Digital transformation, security breaches, and just keeping the network and applications up and running – all of the above are challenges that businesses of all sizes are facing. The good news is that they all represent an opportunity for managed service providers.
“There’s no mistaking it. It’s a good time to be a managed service provider,” says Rick Faulk in a March 22 Barracuda blog. “Demand for managed services is increasing, and service providers that are prepared to meet these needs are capitalizing on it in a big way.”
Managed services involve the proactive management of an IT asset or object by a third party MSP on behalf of the customer, according to the MSP Alliance (News - Alert). The alliance notes that most MSPs have a network operations center, a help desk, the ability to remotely monitor and manage stuff for their customers, to be proactive, and to deliver services with a predictable billing model. MSPs may specialize in applications, the desktop, mobile device management, security, servers, storage, and/or certain vertical areas.
More two-thirds of companies used outside IT services between June 2014 and June 2015, according to a CompTIA (News - Alert) 2015 study. And 64 percent of end user organizations tell CompTIA that they use an MSP for at least one operational function.
Indeed, the fact that many businesses – especially small ones – don’t have the technical know-how to transition to the cloud themselves; have concerns about security amid a complex security landscape; and are grappling with increasingly complex IT environments has contributed to growth in the MSP space. The MSP market saw a growth rate of between 11 to 16 percent in 2014, when it reached $85-$90 billion, according to research and consulting firm the Everest Group.
Now MSPs need to figure out how to best position themselves as MSP buyers look for more sophisticated solutions, and as new players join the already crowded MSP marketplace.
MSP Expo (www.mspexpo.com) is an event designed to help organizations learn what’s possible with the help of MSPs, and to help service providers better understand what their business customers need so they can take their businesses to the next level. This event, co-located with ITEXPO (News - Alert), will take place Feb. 8-10, 2017, at the Greater Ft. Lauderdale/Broward County Convention Center in Fort Lauderdale, Fla.
“MSP buyers have already picked the relatively low hanging fruits, and now they are looking for additional strategic gains from their MSP programs,” explains Rajesh Ranjan, partner at Everest. “This, in turn, has provided an opportunity for service providers to differentiate themselves by bringing in innovative solutions and adopting best practices from allied industries in the broader business process outsourcing area, including recruitment process outsourcing, human resource outsourcing, and procurement outsourcing.”
Meanwhile, Michael Cummings of The Taylor Business Group, recently blogged that most MSPs struggle with building a scalable sales model.
“It is not uncommon for MSPs to grow their business rapidly through their operational and administrative excellence to a point,” Cummings says. “Then, they tend to hit the sales wall, where they can’t grow using their current sales model (often with the owner acting as the prime sales person). This sales block can stagnate your growth for years.”
However, MSPs can take steps to avoid that situation, according Cummings. And, according to the results of a recently released CompTIA survey of 400 U.S. managed services providers, the level of confidence among MSPs in how they are running their businesses is high.
“Two-thirds of the companies we surveyed consider themselves to be skilled experts at managed services,” says Carolyn April, senior director of industry analysis at CompTIA, who notes that nearly 90 percent of MSPs have been offering technology services for two years or more, and that half of all MSPs surveyed expect high revenue growth over the next two years, with services accounting for 75 percent or more of total revenue.
Edited by Alicia Young