BCN will become “a bit more cerebral” on M&A, its CEO said as he revealed plans for an agentic AI push.
The £70m-revenue, Microsoft-focused MSP recently launched an ‘AI Growth Team’ to incubate opportunities for agentic AI both internally and among its customers.
It also plans to begin selling its agentic AI services through the channel via a new pact with distributor Arrow ECS.
Talking to IT Channel Oxygen, BCN CEO Rob Davies said it is “quite likely” the Manchester-based outfit will make an acquisition “towards the end” of 2026, having not announced one since January 2024.
“We were an M&A machine and built up a lot of capability around the Microsoft ecosystem,” he said.
“The fact the M&A market over the last 12 to 18 months has been slightly stagnant hasn’t been a bad thing for us, and going forwards I’m looking at the market slightly differently in terms of what we need from an M&A perspective.
“Because of the inflection point around AI, and the influence of AI on what we’re doing organically, you can’t really go and buy anybody doing what we’re doing at the moment.
“I want to continue to take stock in terms of what organisations we want to acquire.”
“I’m astounded by how quickly we’re moving”
BCN’s AI pivot comes in response to what Davies described as “Darwinistic” conditions in the MSP space over the last 12 months.
MSPs have faced three headwinds, he claimed.
The sun-setting of high-margin legacy revenue streams such as VMware is the first headwind Davies highlighted.
Secondly, traditional MSP services in areas such as IT support and Microsoft Azure and Modern Workplace are commoditising – a situation Davies said is being exacerbated by “aggressive” pricing from buy-and-build MSPs facing “leverage headwinds”.
Thirdly, MSPs have seen a rise in the cost of delivery – driven partly by cyber, Davies said.
“It’s not been an easy place to be,” he said.
“But then you’ve got the opportunity, which is how do you capitalise on AI?
“When you get such pressures, sometimes it’s not a bad thing because it’s a bit of Darwinism in terms of survival, but it also helps drive innovation.
“AI allows you to accelerate and innovate in a way you could never do before, and we’re astounded at how quickly we’re moving with that.”
“It’s mind-boggling”
Davies questioned whether the rise of agentic AI will effectively kill off digital transformation as we know it.
“Agentic AI is turning it on its head and completely delivering it as an outcome almost immediately. Not only that, it’s learning its outcomes and getting better and better. The impact of some of these services is just mind boggling,” he said.
BCN now plans to take its ‘BCN Agentic AI Services’ out to the wider channel via a new pact with Arrow ECS, Davies revealed.
“We’ve decided for many reasons to go from a direct partner of Microsoft to become indirect through Arrow,” he confirmed.
“It gives us much easier access into Microsoft.
“But there are also a number of products we’ve created through agentic AI that allow us to reach another market, and Arrow will help us facilitate that.
“There’s an opportunity there that lends itself to more channel-oriented, prescriptive services.
“Traditionally, it’s very difficult to sell through a channel when you’re delivering solutions that have to be very engaging with the client, with lots of changes. I think the opportunity with AI starts to really challenge that.”
“Professional services will reduce significantly”
Having evolved from a reseller into an MSP, BCN has more recently built a large professional services business via acquisition under private equity backer ECI Partners.
Breaking down BCN’s £70m top line, some £20m is generated by managed services, £33m from external annuity revenue, £12m from professional services and £7m from infrastructure, Davies revealed.
The onset of AI could see BCN’s professional services revenues head south while fuelling a resurgence in annuity revenues, Davies predicted.
“I see the world of agentic AI service consumption being less about professional services, and more about subscription annuity pricing and consumption,” he explained.
“Professional services will probably reduce quite significantly going forward as people look at consuming technology in a different way in terms of what AI can deliver.”
Doug Woodburn is editor of IT Channel Oxygen
