Why SMBs Will Soon Spend More on AI Than Security — and What It Means for MSPs

Within two years, the average SMB will spend more on AI than on cybersecurity — and Jimmy Hatzell, Co-Founder and CEO of Hatz AI, says the MSPs that win this shift will look nothing like the per-seat help desks of the last decade.In Episode 10 of How to MSP, host Andrew Moore sits down with Jimmy Hatzell, Co-Founder and CEO of Hatz AI, to unpack how fast AI is moving through the MSP channel and what it means for managed service provider growth, pricing, and the future of the vCIO role. Jimmy explains why the AI wave is moving roughly six times faster than the security wave did, how Model Context Protocol (MCP) servers from Halo PSA, ScalePad, Liongard, and N-able are changing what MSPs can actually deliver, and why intelligent model routing cut Hatz AI's costs by about 75 percent on common workflows. Andrew and Jimmy lay out a practical playbook — starting with shadow AI as the security conversation — and dig into how per-seat MRR breaks when clients hire fewer people and spend more on intelligence.What you'll learn:•       Why SMB AI spend is on pace to overtake SMB security spend inside two years•       How to use existing DNS, RMM, and firewall data to surface shadow AI in any client environment•       What Model Context Protocol (MCP) is, and why Halo PSA, ScalePad, Liongard, and N-able have all released official MCP servers•       Why intelligent model routing can cut AI costs by roughly 75 percent without sacrificing output•       How the per-seat MRR model breaks under AI — and what advisory and account-management revenue replaces itMentioned in this episode:•       Behind the Cloud by Marc Benioff — Goodreads•       The Grateful Dead on Spotify — open.spotify.com•       Phish on Spotify — open.spotify.com•       Hatz AI — hatz.ai•       Halo PSA — halopsa.com•       ScalePad — scalepad.com•       Liongard — liongard.com•       N-able — n-able.com•       Cisco Umbrella — umbrella.cisco.com•       ThreatLocker — threatlocker.com•       ConnectWise — connectwise.com•       Pax8 — pax8.com•       Salesforce — salesforce.comAbout the guest:Jimmy Hatzell is the Co-Founder and CEO of Hatz AI, a secure AI platform for SMBs delivered through managed service providers. He previously led teams at SKOUT Cybersecurity through its acquisition by Barracuda and served as VP of Revenue at CyberQP.Read the full show notes: https://www.ridgeviewadvisors.com/blog/smbs-spend-more-on-ai-than-security-mspKey topics: MSP AI strategy, shadow AI, Model Context Protocol, MCP servers, MSP per-seat pricing, AI governance for SMB, MSP vCIO, AI model routing, AI cost management, managed service provider AI services#MSP #ManagedServiceProvider #ShadowAI #AIGovernance #ModelContextProtocol #MSPGrowth #vCIO #SMBTechAbout How to MSPHow to MSP is the weekly podcast for Managed Service Provider owners and operators who want to grow, scale, and exit on their terms. Host Andrew Moore — Founder of Ridgeview Advisors — interviews MSP operators, advisors, and investors on the topics that actually move the business: EOS implementation, valuation and exit strategy, sales and marketing, service delivery, M&A, financial benchmarks, and operational excellence.Watch full episodes on the How to MSP YouTube channel.How to MSP is produced by Ridgeview Advisors and hosted by Andrew Moore.