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Episode #38: Why Mastering Automation Will Determine Which MSPs Succeed Or Disappear

In today’s podcast we interview Taly Dunevich – Vice President of Global Business Development and Alliances at Ayehu.

According to MarketsAndMarkets, “The managed services market is expected to grow from over $180 billion in 2018 to $282.0 billion by 2023, a Compound Annual Growth Rate of 9.3%.” Yet despite the rosy forecast, Gartner is advising MSPs to make an investment in automation now in order to reap profitable & sustainable benefits down the road. Otherwise, they’ll have to face an exit from the market “…with a strong focus on damage limitation.” It would seem the labor arbitrage game MSPs leveraged for so many years has played itself out, and now the game has changed.

To better understand how to master the new MSP game, we turn to Taly Dunevich, VP of Global Business Development and Alliances at Ayehu. Her relationships with key executives at almost every major MSP, provides her with a unique perspective on the challenges they face, and what they must do to survive. Taly shares numerous key insights with us, including why the low-cost labor model that drove growth for so many MSPs is being pushed aside to make way for higher-cost services that expand an MSP’s footprint with their client; why MSPs who become experts in automation will translate that expertise into more services with their clients (and greater market share overall); and what the cost reduction “magic number” is that CIO’s are expecting from MSP’s today.

Read Full Transcript

Guy Nadivi: Welcome, everyone. My name is Guy Nadivi and I’m the host of Intelligent Automation Radio. Our guest on today’s episode is Taly Dunevich, Vice President of Global Business Development and Alliances at Ayehu, the company we both worked for that sponsors this podcast.

Guy Nadivi: Taly, as you might’ve guessed from her title is in charge of the partner program here at Ayehu, which has been quite successful and as such, she has a lot of expertise about the MSP market, and the impact that automation and artificial intelligence are having on the MSP landscape. Taly is also an executive member in a number of Silicon Valley philanthropic and networking organizations, and last but not least, she’s a three-time Israel windsurfing champion, as well as a bronze medalist in the world wind surfing championships.

Guy Nadivi: With this episode of Intelligent Automation Radio, we’re inaugurating a new series within the podcast called “Women in Tech”, which will profile some of the outstanding women helping to shape the technology industry.

Guy Nadivi: As everyone knows, there’s a bit of a gender disparity in the tech field, but there are many women whose success can serve as a model and inspiration to other women, and we’ll be showcasing them from time to time. We couldn’t think of anyone we wanted to feature first more than Taly Dunevich, and we’re very happy to have her on the podcast. Taly, welcome to Intelligent Automation Radio.

Taly Dunevich: Hi, Guy, and thank you so much for this warm introduction. Thank you. Happy to be here.

Guy Nadivi: Let’s talk a bit about the evolution of IT outsourcing. In the ’60s and ’70s, there was something called timesharing service bureaus that sold mainframe access to organizations, kind of the way a timeshare resort in Maui might sell someone access to a couple of weeks every year at one of their condos. Then in 1989, Kodak outsourced management of their data center to IBM, and that’s considered by a lot of industry experts to be the dawn of the modern outsourcing era.

Guy Nadivi: Then fast forward a little bit to the year 2000. When that approached so did the Y2K scare, which caused a lot of organizations to outsource remediation of their software programs, which were mostly comprised of COBOL code. After that we saw the growth of something called Application Service Providers, who eventually evolved into Managed Service Providers. Many firms, particularly the MSPs in India, saw explosive growth during this period, because they were able to parlay their success at things like Y2K remediation into other service offerings that were very competitively priced.

Guy Nadivi: A lot of organizations took advantage of that attractive lower labor cost from offshore outsourcing to run their IT operations leaner. And that brings us to our present situation today, where automation, artificial intelligence, and other digitally transformative technologies are exerting further economic pressure on the outsourcing model. Taly, with that in mind, do you see a shift in the kinds of services organizations are looking for from MSPs today?

Taly Dunevich: First, it was very interesting to hear how outsourcing evolved since the ’60s. I was not aware of all the details, so thank you for sharing that. Yes, definitely, we see a big shift in the type of services the enterprise of today is asking their MSPs to provide. After the evolution that you have described, there is more evolution that has taken place in the past few years and will be taking place right now towards the next coming years.

Taly Dunevich: As you said, traditionally the CIO was looking for the managed services to really manage the same mess for less for them. They were looking at the large MSPs, mostly offshore, for cheap labor. The MSPs traditionally focused primarily on remote monitoring, security, network management, and other mundane daily routine IT tasks that the CIO would rather outsource and have somebody else do that for much less, and even with more expertise.

Taly Dunevich: But that has shifted a little bit in the past few years since cloud management services became a new need by the enterprises, and migration to a public cloud or private cloud has become another need. That’s really driving the MSP business. There is an expected growth of about $100 billion in this market forecasted for the next few years. This is mainly driven by this growing demand for the cloud-based managed services.

Taly Dunevich: This is kind of where the set of services that the CIO is now looking for their MSPs to provide is becoming a bit different than it was. It’s no longer just cheap labor offshore. It’s not just a body shop anymore. They’re looking for more advanced capabilities from their MSPs. I would say that that presents huge opportunities for MSPs who will be doing that well to take on this growth in the market of the next $1 billion and take a share in this huge growth coming up in the next few years.

Taly Dunevich: If I want to really summarize what the CIO is looking for today to help them set up for the future, they want their MSPs to be really their strategic advisors. So really help them design and implement an optimal IT environment from the perspective of cost, performance, and business innovation. They really want the MSP to be able to provide this strategic advisory role in doing all of that in optimizing their environment.

Taly Dunevich: What it requires from the MSP is to really reconfigure, and we already see that in the market, they are reconfiguring their operations, their services, and even the composition of their staff. It’s no longer cheap labor, doing only the mundane simple task, but it’s really shifting to higher level people with more expertise in different areas to fulfill those growing needs of being strategic advisors. MSPs today are really required to be technology simplifiers if I may.

Taly Dunevich: They really help IT leaders to analyze the tools they have in their environment, identify what is necessary, what is not, what technology needs to be replaced maybe with something else, and everything is moving towards more of a central visibility from monitoring to analytics to remediation, everything under one single pane of glass to really improve the business outcomes and the IT outcomes. This is one main area, to simplify the technology.

Taly Dunevich: CIOs today are really expecting their MSPs to be automation experts. Automation is becoming a very strategic part of any IT operation, because it allows the IT teams to work smarter, faster, and also be leaner and not rely so much on humans, but rely more and more on automation. Really being able to determine which solutions to use for each use cases. That requires a whole investigation and the whole domain knowledge that the CIO cannot do in every area in their IT operations.

Taly Dunevich: They need an expert, an automation expert that will know for their use case what are the best solutions to implement in their environment. The MSP that can really develop this credibility with the CIO, and help and select and optimize AI machine learning tools, process automation technology, those MSPs that can build this credibility for the CIO will win the market, will win more market share and more services with more clients.

Taly Dunevich: Finally, maybe the last point is really the CIO today is looking for the MSP to be innovation enablers. What I mean by that is really once the MSP really free up time and resources from the IT organization, that can help the IT leaders to really focus on aligning with the business, which was the initial goal. The IT niche should serve the business and to align with the business. If the MSP can really deliver the expertise in strategic areas like cloud orchestration, intelligent automation, and platform modernization, then it really gives the CIO the freedom and the foundation to really help the business win more market share, which is the final end goal for the MSPs. This is where the MSP job kind of shifting towards.

Guy Nadivi: Okay, let’s drill down a bit on that. Given that CIOs are looking for more advanced capabilities from their MSPs, as you said, how have you seen MSPs transform themselves to address the market’s needs for those kinds of services?

Taly Dunevich: Oh, that’s a great question. We have seen a few trends in the past few years, not all of them were very successful. Let me name one that was not very successful. Some MSPs who understood the need for more automation, they started to develop their own tools and their own software for automation.

Taly Dunevich: The reason it wasn’t very successful, two main things. One, they didn’t really present any innovation. It was more of scripting of automation processes packaged a little differently. This was in most cases, and that really was not bringing anything innovative or more efficiencies, it was still hiring many people to write script and sit, you know, behind the solution, and deliver still managed services and not automation solution. This was the first reason why it wasn’t very successful.

Taly Dunevich: The second reason, and this is a very big one, is that it presented for their customers a vendor lock, and customers are smart today. They understand if they connect themselves to their MSP solution, they’re kind of tied to work with this MSP for a long-term, because if they want to switch to a different MSP and they want to have this freedom, right? They want to be able to negotiate a contract and compare between MSPs, but if they are kind of locked to automating everything in their IT operations with one MSP, then to transition to a different one, it’s like building everything from scratch all over again. That’s a big, big challenge. Customers don’t want vendor lock.

Taly Dunevich: The new trend is really not to build your own solution, so this trend is kind of stopped, and even the companies who have built their own solutions, they’re looking to work with off the shelf automation solutions to allow this non-vendor lock approach and to allow, of course, more innovation and automation.

Taly Dunevich: Also they are not really experts in building software. They’re really, really great in providing services, but not necessarily the best in building, you know, smart software because it’s not in their DNA. It’s hard to change DNA overnight. The ones that don’t lock their vendors are smarter, stronger, and allow this freedom.

Taly Dunevich: Really the best of breed solutions were the experts in software. Today MSPs are looking to work with them. Another misperception that I see is … When I speak with MSPs daily, especially with new ones – the new ones for me, not new ones in the market – sometimes they’re trying to find one solution that can provide everything end to end from monitoring to diagnostic tools to ITSM to analytic prediction, including automation, remediation, and taking actions. They want everything to be in one solution.

Taly Dunevich: This is another thing that I think MSPs today are educating themselves and understand that there is no one tool that can do everything in the best manner. I would even say that there is no one tool that can do two things in the best manner. It’s like trying to mesh together a washer and dryer, or a shampoo and conditioner. You would never get the best shampoo or the best conditioner if you put them together, or washer and dryer, right?

Taly Dunevich: If you want to have the best solution, get the best shampoo and the best conditioner, but separate them. This is exactly the same in your IT environment. The best in class approach today that many MSPs are adopting and all CIO’s are kind of moving towards, sorry about that, is really to integrate the best breed solutions. So really finding what are the best solution for each type of application or system that you need, and integrate them together. The MSPs’ job is really to be the advisor, to architect the environment, and to be the experts on deploying those. This is the expertise and really adding value by increased efficiencies among their enterprises.

Taly Dunevich: I hope it answered that.

Guy Nadivi: Yeah. Yeah. Very interesting. Gartner recently wrote that quote, “As competition heightens service providers will be forced to aggressively roll automation out across their client base and service lines because if an existing provider is slow in implementing automation, this will leave that account quite vulnerable to competition, proposing a strong artificial intelligence proposition with the possibility of a vendor switch.” Taly, I’m curious, how concerned are MSPs about losing customers to other MSPs they compete with, who are rolling out automation and AI faster than they are?

Taly Dunevich: Well, another great question. I would say that they are very concerned. The MSPs who will win market share are the ones that are most innovative today and really can show track record of bringing down costs with automation and with efficiencies. There is a big concern among MSPs who are lagging behind to catch up, to play catch up.

Taly Dunevich: I speak with some who are a little lagging, and we’re trying to educate them as fast as we can and help them ramp up and build their own track record. There are some who have not adopted automation yet and are not concerned. I would say for those, you know, they should be even more concerned because they are not concerned, and really run fast and educate themselves with you know, the different Gartner analytic reviews that are out there.

Guy Nadivi: Now staying with Gartner for a moment, they’re also telling their customers who purchase outsourcing services that they should expect their MSP vendor to start automating their service offerings, and begin sharing back to the client the benefits of automation in the form of reduced charges, and if an MSP doesn’t do that, Gartner is essentially telling sourcing executives to go find another MSP that does. How much pressure of this nature are you seeing MSP customers placing on their vendors?

Taly Dunevich: Oh, well, this is huge today. It’s even more than just pressure. It became a basic demand. A CIO today who is trying to get more innovation, cost reduction, and automation from their MSP, if the MSP does not have it, they would not really ask and demand. They don’t want to wait until the MSP will get those capabilities. They will just walk away and go to an MSP that has already this experience and can show track record and they can be up and running in months instead of years.

Taly Dunevich: No one has time to wait today. It became a basic demand, and moreover, the expectation today from the CIO is for the MSP to reduce the cost of operations in about 30% over three years. This is the magic number. Reduce your costs in 30%, and the MSP cannot do that today in the traditional ways. They cannot reduce 30% cost without heavily invest in automation, and bring up their own operational efficiencies. This is what we’re seeing today.

Guy Nadivi: I’ve read that one of the concerns holding back some MSPs from moving more aggressively with automation and AI, is their fear of cannibalizing their revenue base. In other words, because automation and AI are proving cost-effective, it forces MSPs who roll out these technologies to charge less for their offerings at the expense of their labor-based services. How are you seeing fear of cannibalization shaping MSP decisions about automation and AI?

Taly Dunevich: That’s a great question. We’ve heard cannibalization concerns three years back, maybe even a few, two years back. But in the past year, even more than that, you no longer hear any concerns around cannibalizing your own workforce. Traditionally, business models and the pricing models of MSPs were around charging per seat, it was, a man shop [body shop].

Taly Dunevich: But today pricing models are changing. You’re no longer concerned about not charging for seats or per people. You’re actually introducing different pricing models where you actually expand your business, not with low cost labor but with high cost labor. What I mean by that is that you are charging your customers for strategic advisors, for automation experts, for top-notch solution architects. You’re completely … You have a different business offering as an MSP today that at the end of the day is much bigger then where you started when you only sold, you know, hundred peoples, you know, sitting in the NOC or around service desk. This is how it changes.

Guy Nadivi: Taly, you’re helping us inaugurate our podcast’s “Women in Tech” series and I’m sure that many of our female listeners would love to hear from you about what your experience has been like as a woman and an executive in the technology field.

Taly Dunevich: Oh, I’m very glad you’re asking me something about that because I’m very involved in different organizations. One of them is a Hipower women organization in which we are women leaders helping each other succeed more in our careers, in the workplace, and I’m a big advocate for women, especially driving up to executive positions.

Taly Dunevich: To share from my own personal experience, usually I’m the only woman in the room. For me, it’s not a big problem. I know for some other women it may be. You said in the beginning, I was a wind surfer and I was always part of a team of guys, wind surfers and I was always the only woman, so I’m kind of used to that. This is how I grew up. I don’t have an issue with that, but typically if I’m sitting in a room or in a Zoom conference, there are 10 men and I’m the only woman and it shouldn’t be this way. I think women have more room to take in those rooms and conferences.

Taly Dunevich: Let me share with you a funny story that I had. I flew in, I won’t mention where to, I flew with the head of our presale team to one of our partners, let’s say, in Asia. We sat around the table, again, it was 10 men, more than 10 men even, and the head of our presales, and we started to have a conversation and every time they asked the questions or in the beginning they kind of looked only at him.

Taly Dunevich: They didn’t look at me, and they asked me different questions and every time he was pointing with his hand towards me and saying, “Hey, you should ask her, she’s the boss here” and it was like that for, you know, a few times. He was pointing at me and then they kind of shifted their eyes looking at me and I’ve answered and you know, I made them feel comfortable speaking with me. I’m not saying it’s happened a lot this incident, but this was a funny thing and we overcame it in the first few minutes of this meeting and everything was great afterwards and they’re approaching only me from back then. It has been … It was two years ago and everything is good.

Taly Dunevich: But this is something that you can see how millions of business leaders are kind of shifting as you’re speaking with them, and I love to see this change and I love to be part of this change and I’m inviting more women to be a part of this change.

Guy Nadivi: Your story has gotten me curious. Are there any advantages to being a woman in the technology field?

Taly Dunevich :Yes. I believe women have advantages, especially in this field and especially in executive positions. The first reason is we stand out. As I said, I’m the only woman in the room, obviously physically, visually I’m standing out.

Taly Dunevich: Another thing about women, because we are kind of compensating and trying to level the field as they say, we tend to work harder, we’re more efficient. We’re taking charge of a situation, and I think that when we are taking charge, first, it’s a big pleasure. I love doing that. Men love to work with strong women. We just get things done and women are great closers and there is a big advantage in bringing more women to high positions and not just to be a developer, which we see more and more of, which is also great. I would say, and I would encourage women and I’m willing to help women all over the world, to take on a leadership position and let’s do it.

Guy Nadivi: Interesting. It’s great to hear that perspective.

Taly Dunevich: Yeah.

Guy Nadivi: Taly, for the MSP executives listening in today, what are the biggest must-have pieces of advice you’d like them to take away from our discussion with regards to making automation a major delivery channel for their services?

Taly Dunevich: Wow. That’s a great question. I would say the biggest piece of advice that I can give them is … And I think some of them may know some of it. First, don’t try to invent the wheel yourself. You don’t need to build your own solutions. There is a whole creative world of startups and companies who are building great solutions. Just choose the best of breed, educate yourself, and choose the vendors you’re working with from software perspective, what is the solution providing the capabilities, but also how partner-able they are. How you can work with them and go to market together and really help each other grow and deliver a smooth experience for the end users. This is one.

Taly Dunevich: Again, when we say automation today, CIOs are expecting today no code or low code, so go for those type of solutions. Don’t go for the one with heavy scripting. It’s kind of becoming more of a history and more innovative enterprises are looking for no code, low code. Choose the best of breed tools to work with and become … You know, build the expertise, build your own center of excellence on stitching those tools together in the enterprise environment and slowly, you know, change your DNA from a body shop, which it’s already changing … I’m kind of saying what is already happening, but change it to a trusted advisor to the CIO, an automation expert, technology simplifier, innovation enabler. If you can be that for the enterprise you serve, you have this enterprise loyalty and you can win more enterprises customers for your own to grow your own business. Those are my few cents.

Guy Nadivi: Sounds like some wise advice. All right. It looks like that’s all the time we have for on this episode of Intelligent Automation Radio. Taly, you and I work in different locations so we don’t see or talk to each other that frequently. In fact, this might be the longest conversation you and I have ever had, but also quite possibly the most interesting one. Thank you very much for coming on the show and helping us inaugurate the “Women in Tech” series.

Taly Dunevich: Thank you so very much, Guy. It’s always a pleasure to speak with you and have a great rest of your day. Thank you very much.

Guy Nadivi: Taly Dunevich, Vice President of Global Business Development and Alliances at Ayehu. Thank you for listening everyone, and remember, don’t hesitate, automate.

Taly Dunevich

Taly Dunevich

Vice President of Global Business Development and Alliances at Ayehu.

Taly is currently the Vice President for Global Business Development, Channel, Alliances & Partnerships at Ayehu Technologies - a leader in intelligent automation and orchestration of IT processes. She brings more than 20 years of experience leading business development, venture funding development, and sales for dynamic startups and established companies, where she scaled business growth through strategic multi-billion dollar partnerships and alliances. Taly is a strong believer in growth through building trusted relationships with strategic partners, and has successfully led comprehensive go to market initiatives with both Fortune 500 companies and startups, accelerating their revenue growth in enterprise software through Channel, OEMs, Systems integrators, and VARs across North America, EMEA and APAC.

Taly is a 3-time Israel windsurfing champion and a bronze medalist in the World Windsurfing Championships; and brings the drive, discipline and performance standards of a competitive athlete to grow businesses. She lives in Los Altos and in her free time enjoys running, hiking, reading, and striving to make a difference in her community by being an executive member of Hipower Women, a mentor in The Alchemist Accelerator, and a Co-founder of “MISHELANU”. Taly holds an MBA and BA in Economics and Business Management.

Taly can be reached at:



Mobile: (408) 881-4600

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