Thinking Smarter About M&A—How Automation Makes a Difference

As a business, we talk a lot about automation as one of the key ways to drive efficiency and growth within an individual MSP. By automating the response to and remediation of some of the more common IT issues customers face, technicians are freed up to spend more time dealing with bigger issues. Ultimately, this means the business is able to handle more customers without having to invest in growing its technician base. However, automation also forms a critical part of the M&A process and can add real value for private equity by ensuring a quicker return on investment.

While automation for private equity is essentially product–focused and tied to the discussion around standardization which I talked about in my last blog—in other words, ensuring that the platform you’re choosing to build your MSP businesses around has the ability to support and encourage automation—there is a cultural challenge that the industry faces that those funding growth MSPs need to be aware of.

Slow take up on automation

Despite the obvious benefits, automation is not that common in the market, and it’s surprising just how few MSPs are actually leveraging automation within their businesses. Anecdotally, we see that only a small percentage of MSP (perhaps as little as 10%) are actually utilizing automation effectively. 

While many MSPs understand that automation has a direct impact to their bottom line, they can often struggle to implement it. This is because it is left either to one individual tech within the business, or, at most, a very small team (who are doing it on the side of their actual jobs). While these techs may have some of the technical foundations to write the scripting or code needed to integrate automation policies into their business’ day-to-day operations, there is often little business cohesion to get this type of program off the ground in the long-term.

The most successful MSPs have an automation strategy and business process for handling this, and this is something our Automation Nerds frequently cover in the Automation Bootcamps.

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Bridging the skills gap

So, where is this lack of cohesion coming from? The harsh reality is that there is some resistance in the MSP community to automation. And there is likely to always be some resistance as long as we have “non-developers” trying to write the code needed to automate. While some techs can do this, and indeed enjoy this, it’s more often than not seen as a necessary evil rather than a career-driven one. In fact, for many MSP technicians, learning coding can often be very daunting. And with the existing labour and skills gap, coding resources come at a premium for MSPs, so business owners are understandably resistant to hiring this kind of expensive talent.

As a result, in some of the more mature MSPs we’re seeing them develop DevOps strategies within their businesses to map automation and development to business outcomes as part of a way to increase its relevance to the organization and help justify any increased spend.

Plus, there is still a lack of trust in technology for many less–mature MSPs, alongside a feeling that they would rather just do it themselves.

However, most of these challenges can be overcome using N‑able’s Automation Manager, which allows you to bridge the skills and labour gap with a drag-and-drop interface that makes creating automation tasks easy. On top of that, we also provide a repository of scripts and policies that our partners and Nerds have developed to address many of the most common issues users face in our Automation Cookbook (an open version of this which is available to MSPs outside of our customer base and contains just PowerShell scripts is available here).

With so much work still to do in the automation space for many MSPs, this represents a major opportunity in a consolidated world. By having a strong automation policy, a standardized platform, and team able to deliver on it, MSPs whose growth plans are driven by acquisition have an opportunity to dramatically increase their return on investment when buying other businesses that are not so mature on the automation spectrum.

And far from being behind the curve, this is still an area where a lot of the industry is playing catch up, so it’s very much a fertile ground for investors to focus their attention on.

Davide Di Labio is senior director of sales at N‑able