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Welcome to the MSP Radio newsletter, catching you up on some stories you might have missed!
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Datto files for IPO.... but do we care?
From Wednesday, July 15th's episode: Datto, provider of MSP tools, has confidentially filed for an IPO.
Why do we care?
Here’s my take.
First, short term, I consider this bad for their customers. Why? Because you enter the quiet period. Before an IPO (and through 40 days after), a company does an embargo on promotional publicity. No forecasts, no opinions….and often times, no roadmap. So your communication gets actively worse. No one likes to talk about this.
What about the larger “market endorsement”?
The number of US public companies has dropped 50 percent since 1996 until 2016, from over 7,000 to 3,800. Worried about that being the dot-com boom? It’s still down one third relative to 1972.
That smaller sample size is also not connected to the actual economy. The stock market is completely disconnected from the actual economy right now – record highs when unemployment is at record highs and consumer confidence is awful.
Finally – per 2018 data, the richest 10% of households OWN 84% of the total value of stocks. What we’re getting is a perspective of the very rich, not the broader “economy” and I would argue “market.”
So sure, a group of investors – also known as gamblers – will actually probably do really well with this IPO. The IPO market is expected to be really hot for those who can get out, particularly as whole industries are frozen. You won’t be seeing any travel or hospitality IPOs this year, and with an election in November, anyone who can launch will benefit from the market conditions. And there are those with money looking for a place to put it.
This move says little to nothing about the “SMB” market nor about technology in general. It says investors are finding a good time to make some money.
So, why do we care? We don’t really – except to note communication is going to be worse for a while.
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Selling Security is a Mirage
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Selling Security is a Mirage... how to change the words and succeed.
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There's enough data to have a solid 2020 projection and strategy
From Tuesday, July 14th's episode: Let’s talk marketplace – how is the market projected to do?
Last week, the Organization for Economic Cooperation and Development (which is a group of 36 countries) issued its forecast for the US through 2021. Their forecasts entirely depend on the severity of the coronavirus, and they offered two scenarios. Bad and Worse.
Bad projects unemployment at 11.3% at the end of 2020, and the economy measured by GDP falls 7.3 percent. These are both declines larger than any post-World War 2 recession.
The Worse version assumes there is a second wave of coronavirus cases, and the year end unemployment is 12.9% and GDP drops by 8.5%.
Next, Gartner. Their latest forecast says IT spending will drop 7.3% from last year, although their analysts predict it will recover faster and smoother than the overall economy. Hardest hit is devices, and in that IT services fall by 6.8% in 2020.
Moving onto Forrester, who has released analysis of leading SaaS vendors performance over the past quarter. Their analysis – now indicating a much lower projected growth rate for revenues this year. Quarterly growth is normally in the 5 to 8% range, with annualized growth between 20 and 30% -- now, it’s 1 to 2% quarterly, which is 4 to 8% annualized.
Finally, Apple – who have issued guidance that retail employees within closed stores to work from home, as well as indicated they are not anticipating full return to the office for their US staff in 2020.
Why do we care?
Lots here – the projections are not good. However, this isn’t about wallowing in bad projections, it’s about what to take away.
“Recurring revenue” is held up as the most resilient, but that doesn’t mean it’s resistant to economic changes. Let’s wrestle with the projections as a whole – unemployment is likely to get worse, and the overall market worsen. IT will see it too, and even recurring revenue businesses will be hit. Most business operations will not return to pre-pandemic in 2020.
That also allows you to place your bets and investments – assume the disruption. Don’t shake your fist at the sky, instead plan for it. The more your leverage the situation and knowledge, the more you can navigate it and be successful.
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Why does security fail?
From Monday July 13th's episode: Kicking off with details of Sophos’ The State of Cloud Security 2020 report. What are the top cloud security threats?
- Ransomware and other malware, accounting for half of incidents
- Exposed data at 29%
- Compromised accounts at 25%
- And cryptojacking at 17%.
Accidental exposure is the main reason, with exploited misconfiguration being 66% of reported attacks. 33% of organizations said bad actors gained access via stolen cloud provider credentials.
Also notable – Europeans suffered the lowest number of incidents. Sophos’s researchers believe this is an indication that the EU’s GDPR law is working.
Why do we care?
Misconfiguration. That’s why we care. It’s not that the product is flawed, but that it was configured incorrectly. It’s capable of doing the security, it simply wasn’t setup to do it.
There’s two parts to the responsibility here.
First, “secure by default” is the vendor. Vendors that design products that are configured securely by default and make it harder to misconfigure to create security vulnerabilities will really succeed.
Second, the configuration itself is owned by the services company doing the installation or management. This is where the provider comes in.
In this weekend’s editorial, I observed how important configuration and management were in a cloud world – and how few tools there are for the SMB to manage here. I still think this is a big area of opportunity, and here’s more data to show it.
Your takeaways. If you’re a provider, you have two major action items. The first is ensuring that you have a process for managing and monitoring configurations. You’re also in the market for tools that do this – even if that isn’t available yet.
Also of note – regulation. If you think it’s not necessary, note that having actual penalties and guidelines has resulted in action. The Europeans are better off.
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