ConnectWise-Continuum: Big Merger, Modest Ripple in the MSP Tools Market

There was a gigantic deal in the managed service provider (MSP) tools market this week that changes, well, not that much in the short run.

ConnectWise is acquiring Continuum. Both are major players in the MSP market. ConnectWise has a long legacy in the professional services automation end of the space, which it has been increasingly building into a full-stack MSP solution that includes remote monitoring and management (RMM), quote tools and various other business and technology pieces. Continuum is a younger company, born out of a partial Zenith Infotech acquisition, that focused heavily on providing turnkey MSP technology tools and operations center-provided services to MSPs with fewer technicians on staff.

Both have large bases of MSP customers/partners, making the deal important in terms of the number of partners affected.

Yet, there is more that doesn't change, at least immediately, from this deal than does.

For one thing, both companies are already owned by Thoma Bravo, the private equity behemoth that's been funding much of the M&A activity in the MSP sector. The Thoma Bravo portfolio also includes SolarWinds and Barracuda Networks. Interestingly, ConnectWise was acquired by Thoma Bravo in February and at the time denied rumors that an acquisition was pending for another Thoma Bravo company.

ConnectWise also says it remains committed to keeping its platform open to competitors, so that MSPs can choose on their own best-of-breed combinations of tools. "We believe in an open ecosystem, the power of choice and providing a single pane of glass view," the company said in its statement Wednesday announcing the deal. The announcement came during IT Nation 2019, ConnectWise's annual partner conference, which features more than 100 exhibitors, including direct competitors in several areas. Many of those vendors must keep a close eye on whether that commitment to openness continues, but for now ConnectWise is saying the right things.

The most significant part of the announcement is that the company intends to continue offering both RMMs, meaning little change for existing partners. In the announcement, which also covered the acquisition of ITBoost and a partnership with Webinfinity, ConnectWise emphasized how all the pieces fit together.

"The resulting solution suite redefines business automation. The convergence of ConnectWise's best-in-class platform (PSA, RMM, CPQ), with the service-enabled RMM, security and NOC/SOC and Help Desk from Continuum, IT documentation from ITBoost, and partner relationship management (PRM) from Webinfinity, substantially increases value to [technology service providers]. ConnectWise becomes the only software platform that connects the TSP upstream to its suppliers and downstream to its customers, creating a unified business operating environment to accelerate TSPs success," the statement said.

Specifically about any potential overlap between the ConnectWise/Continuum tools, ConnectWise positioned the RMM approaches as complementary.

Describing the Continuum tools and services, ConnectWise positioned Continuum's model as appropriate for TSPs "preferring to outsource much of their low-level work, whether because they want additional help on nights or weekends, or because they need to access a different skillset than they possess. This complements ConnectWise's current offering, which targets TSPs who take more of a 'do it yourself' approach. As a result, TSPs will have the freedom to adopt either model, or a mixture of both, all while making more data driven decisions and increasing their use of automation."

Competitors are going through the motions of seeding doubts for ConnectWise or Continuum MSPs about potential de-emphasis of their preferred tools in the future.

"Some hiccups are, of course, to be expected for a deal of this size," said Kaseya CEO Fred Voccola in a statement. "For example, both ConnectWise and Continuum are relatively the same size and offer users competing RMMs. And while they, in theory, could continue maintaining two RMMs simultaneously, they'll likely focus instead on investing in just one tool's continued R&D, technical support and customer enablement. This will ultimately force half of its users to migrate to the company's preferred tool -- an often costly and time-consuming effort."

Datto's CTO Bob Petrocelli was less direct, but addressed big questions for MSPs to keep in mind after a merger in a blog that was posted after the merger but that didn't mention ConnectWise or Continuum specifically.

"There are steps you can take to anticipate how consolidation among vendors may affect your business as an MSP. Look for transparent communication from your vendor. Why did they make this decision? How does the tech benefit you? How will your partnership change and improve? These are a few good questions your vendor should provide answers to," Petrocelli wrote.

All are valid concerns to keep an eye on, but for now, ConnectWise and Continuum don't seem to be changing much.

Posted by Scott Bekker on October 31, 2019