Let's discuss some of the trends affecting IT services right now, AI, Regulation, Employment, and even the role of the press. To get a unique perspective, let's travel across the Atlantic to hear from UK-based journalists Simon Quick of Computer Weekly and Microscope. There's real value in understanding the differences in the markets. Welcome to the Business of Tech Lounge, the live version of the Business of Tech podcast. It's Wednesday, October 30,
2024, and I'm Dave Sobel. I'll take questions and comments throughout the show, so make sure to put them in chat. If you have a question, we will happily respond to it. Now I want to thank SalesBuilderR Patreon sponsor who support makes this show possible. Focus on your IT Sales workflow with the power of automation and visit them at salesbuilder.com. That's B-U-I-L-D-R dot com. As a reminder, I am distinctly watching the chat for your
questions and comments. Well, Simon Quick is a seasoned journalist with extensive experience covering the IT channel and managed services for Computer Weekly and Microscope, known for his in-depth analysis and keen understanding of the evolving technology landscape, and Simon provides valuable insights into trends, challenges, and strategic shifts within the IT and MSP industries. Simon, welcome to the show. Well, thank you very much for having
me on, Dave. Thank you. I'm so excited to have you and we've known one another all the way. I think all the way back to my MSP days, as well as my time on the vendor side, particularly as we move into the UK. So it's good fun to get back a chance to talk a little bit. Yeah, he didn't like what, yeah. Now, I'm going to kick it off with kind of the topic that we're all talking about, which
is AI, right? And what I thought would be interesting to get a little bit is, is I'd really like to get a sense, as somebody who's covering the space and reporting on all the moves right now, give me a little bit of what you're hearing specifically from the field about when MSPs, IT services, Vars, whatever they call themselves, are really doing with AI in the field. What are some of the stories you're tracking right now? Well, it's been
an interesting, I guess, evolution over the course of this year. If you think about it, it started off with everybody talking about use cases and saying, we really want to sell AI, we want to get involved, we see there's potential for it. You know, the sales pitch to the customer is quite compelling. You get these productivity up lifts, you get these fantastic business insights, but it was almost as if the use cases were not quite there.
And then everybody latched onto co-pilot and said, this is it, you know, this is, this is Microsoft's pushing this. Finally, there's something. But talking to people recently, even that, I don't think has yet had the breakthrough that people were hoping for, because I think this isn't just a question of dropping a little piece of technology or even a big piece of technology, drop it in, press the button and then wow, here we go. This AI is
more of a, I think, a cultural shift. And so two things I think are happening. One, the customers are starting to get used to it, starting to work out, well, what can you actually do? But on the flip side, I think you're seeing the channel at the same time, embrace it as well. So there are more and more partners who are going all in with co-pilot, but using AI and automated tools themselves. I mean, there's that, you know, that classic line, you
drink your own medicine. Why should I buy it from somebody? I don't believe really knows what believes in it themselves. But certainly there's a sense, I think, which is okay. Look, this year has been exciting. It's been good. There's been advances. There's been a lot of knowledge. But next year's going to be the year where we really start to see not just the use cases, but I think this cultural change at the customer level where the customer
understands this is how I use the technology. This is what it can do. I think at the moment it's still pitched far too black and white. The people say this is a fantastic, almost like a silver bullet. This is going to do amazing things. And we've seen the channel do that before. And then customers get frustrated and the backlash on the MSP community. So I
think that's where we're at. Certainly, it's like I say, dual process. The customers are working at house use it, but equally we're seeing more and more inventive adoption of AI within the MSP community. That's been my sense too. And totally aligned with some gardener just in the past couple of days have said that they've put generative AI as sort of like, you know, coming out of the peak of a flated expert in flated expert or coming out of the
trough. And additionally, I just was digging into and we talked a little bit as we were prepping here. There's two reports that I like to put side to side. The first with the information did a whole bunch of coverage showing Microsoft is having a trouble selling it, right? They're having trouble getting co-pilot adoption. Yet Forester just puts out some information saying that we're seeing productivity uplifts. And I'm inclined to believe both sources because they're
both very, you know, they're both well researched and well trusted. So I don't think either one is coming at this wrong. But I think it's exactly showing the, hey, some people are figuring out productivity. I'm not necessarily sure everyone is convinced they're ready to pay for it yet. And I think the real hidden bit that was sort of behind all of this is you've got to do a lot of
prep. Like you say about culture, you've got your data ready, you've got to have some sense of what you're going to use it for, how you're going to use it, the culture of what makes sense, like how people will do it and get people embracing it. Because the, you know, ultimately the interesting about this is, is not, this isn't selling a widget, right? This is selling a augmentative tool that humans need to use to do a good job with it. And I definitely know that
my own experience with the tool, it has made me much more productive. I am a heavy, I'm not a co-pilot user, but I'm a heavy generative AI user for a lot of my stuff. But I also know that I have to check it all. But I have to verify all the stuff that I'm doing with it. What is
allowing me to do is produce more, but I've changed the way that I work. What's interesting is, is I think, I circling that, I like to get your sense, you know, our partners starting to settle into that area of, hey, this is a good consulting opportunity, this is a good advisory opportunity, is that the, those are the conversations you're having and are they using those words? Yeah, yes, very much so, but I think also don't underestimate the vendors here.
Okay, just to give you, I guess, the most topical example because it happened yesterday, but the Cisco partners summit, Cisco, out loud, outlined the fact that it's launching a new partner program in February of 2026. But buried within all of those details was, I think, 80 million, well, at least 60 million dollars, which is going on AI and Abelment for its channel partners.
As a sort of recognition, I think, that they will have a major role in, in that consultancy piece, as you were saying, but they've got to have the skills, they've got to understand it first. So I think, yeah, those, those things are being set up now and being aligned. I think,
there's always that thing where it's almost like one plus one equals two, but it doesn't. So, for instance, someone will say, the, give you an example, the customer has no security skills, the channel will fill the gap, bingo, big opportunities, anything that breaks. Yeah, same with AI, but the problem is that no, the channel, the MSPs can only fill that gap
if they are skilled enough. And so, yeah, there's a lot of activity happening, a lot of talk about Abelment, a lot of vendor partner programs using certifications and specifications to drive that behavior and reward it. And so, again, I think that's why, although there's been hype all year, that's why it still feels like we're at relatively early stages of all of this. Okay, well, we like early stages because that means there's still opportunity here. So,
that's good. You've opened it up because I wanted to ask you to get a little sense of the market. One of the things that I always like to focus on is is reminding everybody that, look, the number one expense line item for most IT services company, the vast majority of them, is people, right? And people remain the number one driver. There was a data set that just came out of CompTIA that I kind of wanted to get your perspective on because they just
really done some specific analysis on the UK market for jobs. And they've projected, noted that there's a projective growth of 1.7% to create about 35,000 new jobs this year. And then by the end of 2023, the net tech employment reached over 2.1 million people, which is about 6.4% of the overall UK workforce. Currently 72% of employers plan to increase staffing and tech roles. And that's an estimated almost 200,000 new jobs since 2018. And the median salary,
annual salary in the UK for tech workers is just shy of 45,000 pounds. So, it's a slightly better job than the average market. Now, I kind of wanted to get your sense of how tight hiring is for IT providers? Are they scrambling for people? Is there a real skills gap? I mean, these feel like they, with growth, there's good jobs there. And they pay well. Give me a little bit of your insight into what's going on from a hiring perspective. I think it's, you've got to
take even for not a step back. And it ties into what is your approach to, you know, a lot of MSPs, particularly the larger ones here have apprenticeship programs. And they are trying to, in a way, fill the skills gap by doing it themselves. So, if you can bring on board the next generation, look after them, you know, train them up. So, there's a lot of investment going on in young people.
There's quite a lot of effort and diversity. So, the idea, how can we bring in people that potentially would never, you know, never saw tech as an appealing career, particularly young girls and women can we bring more of those types of people who are often fantastically, you know, skilled ones there on the books, can we get them involved. And so, we're seeing that level of going on. And then the other trend is probably a greater awareness of the need for re-skilling and
obstacle within the business. So, one of the things I've seen ever since managed services, model emerged is, of course, this constant evolution. And you can never stay still. And so, I think, if you've actually got people sitting there, and so you've done the hard bit, you've hired them, you just need to keep training them and keep them. And again, AI, going back to that, this is where you need to arm them with those skills. So, yeah, it's tough. I'm not going to lie.
But I think that, like you say, the salary is, the reality is that particularly if you get a job and say cybersecurity, you're looking at quite a decent salary here. So, young people are being drawn into those careers. But there's still stereotypes around it that it's quite geeky, quite mal-dominated. And you've got to be a technical whiz. And so, you know, it's going to take time.
But I do think, certainly, the channel is working very, very hard to dispel that. And some of the apprenticeship programs, I've followed some of them and write about some of the efforts there. They're very imaginative, you know, giving people the chance to work in every department and find their feet. So, I think, in many ways, there's lots of efforts. It's not being solved overnight.
But, yeah, there is a gap out there. There's no doubt about it. And if the channel can fill it, then obviously those consultancy budgets go in their direction. So, you've let the nugget out. And I want to highlight this because one of the reasons I love exploring the differences between the markets is I always quip that the markets rhyme,
that they're very similar, but it's the differences that matter. You threw something in there that I want to sort of double-click on and dive into is because you were very casual in the, oh, I talked to lots of organizations that have apprenticeship programs. And you threw it out, like that's very commonplace, which I'm sure it is in the UK. And for my US listeners who must be going, oh, wait a second, that isn't something that is commonplace, that all organizations
immediately have. And there's a real lesson that write in that tidbit to say, like, look, there's a market that is filling this actively by building apprenticeship programs. That is a solution for American companies that are not thinking that way because it isn't commonplace. And you can actually pull that competitive nugget out of that. You know, I'm going to sort of
riff in something. Is there something that you keep looking at the markets? Because you're also a person who studies the markets a little bit and say, like, there's something I wish other people you recognize in their markets, say an American thing or a European thing that you've kind of highlighted is that fits that bit for you that you're like, oh, I always wish more providers did
that than I see in other markets. I think, I think we were always told that the States, particularly with the MSP model that the US was probably two or three years ahead of us and that the UK being a really big market in Europe was probably then ahead of the rest of mainland Europe. I think the key thing is for me, I guess it's just that sometimes you'll hear things and you think, I wish that was spoken about more widely. People are always trying to come up with their
own little catch phrases because they can say I was personally invented that. But sure. The one thing I'm hearing increasingly more and more, it's starting with one person and then another person said it is at the moment the big thing here is outcome as a service. So the idea that a lot of the traditional managed services that were offered are just now almost taken as a given. And so you've got to now focus on the outcome. Don't talk about necessarily
the technology, the customer doesn't want to deal with complexity. So just make it work. And so they're talking about outcomes. But I think it's, I think for me the constant thing is I was talking to somebody earlier today about in distribution saying what you need to do perhaps is amplify your value. And I think that's something I'd say to everybody across the channel is we're not,
the people in the channel aren't necessarily good all the time at amplifying their value. What what is it you do because so much within our world is taken for granted, you know, oh, you do enable when an onboarding. Yeah, but what does that look like? So I think, you know, sometimes it's just a question of, you know, you see it different markets are better perhaps at blowing their trumpets a bit more and maybe the Brits are not very good at that. But I think it's something
be proud of what you do, I think. And so yeah, as we get more and more and more, complex solutions being delivered and outcome as a service, I think the MSP community here should be very proud of the service it delivers. I know 100% echo that and I'll self-a-basically sort of tease it go, you mean Americans to bold and brass sometimes. I almost epitomize that exact stereotype sometimes. And it's interesting because I've heard that thematic idea
of there being differences between the time frame in the markets. And I think that's missing a subtlety that is a little bit more about cultural buying techniques. What I've always generally observed is as Americans are really fast to throw a credit card down and buy things, but that doesn't necessarily mean long-term follow-through. Whereas, you know, a British audience, if I was, you know, again, broad strokes, is more careful on that initial investment, but also much more
committed to a long-term relationship. I've done the due diligence to commit to that, which means a longer-term relationship, which in theory would reduce churn. By the way, while we're talking listeners, you know, if you've got a question or a comment, throw it in here, Simon and I would love to hear from you. Because I'm going to throw some stats for everybody. Again, another one I was digging into because people don't notice this at the same time. The UK is the third largest venture
capital market globally. And in particular, Fintech, software, green tech, and deep tech sectors are all specific areas. I've been 72 billion pounds raised between 2021 and 2023. And it's share of global VC investment increased from 3.4 to 5.8 percent. And in Fintech, specifically, it's 11.3 percent of global investment. So there's areas where, you know, the markets do, you know, keep to one another. And I think that it's important, you know, particularly when we talk about
SaaS, things move a lot faster because they are global rollouts. Now, we've got, you know, specific holdouts where technology does need to be both localized and you have to deal with the regulatory concerns, you know, particularly across both the UK and the EU. Where Americans will take
abuse on anything. But, you know, but that dynamic changes anything. Are there, particularly, the area I wanted to ask you about as well is kind of on the regulation front because I mean, I talk all the time on the show, you know, the America is sort of the wild west in terms of tech. I mean, you know, the US at the federal level continues to have essentially zero laws that apply
to technology in any way. Whereas both the EU and by extension to UK either laws that were then, you know, pre-existing pre-Brexit or also ones that have rolled out since has much more of a technology landscape market. Like are there particular regulatory trends that you're watching really closely and their impact on the channel? Yeah, I think what you said there. I think the interesting thing is, and I didn't vote for Brexit. So I'm just, you know, that's a political thing.
I think we can all just say you have to live with it. So regardless of the choice. But the interesting thing was that one of the obviously the aims of it was that we sort of cut our ties with Europe, but the reality of it is that yeah, the big trends from a regulation point of view are still coming from the EU because there's very, very few, particularly if you're an ambitious MSP, you want to sell, even selling in Ireland, you want to sell abroad, you want to support customers
where the customers are. So in that sense, to be honest with you, although I say GDPR and then we might have our own flavor of it, the big things are coming out of the EU. Still very, very much apply here and they are still, you know, to be frank, their triggers for the channel to use in their pitches. So yeah, it's remained a very highly regulated market. Is that a, is that a proving to be kind of opportunity? Is it proving to be challenging? Or is it
just the typical mix of both? Like what's it doing to the provider market? It's, well, it is both, but I think it's more of an opportunity because I think give an example, take the Windows 10 end of life support in years time. In a sense, and we have a, there's a switch off here, it's just been, it was delayed, but we were meant to have a big telecom change here when they switched off the PTSD essence network and that got delayed. But things like that in a sense that the channel love them
because it's an opportunity to go and talk to customers. So again, the regulations, I mean, the challenge is on one level, I can go to a customer and I can say, hey, you ready for whatever it is missed to or do or are you on top of this? And I can rattle the cage a bit and get them thinking, oh, we've got to invest. But as a flip of that is, you've got to be able to do it then because you've got to be able to support that customer with regulation and you've got to help
them understand what they are, what they need to do. So yes, it's an opportunity, but you've really got to have invested yourself in making sure you can deliver it because it's not for the faint heart. You can't just go in, you've got to really understand. So yes and no. And what you tend to get, I think, a specialist, it's a bit like our key verticals like the public sector here, health education, defense, it's pretty much the same characters, the same companies that
work really, really hard. They have fantastic rotations and that's their skill. And so I think if you are going to be somebody that leans on compliance and regulations heavily, you've got to invest. Yeah, well, that makes perfect sense. I want to bring up one of the things that I always have a little bit of fun for listeners is, you know, I love having journalists and analysts on the show because I get to sort of the opportunity of like, hey, what's your thing that's top of mind?
And as we were talking about it, the interesting thing you brought up, which I wanted to hear your thoughts on, what kind of the role of the press, particularly as you think about it from a channel perspective, how do you view the role of the press, particularly as you think about like channel, you know, the delivery of value to the channel, what do you think is important about
that role and what's evolving and changing about it? It's changed significantly because if you think, but there was a time, you know, and you know, you mentioned at the beginning, we go back quite a way and I go back to when the internet was fairly infant. But the point about it is that there was a time when we told you, if you were a part that we told you about the new part,
the program, we told you about how they were changing your rebates, all of that stuff. Now, if I was telling somebody that now, I'd be really concerned about their relationship with their supply. Sure. You still report on it, but you're trying to look for the trends. So you're trying to, I guess where it's changed is you're trying to go through and say, okay, what does AI mean? Is it time to move on it? If it is, what does good, good practice look like? And so you try and secure
interviews with market leaders, you try and cover the main developments. And so you're looking for themes, I think, you know, somebody like in one part of the market can do something. And then two or three weeks later, somebody else does something. And you, and they might not know each other at all, but you start to think, hold on something is happening. And I often think that's also the role of the press, which is to try and identify and say, look, something is changing. It's both
opportunity and threat. You know, threat isn't necessarily in the sense of, I'll be careful, someone's going to put you out of business. I think they understand this competitive market. It's more about, I give an example a few years ago, everyone was talking about big data. And it never quite happened in the way that everyone said it would. So the threat, the threat there was, if you go off and you, and you, I don't know, you put a lot of time and money and you have a three
or four person team, it's your big data team. And you say, right, we're ready now. Let's go out and bring in significant revenues. And they never materialize. That's more of the threat. So you're trying to understand, but I think at the same time, the channel has professionalized itself
and awful lot more. And it's become a business that is a lot more savvy. So you're dealing with people who are not just out to make a quick buck, you know, like you were saying about the relationship, the relationship that they're looking for with the customer is almost in a similar way that sometimes they're looking for that with us. So it's trying to give people a big picture where's it going? What should you be doing? Where should you be investing time and money?
You know, so it's really interesting that you say it that way because for thematically, it's kind of actually aligned exactly with the trend of what MSPs or an IT services provider is focused on. You brought it up yourself. The idea of focusing on business outcomes, it's really interesting to think about the how the trend of both the press has aligned with
their customers on this and you've sort of set it away. I hadn't thought of before, which if the press's value is about the trends and the direction much more than the reporting, that completely aligns with what the value that the providers are delivering on. And it definitely aligns with some of the data that we're seeing in terms of the number of vendor relationships that any particular solution provider will engage with because that number has
actually started going down. And then we're finding vendor after vendor is reporting to me, all of the reports where they said, hey, we've started seeing consolidation of vendor relationships, less vendor relationships. The value of the vendor has started to diminish. Relationally, I think that the journalists and analysts are reacting to that and savvy ones,
like you, are saying, hey, I need to spend more of my time on the trends. So as we sort of wrap up here a little bit, I kind of want to get a little bit of the look, we both know that, you know, oftentimes you only have so many hours in the day and you're trying to track a lot of different stories and trends. What's the one that you kind of are intrigued by but haven't had enough time to cover in terms of trends that you're sort of keeping an eye on?
I think, I think there's things, sorry, I think there's things you try to follow, which you know are going to be important. I give you an example like sustainability. Okay, just know that that's important beyond beyond the MSP community. You know, this is like our planet we're talking about. And so I think you try and keep an eye on that. I mentioned earlier the apprenticeship stuff. I'm quite keen to make sure, obviously, you and I
spend an awful lot of time, you in the channel me observing it. I care about the channel. I want the channel to last forever. So I try and just, you want to see those efforts being made, that the channel is securing its own future. It's making wise decisions. It's investing for its own future development. And so, you know, you can't always write about everything that's going on. Some of it, you know, it's what I guess some people call soft news.
So you think, well, I let that one go. But certainly when I do get the chance, you know, you might be able to sit down with somebody and say, what do you do? It's things like even mental health, you know, it became a big issue in the UK channel during COVID because a lot of the people were living and working alone. It's just trying to make sure that we remember that this is a community.
You know, yes, there's people selling and there's money that has to be made, but it's also a community of people that have an ability to do good beyond just, you know, selling you a firewall and a roof set. So I think that's what I try and keep an eye on. Oh, you know what? I cannot end it on more positive note than that one. And I would be remiss the listeners if I didn't highlight. There's yet another person chiming in with sustainability
on that. So I mean, this has been awful lot of fun. Really appreciate you joining me for this. I look forward to a few more conversations ongoing as we continue rocking a roller with this. Oh, thanks for having me. Thank you. And I also want to thank sales builder, our Patreon sponsor, who support makes the show possible. Focus on your IT sales workflow with the power of automation and visit them at salesbuilder.com. That's buildr.com. And vendors, you too can get your name
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