Professional services automation platforms hope the gravity of AI development in the managed service provider industry will bend toward them.
To make AI work for their businesses, MSPs are grappling with a dizzying array of AI tools and software vendors.
They can try consumer-style tools such as the open-source platform OpenClaw to spin up AI agents in-house. They can test small, venture-backed SaaS startups pitching free trials and discounted products. Or they can lean on professional automation platforms that they’ve used for years.
The pressure to act is real, but so is the risk of chasing the wrong option.
“It feels like you're drinking out of a fire hose,” KeyStone Solutions CEO Preston West told Channel Dive.
OpenClaw, in particular, has opened the eyes of MSP owners, who see enormous potential in low-cost internal AI development and enormous downside for cybersecurity breaches.
“It's amazing and it's scary,” Omdia Principal Analyst Jessica Davis said. “It could completely revolutionize your business, or it could ruin it. I haven't spoken to anyone who is letting it run loose. No one has that appetite for that level of risk.”
West said his firm is walking a fine line on AI development: ranking the top priority AI initiatives that will drive customer outcomes and focusing on those.
“We can't always be chasing the better mousetrap, because we'll never actually get anything done,” he said.
MSPs can using open source agentic tools and vibe coding platforms to bring app development — historically not a core revenue stream — in house.
“I think there is definitely something there around bespoke development and automation and integrations that people like us can do without a huge, dedicated dev team, which it would have taken even just a couple of years ago. So we're investigating that,” West said.
MSPs — especially smaller firms — have to weigh the potential benefits of in-house development against the need to focus on core services.
“Do you want to be an AI vendor, or do you want to be an MSP? You can, but to be able to keep up with the changes — that'd be your full-time job,” OpenText Cybersecurity VP of Business Development Mike DePalma said.
MSPs with private equity or VC support may have the resources to build AI, while smaller firms may have better luck finding partners to do the heavy lifting, Davis said.
Whatever the case, MSPs need to make a decision.
“If you sit there and you really nitpick and you're waiting for this one feature, everybody's going to catch up, and what we're doing now, six months from now, is going to look kind of ancient,” DePalma said.
Niche AI vendor or PSA?
VC-backed software companies promise to bring AI efficiency to MSP processes such as help desk and documentation, but agentic add-ons are currently positioned as frenemies with the existing MSP software stack.
Some of those upstarts integrate with the large PSA vendors. Other startups have been acquired by a PSA.
The PSA firms, which provide core software MSPs use to manage clients, insist that MSPs wait for them to bake AI into their platforms.
What PSAs have working in their favor is the vast store of data from the millions of endpoints their MSP customers manage.
“This data is important because it allows the vendor to sift masses of real language data to build non-deterministic AI that can take the often incomplete ticket data for example, and make decisions on its own,” Omdia MSP Practice Leader Robin Ody said.
What PSAs have working against them is that their size can slow down their time to market. West said the biggest accomplishment of the PSAs in AI has been making APIs available to integrate the third-party providers. But when it comes to speed of development, the startups are racing ahead.
“The [PSAs] are dinosaurs,” West said. “They move real slow, and they have to for control and safety. They have to homogenize this across thousands of customers.”
West wonders whether a virtuous cycle can develop in which small startups — including the MSPs themselves — develop AI tools and systems that the PSAs ultimately acquire.
“Hopefully the niche provider gets the opportunity to sell their service to the bigger one and have them buy it, and then we all get better,” West said.
The acquisition cycle has evolved for the PSAs in the last year, N-Able CTO Mike Adler said. N-Able, more than ever, is trying to identify startups with a “technical moat.”
“What have you gained either from an information perspective, from a data perspective, from a model perspective, or from an expertise perspective that I can't replicate?” he said.
Adler said N-Able is following many of the new AI entrants.
“The question is, do they have a feature, or do they have a product, or do they have a platform?” he said.
