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Recent Survey Reveals ITSP Growth Factors: Efficiency and Automation

Impressive numbers attest to market expansion in Metrics that Matter, Autotask’s 2017 IT Service Provider benchmarking survey.

IT services providers (ITSPs) are landing more business, thanks to the seemingly exponential growth in the development of increasingly efficient automated access to data and transmission systems and devices.

Project, Ticket and Revenue Growth Increasing

Impressive numbers attest to market expansion in Metrics that Matter, Autotask’s 2017 IT Service Provider benchmarking survey.

Specifically, there was a 10 percent increase in companies working 26 or more projects a year (versus 5 percent growth in ITSPs with 26 to 50 projects) and an 8 percent increase in firms whose annual generated ticket volume is between 10,000 and 100,000.

The percentage of ITSPs with a more modest boost in ticket volume (5,000 to 10,000) also went up, by 7 percent.

Revenues also followed a bullish path for ITSPs, as the number of companies making between $2 million and $5 million annually has grown 2 percent since 2013 and 3 percent since last year, while the category of ITSPs topping $5 million has grown 5 percent since 2013 and 2 percent since 2016.

The upshot being that, in 2016, companies grossing more money also tended to grow more quickly.

With that growth has come greater adoption of remote monitoring and management systems to help clients identify and resolve network and platform problems, as well as increased staffing to handle the larger ticket and project volumes; indeed, 75 percent of companies will hire up to 10 new people for this purpose next year.

Endpoints Present Challenges and Opportunities

The Autotask report indicates that the proliferation of connected workplaces, with all their laptops, tablets and smartphones, is creating more opportunity for ITSP growth because it’s creating a lot more endpoints for ITSPs to manage.

Since 2015, there are 5 percent more ITSPs that manage more than 1,000 endpoints, and 63 percent of ITSPs surveyed are managing up to 50 percent more endpoints.

Device connectivity, and the new business it can stimulate, will become even more widespread and commonplace with the ongoing expansion, and even dominance, of the Internet of Things (IoT) in all sectors of the economy.

But all those endpoints also create a bigger risk of a data breach—and that, ironically, dovetails with another big ITSP market growth factor: Data security.

Just four years ago, 6 percent of survey participants said security consulting was a top revenue driver; today, 44 percent say that data security is their top priority and that it drives new business.

Endpoint security has been a consistently high concern in that regard, named by 70 percent of respondents in 2016 and 71 percent this year as key revenue drivers.

More than half of ITSPs (57 percent in 2016, 52 percent this year) also say internet security is a big contributor to revenue.

Security Awareness Training as a Compelling Service

The corollary to this is that the emergence of another promising revenue stream for ITSPs is security awareness and training.

There is ample evidence that employees who don’t know how to safely send and receive data are the biggest threat to institutional data security.

Businesses find this service compelling because it can let them reduce other security-related expenses and enter into a truly collaborative security partnership with a vendor who’s doing more for them than simply installing, maintaining and fixing hardware and software.

Moreover, ITSPs can make the training available in a security bundle or an advanced suite of services.

Clearly, ITSPs that can provide comprehensive security awareness training stand to get additional business from their existing clientele and make themselves more attractive to prospective customers.

The revenue potential of this security niche is immense.

While Gartner estimated this market at $1 billion in 2014, the 2017 report from Cybersecurity Ventures says it could grow to $10 billion by 2027.

Automation, Outreach, Diversification and the Cloud

ITSPs can position themselves for growth by automating and consolidating service delivery and business management processes.

On the whole, ITSPs say they’re successfully working toward that end in service and support functions, but have room to improve when it comes to selling and invoicing.

They can also differentiate themselves from their competition and make themselves more attractive to prospective clients through outreach activities that improve customer satisfaction, which is now the top-rated metric that matters among survey respondents.

In particular, applying automation here, too, through underutilized service channels such as live chat and self-help portals, can give ITSPs a significant marketplace advantage.

Indications are that cloud-based growth will be even more important for ITSPs in 2018.

IT industry researcher Spiceworks’ annual report tracking the purchasing plans of IT buyers in North America and Europe showed that cloud spending is the category in which the highest percentage of companies reported an increase in their budgets compared to 2017.

 

Joe Rourke is director of product management at Autotask.

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