MSPs to capture $1.0T in ICT spending by 2021

Large numbers have a certain aura to them. We almost disrespect these figures by using abbreviations. One trillion dollars written out looks like $1,000,000,000,000 and for those wondering, such a sum would weigh approximately 10,000 tons (9,071.85 short tons) when carried around in the largest denomination US currency currently in circulation, the ever popular $100 bill. To have such transportation and storage problems… For the sake of preserving the “0” key, we’ll stick to the $1.0T abbreviation for the rest of this piece, but there is no shortening the drive of MSPs to capture an increasing share of global information and communication technology (ICT) spending across the SMB and Large Enterprise space.

MSP spending capture growth
$1.0T in spending capture… that’s a spicy meatball

 

 

 

 

 

 

 

 

 

 

 

How are MSPs winning?

There are a host of factors contributing to the rise in MSP spending capture toward the $1.0T plateau. As with any business, listening to customer needs can help spur growth and expand portfolios. Leading MSPs are offering flexible pricing and contract terms to help cash strapped businesses leverage the technology they need without resorting to debt financing. A more diverse solution portfolio doesn’t hurt either. Cybersecurity has become critical for business continuity and a potential competitive advantage for businesses. Leading MSPs are offering more managed service solutions for security, storage, backup, and disaster recovery to better protect critical data.

A recent “Did You Know” tweet from AMI (@AMI_Partners) showed that 31% of SMBs are feeling pressure to reduce pricing. MSPs are not immune to price sensitivity either and are finding ways to deliver solutions without hurting their own bottom line. In fact, a good portion of MSPs have indicated they fear losing clients to a competitor offering lower prices. The delicate balancing act between generating revenue and managing expenses is a feat best accomplished by MSPs who been proactive in the marketplace and have plotted a course for the future.

SMB pricing pressure
Are IT solutions elastic or inelastic?

 

 

 

 

 

 

Vendor and MSP Ecosystem

It’s no secret that managed service providers have been capturing an increasing share of worldwide ICT spending. This year alone MSPs will capture 19% of the current $2.7T global market. By 2021, MSP spending capture will rise another 5%, knocking on the door of a quarter of all ICT spending. This billion dollar spending capture is a clear and present opportunity for vendors and managed service providers alike. For a vendor, knowing how best to engage and partner with MSPs will better position their solutions to reach ends users. From the MSP perspective, seeing how they fare against other service providers will allow them to leverage best practices and plot a course for future growth. The strengthening supply chain, or rather, “service chain” … maybe “solution chain” … relationship between vendors and MSPs is a situation that warrants close stakeholder attention and a thorough understanding of the shifting dynamics throughout the ecosystem.

Simplification and Diversity

End users want a simplified IT experience. The days of in-house management of IT systems are decreasing. With solutions delivered via the cloud, MSPs can reach a wider range of end users. Portfolios can be expanded to offer sophisticated products that cater to specialized needs across various verticals. Additionally, the upkeep and management of IT systems requires specialized training that most end users simply do not possess nor have the time to acquire. MSPs have clearly positioned themselves to act as an umbrella for end users. By shielding SMBs and large enterprises from the nuisances of technology, MSPs allow businesses to focus on their core strengths and deliver their own solutions to their customers.

Looking Ahead

The old ways of doing business will never completely go away, but modern systems and tools can make some tasks easier. No software will ever replace a handshake. No service provider can deliver a positive corporate culture via the cloud. MSPs are at the intersection of technology and end users. The delivery and management of solutions have segmented this space into distinct categories where there are clear winners and losers. By making the right moves, vendors can work better with MSPs and MSPs can better position themselves for success.

Let us know if you have any MSP related questions  and be sure to follow AMI-Partners on Twitter.

Andrew Svonavec | Associate

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