Unlocking Profitability and Growth in the MSP Landscape: Insights from Kaseya DattoCon 2024

The MSP industry is witnessing a significant shift, marked by increased opportunities for profit and growth. At Kaseya DattoCon Miami this week, industry luminary Gary Pica, President of TruMethods, led a dynamic panel featuring top MSP leaders — Javier Dugarte (CEO, GoCloud), Tim Conkle (CEO, The 20), Will Nobles (CEO, Vector Choice) and Vincent Fung (Founder & CEO, Expera Information Technology Inc.). Together, they unveiled critical profitability strategies, operational efficiencies and trends in an industry poised for what Pica called the “gold rush” era for MSPs. Here’s a recap of key insights and actionable takeaways from the session.

Defining profitability: Benchmarks and metrics

The panelists emphasized that profitability metrics are not one-size-fits-all. Vincent Fung pointed out that for Expera, a Canadian $10 million MSP, labor costs spiked during the pandemic, affecting their efficiency. They’ve since shifted focus to the “labor efficiency ratio” — revenue per technician — which they target between 2.5 and 3, in addition to per-seat pricing to measure profitability.

For Javier Dugarte, CEO of GoCloud, who specializes in compliance and cybersecurity, profitability centers around cost per hour. By utilizing Kaseya’s help desk for Level 1 and 2 support, GoCloud achieves consistent profitability insights. Tim Conkle, CEO of The 20, operates at scale having aggregated 36 companies within the past two years. He emphasized that labor expenses should account for no more than 45% of revenue to ensure profitability, requiring a close look at each client’s efficiency.

The power of integrated tools and cost control

When it comes to MSP tech stacks, every panelist agreed that choosing integrated, efficient tools is essential to reducing costs and maintaining profitability. Gary Pica highlighted the importance of each dollar spent per seat. Tim added that with Kaseya’s toolkit, integrated solutions require minimal labor, driving down operational costs without sacrificing quality. Javier shared how Kaseya’s unified tools enabled GoCloud to streamline workflows, reducing time spent switching between platforms and optimizing cost-efficiency. With the recent announcement of Kaseya 365 User’s inclusion of email protection, MSPs now have an all-in-one solution that’s hard to beat.

Security as a catalyst for MSP growth

In today’s evolving security landscape, MSPs see cybersecurity as a core service and revenue driver. Vincent noted that compliance and insurance requirements increasingly demand stringent cybersecurity practices, creating new opportunities for MSPs in Canada and the U.S. Javier underscored GoCloud’s commitment to cybersecurity as an essential service; if a client doesn’t prioritize security, GoCloud won’t take them on. This approach has boosted GoCloud’s revenue by 30% over the past two years.

Tim offered an aggressive go-to-market approach: mandating advanced security features for all clients. By integrating security at the forefront, MSPs can add immediate revenue without the need for complex, individualized quotes.

Optimizing talent and building culture

Attracting and retaining skilled technicians is a shared challenge in the MSP space. Will Nobles discussed Vector Choice’s hiring strategy, which emphasizes technical assessment over experience. Javier’s GoCloud, meanwhile, prefers fresh college graduates who are trained and incentivized to grow. Tim added that nurturing talent from within is critical; providing in-office help desk teams and a clear growth path builds loyalty and fosters a high-performing culture.

Vincent stressed that simplicity in toolset and automation is vital in keeping operations efficient and minimizing errors, especially for teams in their early stages of professional growth. Each panelist agreed that a strong culture, clear expectations and mentorship are essential ingredients for a productive workforce.

Leveraging automation for accuracy and efficiency

Automation was a central theme in the discussion. While automation is often viewed as a time-saver, the panelists highlighted its greater role in improving accuracy and elevating technician capabilities. Will shared how Vector Choice had each of its ten employees document a Standard Operating Procedure (SOP) each week, creating a rich knowledge base in IT Glue that drives operational consistency. Tim noted that automating billing reduced processing time from weeks to days, illustrating automation’s role in transforming back-office operations.

Key takeaways from industry leaders

1. Specialize and lead from the top: Javier’s advice to “get good at something” resonated across the panel. MSPs that specialize in specific verticals or services like cybersecurity can command premium pricing and build a loyal customer base.

2. Don’t undervalue your services: Both Gary and Will encouraged MSPs to stop undercutting their pricing. Clients often see MSP services as a small part of their budget and can afford higher costs for premium service. Tim reminded MSPs that without sustainable pricing, growth is impossible.

3. Embrace security-driven growth: Vincent’s experiences show that cybersecurity and compliance requirements drive MSP growth, making security offerings an essential component of the MSP go-to-market strategy.

4. Invest in culture and automation: The panel emphasized the importance of fostering a strong team culture and simplifying operations through automation. This combination not only enhances employee efficiency but also ensures accuracy and reduces costly mistakes.

5. Join a peer group: Finally, Vincent advised MSPs to learn from others in the industry. Peer groups allow MSPs to gain insights, share best practices, and stay ahead of industry trends. Gary Pica closed the panel with a rallying call, encouraging MSPs to join a peer group to better understand and take control of their business.

As Gary summarized, “This is the best time to be an MSP for about 15% of you. But 100% of you have that chance.” The time is ripe for MSPs willing to make data-driven, strategic decisions to seize the full potential of a rapidly growing market.

Ready to unlock your MSP’s full potential? Watch our on-demand webinar, “MSP Profitability Panel: Cybersecurity and the Massive Backup Opportunity” to dive deeper into strategies that fuel profitability, streamline operations, and make cybersecurity a revenue powerhouse. Don’t miss out on the insights shared by industry leaders — watch now!