade that relationship that hey they've just thrown me out to Vegas and it's incredible and that's a big thing for you question is that going to help you grow and scale your MSP?

JAY

They're probably not.

IAN

It's that visit going to grow scalier MSP if that's not, but it's an important thing to you. Get real clear on. You know the vendors, these seven people that we've talked in this in this podcast about your team. Are there as tools you know they are different tools and just make sure that you're super focused on what each one does. And one day that tool might get a bit blunt and you might but also understand that there are cheat codes.

JAY

You know I get asked all the time with half a million partners at Microsoft or the 150,000 at Cisco or Dell or HP or Lenovo. I used to be a channel chief at Lenovo and IBM. So there are cheat codes. It's run by people and there's a whole bunch of directors and senior directors running around hundreds and hundreds of them, maybe thousands of them.

IAN

Yes.

JAY

All have budget. They're all trying to get you on stage as their partner of the year. They're all trying to you know have their boss and their boss's boss, there is a real cheat code there of getting more money from these vendors on these little side projects and them funding you for Gen. AI or them funding you for some, you know odd thing in your geography or in your place. But you might be going after the director of SMB. And they're trying to get you on stage. They're trying to show you as a hero of their program. There are companies that do get access to a lot of money, do spend the extra time to figure out of all the vendors that are out there hundreds and well, I mean, there's 35,000 vendors today, 6500 security vendors alone. I mean, each of them have cheat codes. That MVP thing I talked about, like, there is ways to grow.

IAN

Yeah.

JAY

For MSPs, by becoming the darling of a couple of years and when you get on stage, when you become visible, their direct sales people start to love you as well and you start to get that behind the curtain, you know leads and you get a couple Bluebirds sent to you and stuff like that. So there are companies that do that extremely well and don't just see themselves as a number.

IAN

Yeah. And it and I guess again it's about that reminder to be deliberate about that and you know and understand that that relationship is a is a it it's probably more heavily weighted one way the other more than been reciprocal. But there's a reason they've made you vendor of the year is because they want to tell everybody what great things they are and then everybody sees you're successful and guess what, more people can buy more stuff from them, so getting deliberate about what MDF you want from them with your event strategy or whatever it might be and play it is a game I guess, isn't it? I guess that's the that's the kind of the, upshot of that great stuff, really, really exciting.

Just before we wrap up Jay, let's have a chat about Gen. AI and how this is going to affect number. What is Gen. AI when people talk about Gen. AI. There's a group of people who only talk with chat GPT, Ian, what's that all about?

JAY

Yeah, I've had a lot of AI in my life since 1996. I was at IBM when we defeated Garry Kasparov at chess. You know, about 15 years later we defeated jeopardy, which, by the way, the game show was a Gen. AI problem.

IAN

Wow.

JAY

You had to kind of, you know, get the question from Alex Trebek. You get milliseconds whether you think you know the answer to press the button, and then you get about four seconds to form up the answer in the form of a question. But not only do you have to search the Internet and have a confidence interval whether you should press the button or not, but then you actually have to read the answer so you have to read the Internet cover to cover and formulate a question. So that was like Gen. AI you know from 13 years ago.

IAN

Wow.

JAY

But so, Jenna, I didn't come out to be last year. It was just when it became public and it became a consumer trend because it got so good they could write poetry. It could write music, it could create pictures, and people could use it for the first time as a consumer tool and start to think. Oh, I think we just lit up Skynet here. You know where we started the Terminator movie. And this is the beginning to the end of thing because you know, one version of Jenna, one version of chat shaft passed the bar exam. But got in the bottom 10 percentile. Two months later, the next version pass the bar exam in the top 10 percentile.

IAN

Yeah, yeah.

JAY

The next version two months later, now writes the bar exam. So this is a level of exponential growth that we've never seen in any part of technology in 50 years. And has MSPs questioning because they're customers, because it's a consumer trend are asking about it. Not only that, our family and our friends, because we're the tech people, they're asking us, like, am I going to lose my job or are we going to have Terminator robots starting to come and kill us shortly.

But in the end, the thing that most people got wrong, the thing that IBM actually ended up getting wrong, is Gen. AI isn't a product they try to sell it as a product, you know, here is to cure the answer and predict nuclear explosions, predict the weather. We bought the weather channel for data. No, it's not a product, it's a feature. So when it's a feature, it's a little bit different. It's like analytics inside a feature. How do you make money on a feature? And this is going to be difficult for MSPs and we made a prediction that, you know, Gen. AI is growing at 59% compounded off a small number, but it's going to be $158 billion of services by 2028 the problem is, it's going to be back end loaded for MSPs front end you know companies like Accenture and Deloitte and kept Gemini and KPMG. They're lining up hundreds of thousands of people to get certified at Microsoft, at Google, at AWS, at anthropic. Why? Because there's a whole bunch of front end consulting gigs, yes, and designing pilots the second people that are lined up are the 250,000 software companies, ISV's. And just because they're building it into their product as a feature. All the products we use as MSPs today Connectwise has, it can say everybody's building in this Gen. AI functionality. That's where we're going to see it first and we can start working internally. First, let's think about our marketing. Let's think about our sales, our customer success. Let's think about our invoicing billing. Let's think about our service tickets. There's Jen AI help that we can do internally to get us better than our competitor. So it's the first trend in emerging tech to be an internal opportunity. First, nobody saw Internet of Things as an internal opportunity. We didn't see the metaverse as an internal opportunity, or printers or self driving cars, or quantum computing or cryptocurrency. None of those were internal opportunities. This is the first one that's been that I can really change my business for the better me be more profitable as you say or now when I go out to my customer, where is my opportunity, there's nothing to manage.

IAN

Yes.

JAY

In a feature. I'm not going to go ahead and add $5 a user because they're clicking on Gen. AI inside of Einstein GPT instead of Salesforce. Unless I'm consulting on how to do that, unless I'm designing architecting new ways, unless I'm, you know, integrating into deeper features there, unless I'm educating or trying like unless I'm actually selling a service. The actual managed services doesn't really change for a couple of years. So our advice for managed service providers and Vars was to kind of wait it out. Don't get too excited.

IAN

Yeah.

JAY

And make sure that you're focusing on managed services, which are growing at 12%. Security is growing at 12%, manage security is growing at 15%. Go grab those opportunities today and in about 18 months or two years Gen. AI is actually going to start showing up at the edge because guess what? 85% of the world's data sits at the edge, so the amount of compute, the amount of storage, the amount of networking capabilities to go process these large language models to have, you know, handle these AI PCs. AI driven phones and every other device. We're talking 2025, maybe even to 2026 at this point. So I wouldn't be lined up outside of Microsoft trying to get every one of my technicians certified. Yeah, I would stay on top of it, make sure I'm the group of seven around my customer having these conversations, doing any kind of, you know, pilot work. It could be project based work when we actually get into the true managed services piece, you know, we're probably still a couple of years away.

IAN

Yeah, interesting, interesting, interesting insights, Jay, thanks ever so much for your time and insights as you as usual they are absolutely golden. What's the opportunities for MSPs in the next 12 months? What do people need to take away from kind of what we talked about today?

JAY

Well, I would look at those 12 or 15% growth numbers and double them. With good execution, with recognition, recognition of the new buyer, with spreading out at each of my clients and going and meet with the see, you know the lines of business. I told you like you know, 75% of SAS is sold outside of IT. A lot of those businesses. So when you go and sign the guest book next time at your client, if they allow you to look backwards, 80% of people signing in are talking about tech. 78% of digital agencies are now tech services. 81% of accountants are now tech services. They're all talking tech join that group like you're not going to compete against a digital agency on create over. You're not going to do people's taxes or join the tech conversation because you can add a lot of value in security and compliance in the infrastructure in the broader thinking around what they're trying to do as a business leader. Join those conversations. You'd be surprised by working with those teams and the other people around the table, how much business that they're working on in your community as well that you could be dragged into and vice versa.

IAN

Yeah.

JAY

Start to build yourself a network. Build yourself that broader you know ecosystem and recognize that everybody up and down Main Street, you know who think you think are in different industries. They're all trying to come into this industry and grab hold of this tech opportunity that's growing at double goods. And it's not competitive to you. It's just an opportunity for you to think differently about, you know, being more immersive in all those conversations.

IAN

Love it. Love it. Thanks very much, Jay. How do people get in contact with you if they want to learn a little bit more about what you're doing or continue the conversation, what's the best way for them to do that?

JAY

Yeah, always LinkedIn. I have a LinkedIn newsletter that you know I share a lot of these numbers on. You can tweet or ex at me. You can Facebook me. You can e-mail me. I mean, I've got 20 windows open here, so always open.

IAN

I can imagine. There's screens all around with all the...

JAY

Addition or you know if you need, you know, kind of double or triple click on a certain number that I might have said what it means to you, what it means in your current environment. Shoot me a question.

IAN

Fantastic. Lovely. Thanks very much, Jay. Well, again, once again, thanks very much for your help and support with today show been a great show, loads of information loads to process for everybody else. And I look forward to catching up with you soon. Catch up you soon, Jay. Take care mate.

OUTRO

Just before you go. And if you're curious about how this episode links with the ability to scale your MSP to a million or you already there, accelerate to five if they want to invite you to come and take the MFP marker quiz and in just three minutes you're going to get a 300 and seat scan of your business where you can identify the one or two tactics that help you find more time engaging. On your people and help generate more leads. And more. It's really simple. Just click on the link in the show note and if you have enjoyed this episode, we'd love to get some feedback from you by means of a racing review on Spotify or iTunes or your podcast platform of choice. We really appreciate every single one. Now you can go and enjoy the rest of your day and we look forward to catching up and connecting with you soon all the best now.