EPISODE 228. Ryan, Matt and Mike from Revenue Rocket discussed with Kevin Lancaster the rapid advancements in AI technology and its significant impact on the managed service provider (MSP) industry. Kevin shared insights from his company’s Channel Program platform, which provides MSPs with data-driven intelligence to optimize their technology stack and financial management. The conversation highlighted the challenges MSPs face in navigating the proliferation of tools and the need to adopt AI-powered solutions to drive operational efficiencies and business value for their customers.

Episode Notes:

Listen to Shoot the Moon on Apple Podcasts or Spotify.

Buy, sell, or grow your tech-enabled services firm with Revenue Rocket.

EPISODE TRANSCRIPT

Mike 0:00Hello, and welcome to this week’s Shoot the Moon podcast. I’m broadcasting live and direct from Revenue Rocket world headquarters in Bloomington, Minnesota. With me today are my partners Ryan Barnett and Matt Lockhart, and our special guest, Kevin Lancaster from The Channel Program. Welcome, guys.

Kevin 0:17Hey, thanks for having me.

Matt 0:19Yeah, it’s great to be here, Mike and Kevin. We are overly joyed—super excited—to have you on. We don’t get too many esteemed guests like yourself; it’s normally just Ryan, Mike, and me. So this is a great one, and I’m going to get the heck out of the way—Ryan, take the lead.

Ryan 0:42I appreciate it. And again, Kevin, thank you so much for joining us today. I’d love to start with the basics: tell us a little about yourself. I know you’ve had a very storied career in the MSP community. I’d love to hear about The Channel Program—why you built it, where you started—let’s start there.

Kevin 1:04First of all, I’m going to have to come on at least once a week for my ego—thank you for that intro. I’ve been fortunate—blessed, fortunate, dumb luck, hard work, what have you—to be in this channel for about 25 years. I built an MSP focused on the public sector, working with a lot of federal agencies. I saw the rise of the channel, got into managed services, and along the way worked with a bunch of different technologies and got into the reseller game.

But it was frustrating: we’d find great technologies, start to scale, win contracts, and then those vendors would get acquired by big companies and we’d have to start over. That led me to build my own cybersecurity company about 10 years ago—ID Agent. So I started on the service provider side, then spun out a software company, grew it, and sold it to Kaseya in the 2019-ish timeframe. I stayed on a couple of years, then had to scratch the entrepreneurial itch again with The Channel Program.

The early concept was to reduce fragmentation and friction in the global channel—really the MSP/MSSP space. There are pockets of MSPs everywhere and thousands of vendors trying to get in. We asked: could we build a two-sided marketplace that connects emerging vendors with MSPs and helps MSPs make better decisions?

As we built the platform, we launched NaviStack—a free tool where an MSP can visualize their technology stack: “Here’s my email security, my security awareness training, my SaaS backup,” etc. We started with an assumption of ~29 core products/services an MSP uses. We were way off. Very quickly we realized there are about 72 different products/services an MSP uses to deliver services or run the business. That was eye-opening.

Today, just under 3,000 MSPs use NaviStack with ~50,000 product additions. We then added contract management—so you never miss a renewal or get stuck on an auto-renewed 3-year you meant to cancel. Most recently (about 3–4 months ago) we enabled integrating bank accounts and credit cards to get a source-of-truth view of actual tech spend—what you’re paying for and forgot to cancel.

So yes, it’s a two-sided marketplace, but it’s geared to help MSPs make better business decisions—financial, technology, and vendor-enablement—especially in the crazy, chaotic age of AI.

Ryan 3:32One thing that jumped out in the report: the number of vendor categories vendors say they cover versus how your MSP users actually categorize them. There’s a big difference between what a vendor claims and what the MSP gets. Was that a big revelation for you too?

Kevin 4:00Yeah. We saw it early—maybe four or five months into NaviStack. MSPs would say, “I’m using this PSA tool, but really just the help desk features. Can we put it in ‘Help Desk’ or ‘CRM’ since it has CRM capability?” Vendors perceive and categorize their product one way, but MSPs use it differently.

We decided to let MSPs categorize products how they see fit. That revealed a broader positioning challenge for vendors. Another theme: what’s a standalone product today often becomes a feature of a broader platform in 18–24 months. Single-product companies pop up; then either they get acquired or platform companies build that capability and absorb it. With the new wave of AI tools making it easier to build, this cycle is accelerating.

Ryan 7:45Right—“today’s category is tomorrow’s feature.” And with agentic AI inside every tool, releases are coming at a pace we’ve never seen. Are MSPs confused by how quickly the industry is evolving? The last six months feels like the last six years.

Kevin 8:18Their heads are spinning—everyone’s are. Eighteen months ago you’d ask ChatGPT to write a blog and get something elementary. Today the same prompt yields much smarter output. That’s a basic example, but advancement has been incredible.

Twelve months ago vendors started building agentic capabilities; they’ve had time to iterate, and now that wave is hitting. It’s not one update a day; it’s ten. Another twenty brand-new tools you’ve never heard of show up, too.

A concrete example: I sold ID Agent (dark web monitoring + security awareness). Years ago, “buy vs. build” skewed toward buy. Today, with tools like Bolt AI, you could build dark web monitoring plus awareness training in a couple of months. What took me years can be replicated in weeks. That changes the vendor calculus and intensifies decision paralysis for MSPs. The next 18 months will be wild.

Ryan 10:34Absolutely—miracles will become commonplace as pace increases. Fascinating time.

Matt 11:12Related to that: the companies that can adopt, choose the right tools, and keep operating will survive. Others will get left behind, right?

Kevin 16:09That’s my big worry. Short term, AI tools are phenomenal for P&L—disruptive to hiring, sure—but margins will rise through automation, predictive workflows, and richer answers with fewer escalations.

But everything gets automated and commoditized. Many MSPs already look/sound the same—same websites, same offers. With platform vendors bundling and driving pricing down, that’s another wave coming. If you’re not leaning into AI now (beyond simple prompting—think predictive cyber tools and operational automation), you’ll miss the wave and it’ll be more painful later. As with any tech revolution, early adopters who get educated win.

Ryan 16:35You mentioned categories earlier—did I hear right there are 72 core product categories now?

Kevin 17:00Right—about 72 core categories an MSP uses across service delivery and running the business (PSA, RMM, QuickBooks, HubSpot, Canva, etc.). On our site overall it’s ~266–270 categories. Some have thousands of product entries; others are obscure with little adoption.

In IT management we started with ~39 categories, dropped to ~23, and if you look at real volume there are ~13 core categories. A year from now I’d guess only 7–8 of those will remain—others will collapse into platform features. It’s moving fast.

Ryan 20:02How many tools does an average MSP actually use?

Kevin 20:26About a year ago it was ~58. With AI proliferation—and MSPs building internal tools—we’re seeing ~66–67 tools in the core operational/service-delivery stack. Many MSPs think they have ~20, then remember acquired customers with legacy tools they must support for 12 months, etc.

At scale it’s dramatic. One PE-backed roll-up with 15–20 acquired MSPs showed us a spreadsheet: 1,300 contracts across 200+ vendors. As you roll up and normalize, sprawl explodes.

Ryan 24:45In consolidation, do you see a favored stack emerge? Do platforms win 80% with a rotating 20% “best of breed”? How are acquirers handling rip-and-replace?

Kevin 25:35It depends. M&A in the space has matured—most know you can’t rip-and-replace overnight without disruption and churn. The better approach is a roadmap to gradually assimilate.

There’s a clear push to platforms (Enable/N-able, ConnectWise, Kaseya, etc.). Roll-ups get endpoint/license scale, gain bargaining power, and drive platform pricing down further. Standardize the bulk on platforms (~80%), then keep 20% for loyal, irreplaceable niche tools and new innovation. It’s great for margin and optimization—but be mindful of long-term pricing trends and over-automation.

Ryan 29:07As MSPs adopt agentic tools inside platforms, what happens to revenue and profit? We often use a “Rule of 45” (3-year avg. growth + EBITDA ≈ 45). What impact are you seeing on margins and staffing?

Kevin 30:29Impact is positive—material margin expansion. We started to see it late ’24 into Q1 ’25. Early workflow-automation tools were powerful but complex; they’re now much easier. New AI tools are ridiculously easy.

Support is increasingly routed through chatbots and email; voice escalations are way down. That means fewer front-line service-desk hires. Short-term: great for margins. Long-term: as price points drift down and parity rises, MSPs must differentiate beyond the stack—become true business partners.

We just hired an MSP ourselves. Three of four proposals looked identical—same pitch, nearly identical per-user pricing. The fourth differentiated on business outcomes. That’s where leaders are going: customer success, optimization, and outcomes—not just “per user per month.”

Ryan 35:19Nailed it. We’ve said being a “traditional MSP” won’t cut it. The role moves into line-of-business applications and business value—empowering growth through AI-driven tech.

Matt 36:28You and I bump into each other at events—lots of M&A activity. How will AI adoption and “beyond the stack” positioning impact M&A? We’re seeing the bar rise: PE-backed firms and strategics want sellers already on this journey.

Kevin 36:30Absolutely. It’s disruptive. On the vendor side, parity and rapid change mean vendors must lean hard into enablement—not just product. Some are even building AI tools to help MSPs market more effectively. If you’re not enabling partners, don’t bother—it’s that competitive.

MSPs should expect the same from vendors and mirror that ethos with customers: be an enabler and advisor, not just a tech supplier. PE now evaluates what used to be “intangibles” as tangible: real customer outcomes and embedded value. You want to be so operationally integrated that when budgets get cut, you’re the one helping decide what to cut—rather than getting cut.

Ryan 41:24For founders looking to sell in 12–18 months: how should they think about stack, margins, and AI adoption to look and perform best a year from now?

Kevin 42:12First, invest the time to understand AI. There’s hype, but the benefits across the stack are real and material. Many owners started 20–25 years ago—it’s hard to relearn, but you must.

Map AI to your stack: identify operational efficiencies and margin opportunities. Educate yourself on generative vs. agentic vs. predictive AI so you can see through marketing fluff and choose wisely.

Buyers are evaluating this already—don’t let AI posture become a lever against your valuation. Be on equal footing: show clear AI-driven efficiencies, stable service delivery, and thoughtful integration (not brittle one-offs).

Ryan 45:59Appreciate it, Kevin. Everyone: check out the Channel Program 2025 IT Management Software Report—great detail from intro to insights. Like Scott Brinker’s martech landscape exploding from hundreds to tens of thousands, stacks across industries are ballooning, and AI will accelerate that. Your data shows best-of-breed often out-reviews platforms in specific categories. The Channel Program can help narrow the field to what’s real, reviewed, and workable—so MSPs can implement, configure, and actually build a business around it. Thanks for supporting the MSP community and for the report.

Kevin 48:08Appreciate you letting us come on and talk about it. We’re committed to helping MSPs make better decisions and the industry grow. Data is our way of doing that, so thank you.

Ryan 48:27Sounds good. Mike, any closing questions?

Matt 48:31Just: thank you, Kevin. While we focused on MSPs, much of what you shared applies to tech-enabled services in general. Even if you’re not an MSP, read the report—it will get you thinking about your tool stack, automation, and the future of your organization.

Kevin 49:23Appreciate it, Matt. Thank you very much.

Mike 49:26Thanks, Matt, Ryan, Kevin—fascinating discussion. Thanks for coming on and sharing your experience with our listeners. With that, we’ll tie a ribbon on this week’s Shoot the Moon podcast.