Managed Service Providers (MSPs) are upping the stakes in the current cloud land grab. By rapidly expanding their portfolio of service offerings they expect to capture larger share of wallet. Their customers are aligned with this approach as they seek out full-service providers able to meet all their technology needs.
A Growing Market
By 2021 MSPs will deliver close to 25% of all technology products and services globally, up from 18% today. This is an impressive business transformation story – thousands of IT resellers and systems integrators (most of them small companies with less than $10M in revenues) have displayed a clear vision and competent leadership in enhancing their organizations’ capabilities and infrastructure to keep revenues growing in this challenging business climate.
The number of MSPs worldwide will grow from 50,000 to 75,000 between 2016-2021, with the total IT products/services they deliver growing from $500 billion to over $1 trillion during the same time.
Their services portfolios, which initially included pure infrastructure services such as storage, security essentials, compute power, web hosting, and application hosting, have now grown to include value add and higher margin services such as disaster recover/business continuity, e-discovery, vulnerability assessment, compliance management, application management, SaaS, and mobile device management among others.
Despite being in a high growth business, MSPs face tough challenges which require constant attention and fine tuning of their business models. Some of the top challenges are:
- Differentiating their services from those of other MSPs is a top priority to counter margin erosion and hyper-competition.
- Absorbing newer technologies, tools, and solutions, packaging them for client consumption, and providing follow up services requires a constant learning and training.
- Investing in datacenters is yet another critical challenge, which is often detrimental to smaller MSPs.
How Technology Vendors Can Help
Technology solution vendors that are supplying to MSPs can often play a big role in helping MSPs address these challenges. By fully understanding the nature of MSPs operational and business needs, vendors can design their products and programs to enable their MSP customers to win in the market-place.
Key features can be built into products and programs to make them a nuts-to-bolts solution, or packaged to work with other third-party solutions typically used by MSPs. Examples of the types of features that MSPs would like vendors to include in their solutions are:
- Automation of overall solutions architecture.
- Automation of customer on-boarding and migration processes.
- Dynamic and predictive throughput/capability scaling.
- Performance monitoring and predictive dashboards and controls.
- Vertical industry-specific sales, marketing, and technical know how.
- Vertical industry-specific compliance and reporting features.
- Online university – modular online training videos and certification.
These are some of the insights we have uncovered in our tracking of the worldwide MSP segment. For additional insights and a detailed description of our MSP tracking service and various deliverables click here.
Alternatively, please email John Rezac (firstname.lastname@example.org) for more details or to schedule a webinar that will walk you through our MSP coverage and insights.
~Deepinder Sahni, SVP