Intronis, the cloud-based storage provider focused on MSPs, has cut more than 20 sales team members and also closed a Boston office, multiple sources have confirmed to MSPmentor. The cuts come as Intronis narrows down a list of potential CEO candidates. The layoffs are larger than MSPmentor had originally heard. But I also want to keep things in perspective. After speaking with Interim CEO Jay Bolgatz on the record, and more than a dozen channel sources on background, I think the cuts basically come down to a three-letter acronym: ROI.

During a phone conversation, Bolgatz declined to say how many employees had been cut. Third-party sources peg the number at more than 20 employees. Bolgarz said the cuts mainly involved the company's sales organization, including staff members who spent 100 percent of their time cold-calling prospects. "Nothing has materially changed in the company's performance. We're still growing and we're still absolutely committed to MSPs. But we uncovered some areas where we could manage our business better. We over-invested in cold-calling and events."

Events. There are scores of third-party channel events each year. The VAR Guy's Top 100 Channel Partner Events captures only a portion of the full picture. Sending sales teams and channel leaders to scores of events each year can generate big overhead. And in Intronis's case, I believe, an ROI  review revealed that some events efforts and some sales initiatives were not paying dividends.

Sales Leads, Please

Intronis isn't alone. Scores of vendors run around the country -- heck, the world -- pursuing MSPs at channel events. But in some cases, vendors are seeing the same MSPs over and over again. In some cases the expenses vs. the resulting ROI is  getting difficult to justify.

To be clear, I'm not suggesting Intronis and its rivals will disappear from channel events. I just think those vendors will become far more selective before they decide to open their wallet to see the same MSPs in the same city again.

Talking on the Phone

Meanwhile, I asked Bolgatz some key questions. Here are his replies, in some cases paraphrased:

1. MSPmentor: I heard a rumor Intronis hired a new CEO and the layoffs may be part of that. Is there a new CEO now? Is a CEO hiring imminent? And are the layoffs tied to the CEO hiring?

Bolgatz said Intronis's CEO search has led to some candidates in the pipeline. But the search and the layoffs are not related. Bolgatz and his management team decided to make the cuts after analyzing the company's business costs and the ROI of certain functions. "These are our friends and colleagues. We didn't do it lightly. This is about continuing to build a better business."

2. MSPmentor: Can you continue to onboard and service MSPs appropriately after the cuts?

"Absolutely. Customers will see no change in our service levels."

3. MSPmentor: How many employees were cut?

He declined to say.

Staff Email

In an email to Intronis's staff viewed by MSPmentor, Bolgatz said:
"Earlier this morning, we informed several staff members - primarily within our sales organizations - that we would be letting them go effective immediately. Although never an easy decision, these actions were taken to further optimize our operations, better manage our costs and give us the flexibility to more closely align our business, and our team, with the needs of our partners and the company's profitable growth. As you read this, our sales leadership team is contacting those partners managed by these associates to ensure our business relationships continue to thrive and we don't miss a beat.

And speaking of the business, I want to point out that despite a few changes in leadership and within our team, we are executing to plan and continue to build on the sales and partner momentum captured in 2012. With your help, we've achieved year-over-year growth in excess of 40% three years running now and that's simply fantastic. We also hit several performance milestones last year including consecutive wins for best partner support, recognition on the Deloitte Technology Fast 500 and Inc. 5000, and of course, the successful launch and growing adoption of our Fall 12 Release and the receipt of $12M in funding. It certainly was a good year and by staying true to our mission, 2013 will be a great year for Intronis  and our partners.

On that note, I want to thank you, and those who are leaving us today, for the hard work and dedication you've brought to Intronis  and our partners. Together as a team, we're providing our channel partners with the industry's best-performing cloud-based backup and recovery solution and enabling their success every step of the way.

This is, and will remain, our top priority as we move forward.

If you have any questions please see your manager and/or do not hesitate to stop by my office.

Jay Bolgatz

Interim CEO"
Bottom Line

The Intronis cuts are the latest inflection point for the MSP software industry, especially as so many backup and disaster recovery companies work to engage MSPs -- at a time when so many customers are looking at Amazon, Windows Azure, Rackspace and other public cloud storage systems.

I'll be back with more thoughts a little later.