Hat Tip to Rich Freeman in Channelholic – “Why You Hate Private Equity”. In a recent discussion, Syncro CEO Michael George highlighted the growing disdain among managed service providers for private equity firms, primarily due to the significant debts these firms have imposed on the vendors they own. George noted that once, around 10 to 15 years ago, private equity was welcomed as it fueled innovation and growth in the managed services sector, but that has drastically changed. Today, rising interest rates have shifted the financial landscape, making debt servicing a priority over innovation. For instance, ConnectWise reportedly carries $1.7 billion in debt, while Kaseya has taken on $4 billion, necessitating substantial cash flow just to manage these obligations. As a result, the funds that could have driven innovation in these companies are now being diverted to pay off debts, leading to frustration among their customer base.
Tech Bullion with a discussion of the significant evolution of IT outsourcing in the age of artificial intelligence and automation. With automation tools now able to handle tasks such as data analysis and security monitoring more efficiently than human teams, businesses are challenged to remain competitive without falling behind. As companies shift from traditional outsourcing models to AI-driven approaches, they increasingly rely on automation to streamline operations and improve efficiency. For instance, robotic process automation is being utilized for data entry and system monitoring, significantly reducing errors and enhancing productivity. The article emphasizes that organizations leveraging AI and automation can not only save costs but also improve scalability and flexibility in their operations, positioning themselves for success.
Friend of the Pod Mike Psenka writes in ChannelE2E about A new framework called REAL is being introduced for evaluating artificial intelligence initiatives in managed service provider operations. This framework emphasizes four crucial metrics: return on investment, acceptable error rate, auditability of decisions, and latency of response times. The article highlights that not all artificial intelligence projects are suitable for businesses, with some potentially wasting time and others failing to meet client expectations. It stresses the importance of having clear metrics to assess the value and reliability of AI systems, particularly as vendors increasingly promote AI capabilities. According to the article, understanding these factors can help providers discern which technologies will truly enhance efficiency and client satisfaction while avoiding the pitfalls of overhyped solutions.
Why do we care?
So here are the questions you’ve got to ask yourself heading into the weekend:
- If your key vendors are servicing billions in debt, what’s being cut from innovation—and how does that hit your stack?
- As outsourcing shifts from people to automation, are you set up to compete on efficiency, or are you still selling labor hours dressed up as managed services?
- When vendors pitch you AI, are you measuring it against REAL metrics—return, error rate, auditability, latency—or are you buying the hype?
- And ultimately, are you making choices based on where the money actually flows, or just on who’s got the flashiest story?
Because in this environment, the winners aren’t the ones who adopt everything—they’re the ones who ask the right questions before moving.