Pax8 on marketplace innovation, new generation buyers and MSPs with AI

The future of IT buying is all in the marketplace, according to Pax8 CVP of community and ecosystems, Rob Rae. 

He was recently in town to meet with local MSPs and explore marketplace innovation, Gen Z’s buying habits, and the impact of AI, with the Beyond user conference just around the corner in June.

“The MSP market is just absolutely thriving in Australia,” Rae said. “The future of IT buying is the marketplace. The idea that we can leverage technology, AI and create new platforms for not only for our partners to engage with us or the vendors that we work with, but also for end users to engage with partners. 

From a technology standpoint, Rae pointed out that marketplaces were quickly innovating, compared to traditional distribution.

“As the risks and challenges around cyber security continue to grow, the end user adoption of MSPs, especially in the SMB world, they’re starting to understand these cyber security risks are critical,” he said. 

“They’re starting to spend and engage more with MSPs and buy better technologies.”

Not only are SMBs ramping up MSP engagement, but also the ‘buyer journey’ has experienced change, mainly due to the pandemic, which greatly influenced purchasing behaviour.

According to Rae, two reasons why the buyer journey was changing was that a lot of companies found digital platforms, and marketplaces and were able to invest in that certain way in which people would consume. 

“One reason why the buyer journey is changing is because we just all got used to it and are comfortable with it. The platforms got better for us to be able to do it,” Rae said. “The other reason is that Gen Z grew up in that era. They have a plethora of information at their fingertips, so they tend to do a lot of their own research before they’ll actually engage with an MSP.” 

Last year, Pax8 launched storefront capabilities. According to Pax8 president Nick Heddy partners who publish a storefront are growing 40 per cent faster than its baseline of partners.

“MSPs want to bundle multiple vendors together and wrap their own services around it. They want to buy, sell, bundle and resell,” Heddy said. “All these use cases are organically emerging and there are ecosystems forming around it, and MSPs are wanting to take our marketplace into other ecosystems such as ConnectWise.”

Heddy said the marketplace was mapping out the buying journey from vendor through to partner and customer. 

“We’re even seeing more partner-to-partner interaction than we’ve ever seen before,” Heddy said. 

Heddy also reflected on changing buyer behaviour particularly as millennial buyers are coming into decision making/ purchasing positions.

“B2B buyers are behaving a lot more like B2C and MSPs need to engage with them in that way,” he said.

“Pax8 is all in on that buying behaviour and in meeting customers and partners, where they are assessing what they want to do next, and then helping them take their unique next step.

“This is how we are a marketplace where people buy, sell, manage, and we are a platform where we extend that capability into any ecosystem, meeting any partner and customer where they’re at, and then helping them consume technology like they should.”

Even in the B2B space, organisations were making technology decisions before they talk to an MSP, which Rae said was dangerous because it removes the experts from the process.”

“It’s dangerous because in essence, you’re listening to what the vendors are doing and they are starting to sell directly to those end users, rather than through a local managed service provider. For SMBs, it’s a massive risk and also a risk for MSPs,” Rae said. 

Marketplace momentum

This is where marketplaces are particularly gaining ground in having the ability to make product recommendations, assess user feedback and offer comparable products. 

“It gives the end user the ability to do a lot of their own research, but it’s all being done through the MSP, through their marketplace or their storefront, and vice versa,” he said.

“MSPs have the ability to shop for potentially better products, vendors, even new technology via our marketplace, instead of having to go to a trade show or having to talk to their peers or waiting for that vendor to find them,” he said. 

As a marketplace, Rae said it harbors an immense amount of data in who’s transacting, how they’re transacting, what they’re buying, margins and the opportunity to tap into renewals. 

“Nobody’s leveraging that data to enhance MSP business,” Rae said. “Renewals is another hot area of the market for MSPs. How do they track them and stay on top of it all with multiple customer environments, licenses and product points?

Rae said Pax8 has been very bullish on AI.

“We have the ability to take that information and use that to create a better experience for the MSP and create more opportunities,” he said. 

“I think a lot of the traditional distributors that are starting to get on this whole marketplace bandwagon, are not quite getting there, because they’re still used to the very traditional ways of dealing with the whole MSP community.”

Rae indicated some of the advantages of Pax8 is its ability to be flexible and pounce on trends developing in the market, staying ahead of the curve. The power of AI has also leaned into its ability to be creative beyond selling other vendor’s wares. 

“With the technology that’s available, and the fact that we’re smaller and nimble, allows us the ability to flex, change and move in certain directions very quickly. Those are two very significant advantages that we have.”

Some of the key topics that will be discussed during Beyond, Rae said, was looking into the past 12 months and trends in the market from both a technology and MSP lens, particularly looking into what an MSP will look like in the next couple of years. 

Partners can also expect to see new marketplace features and benefits that lean into the change of the buyer’s journey.

“How is AI going to fit into our space? What are some of the advantages? What are the things that we should be looking at today in order to be prepared for this future? And more importantly, how does it fit within the channel, and how are we all going to make money at it?” Rae said. 

“These are critical pieces that we should be talking about, because it’s one thing to get excited about technology, but it is another to figure out how we’re going to make money out of it, and the appetite for the ultimate end user.”

Rae also touched on the importance of staying open-minded and adaptable to technology advancements within both the AI and cyber security realms. 

“I think this probably one of the core responsibilities of a managed service provider and the vendors in this space, is we have to keep an open mind,” Rae said. 

“We’ve got to keep an eye on it too, and be able to pivot and move in certain directions as these things change, grow and figure out these opportunities.

“Pax8’s going to lead the charge on this. I believe that we are the ones that are innovating faster and we’re a little more adventurous when it comes to the design, plan and thinking about where things are going.”

Emerging business models

New partner types are also emerging, Heddy said moving beyond break-fix and cloud services models.

“It’s something new and different. They’re challenging us on roles and how we define a partner, customer and a vendor,” he said. 

“There are ISVs who want to buy Microsoft or AWS to build their product on. They then want to act like a customer in that sense, and want to publish like they are a vendor and sell to other customers and partners. In that instance, we need to think about how we enable somebody to act like a partner, vendor and a customer all at the same time. 

“AI is going to change things in all industries. No matter what stage of a partner you are at, whether you’re brand new, whether you’re in the middle and need to evolve and form differentiation, or at that exit moment, AI can help with that.”

Navigating through the various AI tech waves, Heddy said was mostly about change management rather than being a tech problem. 

As Pax8 is building up its AI Center of Excellence, the aim is helping partners understand where AI can have the biggest impact in their business, because it’s different for everybody, Heddy said. 

“People have a misconception around AI. They tend to treat it like a better search capability, help rewrite emails and summarise meetings – that’s the most common use, but you can set it up to solve unique problems that it has never seen before.

“But you need to understand how to approach that problem, how to frame up, when it should be hitting large language models, when it should be hitting your database, what priority of context it should be using in its responses? It is a new methodology.” 

Heddy said innovation will be commencing within the SMB segment, and it will drive up into mid-market and enterprise.

“I feel like there are going to be unique opportunities for partners to monetise this,” he said. 

“We’re going to help partners transform their own business and find new revenue streams that they had never dreamed of before.”