From Plumbing to AI: The Evolution of Managed Services

[00:00:00] Frank Scanga: Everybody knows that 70% of AI projects are failing. It’s because they’re taking a technology approach to it and not so much a business outcome approach, really understanding how it’s going to impact the organization. One thing that organizations need to do from a technical perspective is bring it back to why this is important to the business and what it’s going to provide, focusing on that versus what kind of infrastructure is up and running. It’s a service; it should be up and running, period. You turn the lights on, you expect the lights to be on. You walk in, you expect your network to be functioning.

[00:00:33] Intro: Technology has transformed how we live, work, and connect. And behind that change are visionary people with bold ideas. Welcome to the Bridgecast, where host Scott Kinka explores hybrid work, AI, and our evolving future with tech’s brightest minds. Presented by Bridgepointe Technologies, the nation’s leading tech advisory firm. Experience a better way, the Bridgepointe way.

[00:01:08] Scott Kinka: Hi, and welcome to another episode of the Bridgecast. We’re thrilled you could join us here today. I am joined by Frank Scanga, who is currently the Executive Vice Chairman at Exteum. For those of you who might remember, Exteum is formerly ATSG; both organizations are at the forefront of managed IT services, cloud, and cybersecurity. Frank has been a longtime leader in the managed services and cloud space, helping build and scale organizations that support some of the most complex IT environments in the world.

I mean, ATSG got to a point where it had close to a million users across 1,700 clients. More recently, through the creation of Exteum—which was formed by a combination of ATSG and Evolve IP—Frank is helping drive a “security-first, AI-enabled” approach to managed IT services. We’re going to dig into that in the next thirty minutes or so. Frank, welcome to the Bridgecast.

[00:02:04] Frank Scanga: Scott, thank you so much for having me this morning. I welcome the opportunity to spend some time with you.

[00:02:08] Scott Kinka: How’d I do on the intro?

[00:02:10] Frank Scanga: Oh, phenomenal, as you always do.

[00:02:12] Scott Kinka: I love it. All right, Frank, I usually like to start just by getting to know you. Tell us a little bit about you: where you’re from, how you got here, and where are we talking from today?

[00:02:21] Frank Scanga: Yeah, well, thanks for asking. It’s funny; I am a New York-raised individual. I grew up in the Bronx and went to Fordham University. I had that great Jesuit education and values, and I come from a long family of entrepreneurs.

After getting my degree in college and having a few stints, I just followed my family’s footsteps, went off on my own, and started—at the time—Maxpoint, which eventually became ATSG. As you alluded to, we merged with Evolve IP and became Exteum. I’ve always been in technology and always enjoyed solving technical problems for folks. Once I realized I could actually make a living at it, I started to have a go at it. That was quite some time ago, 1994. That’s over thirty-two years ago, and now we’re 700 employees strong with 1,700 customers, like you said. So, it’s been quite a journey.

[00:03:26] Scott Kinka: I love it. And I love the Jesuit background; I went to LaSalle Christian Brothers.

[00:03:30] Frank Scanga: Oh, very nice.

[00:03:31] Scott Kinka: Similarly at odds with Rome most of the time, I would say! So before we get into the Exteum story—ATSG and Evolve IP, which some of our listeners know is close to my heart for obvious reasons—tell us a story from that journey that shaped how you think about leadership, specifically technology leadership.

[00:03:59] Frank Scanga: Yeah, listen, it’s been quite some time. There are a lot of lessons learned, and I could spend the full thirty minutes just sharing stories about what went really well and what went really bad. In business, everybody knows sometimes things don’t go according to plan. You continue to grow as an organization, and like technology, you need to continually evolve.

I tell the story all the time: I learned how to install Novell servers back in the day, and that was my forte. If I were stuck with installing Novell servers, I’d probably be out of work by now! I don’t think there are any Novell servers left out there for those who remember them. So, it’s a constant evolution—a constant reinventing of yourself and trying to understand where technology is going, but also more importantly, how customers want to consume technology.

We’ve shifted our focus over the years several times: from being a VAR to becoming an MSP, to a tech-enabled MSP, and now to an AI and security-driven MSP. We’ve been investing heavily in an AI approach to things, and we’ll cover that in a bit, I’m sure.

[00:05:23] Scott Kinka: Yeah, so “constantly curious” is what I read out of that.

[00:05:28] Frank Scanga: Great way to put it. You have to be. You need to understand that customers are going to want “bleeding-edge” technology. I think one of the things that is important as we talk about helping businesses with technology is that it’s not really about the technology. It’s about freeing up internal resources so they can focus on the business.

We work in many verticals, from retail to healthcare to professional services. Those businesses have very different and unique requirements that we don’t necessarily need to master, but we do understand technology. I feel our job has always been to make sure the technology is addressed so that the internal folks, like a CIO, can really help the business. The more successful we are in alleviating standard tasks, the better the business will do because they can leverage their internal folks to provide real business value.

[00:06:47] Scott Kinka: I want to double-click on that because I feel like managed services is having a bit of a resurgence—like “bringing sexy back” into managed services right now. I think a lot of that has to do with the complexity going on. But before we get there, I have to ask: give me one word to describe Frank. Is it through your wife’s lens, your lens, or your employees’ lens? Just one word that’s not “constantly curious.”

[00:07:11] Frank Scanga: You caught me off guard with that!

[00:07:13] Scott Kinka: I probably did. I told you there were going to be some surprises.

[00:07:16] Frank Scanga: Fair and balanced.

[00:07:21] Scott Kinka: Okay, I like that. Fair and balanced. And that would be universal? You’d hope your family, employees, and customers would say the same thing.

[00:07:30] Frank Scanga: They probably say nicer things about me, but I’m a little modest!

[00:07:33] Scott Kinka: I like it; I dig it. Well, let’s get to the changing role of the managed services provider. I love what you say because it’s a conversation we have all the time: “Let us deal with the plumbing so you can be the general contractor.” Managed services was really the first “as-a-service” model. Everything else has followed, yet traditional infrastructure management has stood the test of time and become “sexy” again. How has the role changed today versus ten years ago?

[00:08:21] Frank Scanga: I think you alluded to it in the opening—that we’re a “full-stack” MSP. What does that really mean? If you think about the entire IT stack—the OSI model from the application layer down to the physical layer—each function requires a service. You need to be concerned about the network, security, infrastructure, and supporting remote users. That full stack is why there’s a resurgence.

Back in the day, most MSPs started around providing a point product. Someone just did remote infrastructure management (RIM) and was known as an MSP for that one solution. But it still left the IT organization needing to figure out the rest, or they dealt with multiple vendors, which became very complex. Who’s managing your network? Your servers? Your help desk? Today, if you look at the more successful MSPs like ourselves, it’s about providing more of the stack and assisting the customer through a unified approach—from the ticketing system to the tools and business integration.

[00:10:10] Scott Kinka: We’re going to come back to that in a couple of minutes because I want to get into the product areas where you’ve received accolades. But you mentioned something earlier: “We’re in the business of giving the IT leader time back to focus on the business.” That leader is our listener. How has that role changed over time?

[00:10:39] Frank Scanga: I’ve been doing this since 1994, and there was a time when the CIO role wasn’t even that important. Technology was a cost center. The board was annoyed that organizations spent so much money on technology without understanding the value. Then, during the dot-com revolution and the rise of cloud computing, there was a much more important need for the business to be close to technology deployment and business outcomes.

We saw the promotion of CIOs and the creation of CISO and CTO roles. However, I think one mistake many CIOs make today—because we are all technologists who love the tech—is focusing more on the technology and less on the business. It then becomes less important within the organization because history repeats itself. You go back to a boardroom, and the board doesn’t want to hear about bits and bytes; they want to understand how you improve business outcomes.

Tying it to AI, MIT noted that 70% of AI projects are failing. It’s because they are taking a technology approach rather than a business outcome approach. Organizations need to bring it back to: how is this important to the business? It’s a service; it should be up and running, period. End of story. You turn the lights on, you expect them to be on.

[00:11:17] Scott Kinka: I love your comment on AI. I was at an event yesterday with the Dallas Chamber of Commerce, and the theme was AI. I was sitting with CIOs talking about use-case development. One thing that came up is that it feels like we’re doing “cloud” all over again. You’ve gone from being a “wrench turner” to sitting at the boardroom table. People say, “I need a cloud strategy,” so they buy a lot of cloud, and now we’re undoing that and putting workloads where they belong. Now, CIOs come to us saying, “I’ve got to go get some AI.” But AI is a platform. If they aren’t involved in applications, how do they even know what’s not working in the business? Do you feel that challenge when searching for AI use cases?

[00:13:25] Frank Scanga: Scott, very much so. There hasn’t been a “rockstar” use case or a universal success story yet, which is why we see so many failures. For us, AI is built into our fabric; we’ve been doing it for a long time.

If you look at our observability platform, we’ve used machine learning for close to ten years to manage networks. It learns from itself to figure out what is “white noise” versus “bad noise.” We’ve even written sophistication into it for business impact modeling—seeing how losing a leg of the network actually impacts the business. We also built AI into our CMT platform that manages our DaaS cloud.

One thing that became prevalent was the need to manage that AI within our own organization. Similarly to when people rushed to the cloud and then needed orchestration tools, we’ve built an “AI Manager” which we hope to release to customers soon. Right now, we consume it internally. There’s an overabundance of folks trying to leverage AI, but they don’t know how to manage that infrastructure. We are striving to be the “MSP of AI.” Someone’s going to manage the robots—why not us?

[00:17:09] Scott Kinka: Wow. Is that a near-term release, like the next couple of quarters?

[00:17:17] Frank Scanga: It is. We have it in beta right now. We may license it to customers to leverage, and it’s independent of which LLM module you’re using. It focuses on the functionality of the AI and the outcomes you’re trying to achieve. Hopefully, you’ll ask us back and I can do a demo for you.

[00:17:45] Scott Kinka: I spent my time at Evolve IP as the CTO talking about features that were coming, so I don’t want to get you “out of your skis” on that one! But I will focus on this: you talked about building AI into the managed network product. You guys are super highly rated by Gartner in that category—you’re a leader. What’s happening there?

[00:18:40] Frank Scanga: We’ve been in Gartner’s upper-right Magic Quadrant several years in a row. I take a lot of pride in that because the other organizations in that quadrant are much larger in scale and budget. We’re the “small guys” in that group. This year, we were actually ranked number one in three managed network services (MNS) categories, beating out the entire competition. Those categories included overall MNS capabilities, automation/AI, and our security approach to MNS. It’s quite an accomplishment, and we’re going to continue to invest in the platform.

[00:19:58] Scott Kinka: For someone sitting out there thinking, “Man, I’d love to be a leader in the Magic Quadrant one day,” what is the one takeaway from a product development perspective?

[00:20:39] Frank Scanga: My approach has been: listen to your customers. There are a lot of smart technical folks who follow the Field of Dreams approach: “If you build it, they will come.” Technologists often get enamored by the tech, but that’s the wrong approach. Listen to your customers. You are an extension of their organization. Meet with them regularly and understand what keeps them up at night.

If you can marry a technical solution to their specific problem and provide value, that’s what makes you successful. If you’re a CIO, listen to your audience. Don’t just dictate what flavor of laptop or virtual desktop they get. We realized our own AI deployment was sporadic, so we centralized it into our AI Manager to ensure our data is secure and development is managed. It lets us sleep better at night.

[00:23:11] Scott Kinka: I love that. So, product leaders: “Don’t suck on your own carbon dioxide.”

[00:23:16] Frank Scanga: I like how you put it in few words!

[00:23:20] Scott Kinka: That was a phrase I used to say to our product leaders at Evolve IP—don’t get so enamored by your own stuff that you forget to actually breathe. Speaking of products, the marriage of Evolve IP and ATSG was so interesting in the area of Desktop as a Service (DaaS). Both businesses ranked very highly there. But DaaS has had some starts and stops in the market. Where are we with that product line? Who is it for?

[00:24:16] Frank Scanga: Again, we are in the upper-right Magic Quadrant there, competing against the big boys. In our sector, there’s always an “impending event” that causes technology to gain success. Recently, that’s been the Windows 10 end-of-life story. Companies are scratching their heads after investing millions in infrastructure that is no longer supported. We can leverage that older technology to provide a virtual desktop in minutes through our self-provisioning portal. We’re talking to large banks with tens of thousands of Windows 10 devices that don’t have the budget to replace them all.

Our approach offers a unique alternative to Microsoft or AWS. They provide the desktop, but we provide the full stack: the management, security, connectivity, and enterprise service desk. With them, it’s “Good luck, you spun it up. Now what?”

[00:26:50] Scott Kinka: That’s amazing. If a company is evaluating an MSP today, what is the most important question they should ask?

[00:27:15] Frank Scanga: They all understand the technology. The real question is: “How do you perform in a failure?” Technology fails all the time. The “S” is the big part of “MSP”—it’s a services business. I would focus on standards, delivery, and customer satisfaction. My first customer is still with me; my first employee is still with me. That’s about reputation. Focus on the service component.

[00:28:28] Scott Kinka: Assume failure, measure response. Makes a lot of sense. All right, Frank, ready for a couple of fun questions?

[00:28:28] Frank Scanga: Absolutely.

[00:28:29] Scott Kinka: I need a bold prediction for the next twelve months.

[00:28:46] Frank Scanga: I grew up in the Bronx. The Yankees are going to win the World Series this year.

[00:28:50] Scott Kinka: Atta guy! That would be fun.

[00:28:55] Frank Scanga: They’re my team.

[00:29:03] Scott Kinka: What’s your most contrarian opinion about cloud or cybersecurity that others might push back on?

[00:29:15] Frank Scanga: AI is going to continue to sprawl. If you don’t start thinking about it differently, it’s going to hurt your organization, not help it.

[00:29:21] Scott Kinka: What are you reading right now?

[00:29:27] Frank Scanga: Someone gave me a book that sat in my office for a while, and I just picked it up: Good to Great.

[00:29:38] Scott Kinka: Oh, great book.

[00:29:39] Frank Scanga: It caught me on the first page when it said the enemy of “great” is “good.” People get stagnant being “good.” What gave me my entrepreneurial spirit and helped us grow to 700 employees was always striving to be better. Don’t be happy with the status quo.

[00:30:33] Scott Kinka: That’s a good one. It’s particularly challenging now with five generations in the workforce. Last one: I’m a sci-fi fan. In a dystopian future—post-zombie apocalypse or alien invasion—there is only one app working on your phone. Which is it and why?

[00:31:14] Frank Scanga: It would have to be Instagram because I’m on it all the time!

[00:31:21] Scott Kinka: So you’ve got scrolling hours of entertainment to keep you busy while the world ends?

[00:31:28] Frank Scanga: Listen, you can use it to communicate and see what your friends are doing without having to call them. And you can get marketed to for cheap widgets!

[00:31:49] Scott Kinka: It’s all there! Frank, this has been an incredibly enlightening conversation. For listeners who want to learn more about Exteum or connect with you, what’s the best way?

[00:32:06] Frank Scanga: Exteum.com is our website. You can request a meeting there. You can also reach me on LinkedIn or email me at frank.scanga@exteum.com.

[00:32:28] Scott Kinka: One last thing: as environments become more complex, why is a trusted partner more important than ever?

[00:32:45] Frank Scanga: “Trust” is the keyword. Technology inevitably fails, and you need to trust someone to get you through that moment. No one has ever called me in thirty-two years to say, “Hey, great job, my network is up today!” It’s always when something goes wrong. If you trust that we are taking care of the infrastructure, you can focus on your business.

[00:33:51] Scott Kinka: If you can’t trust your MSP, it’s probably time to look for a new one. That is a wrap on this episode of the Bridgecast. Thank you, Frank, for joining me. And for those of you at home, if today’s conversation gave you something to think about, please subscribe and leave a review. We appreciate you spending your most valuable asset with us—your time.

We’d also like to thank Bridgepointe Technologies for their sponsorship. If you are thinking about digital transformation, check out bridgepointetechnologies.com—don’t forget the “e” on Bridgepointe—or reach out to me at skinka@bpt3.net. Give us a five-star review to help us reach others. I’m Scott Kinka. Until next time—there’s a lot of noise out there; do what you can to be the signal.

[00:35:25] Frank Scanga: Thanks.