Cautious but Continued Optimism for MSPs in Channel Futures’ Exclusive Quarterly Survey

…providers to be optimistic for this year as well. We expect record sales and profits for the top 15% of the industry.”

To some degree, the uptick in recurring revenue is to be expected, as Q2 2021 was the busiest time for MSPs in the past decade. 

Figures Impacted by Delays

“For many, sales weren’t as top of mind as they were in Q2 2021,” says Fernandez. “I attribute some of the growth and continued growth to things like a delay or lapse in billing, a delayed sales cycle and delayed onboarding.”

“During the pandemic, many businesses needed help to keep the doors open, so many MSPs lowered rates or didn’t charge customers for services. Conversely, many new customers coming in just needed help, and there was a lag in onboarding and billing. Saturation hit about November of 2020, and that is when the biggest influx of customers came running to managed service companies. The numbers show that we are just now seeing those businesses being onboarded, billed and reestablishing themselves and stabilizing financially, thus illustrating the positive outlook. The Q2 growth I believe is also indicative of what’s to come and that is more customers looking to managed services as the new way to buy technology and services.”

The Human-Centric Approach

Indeed, the general economic outlook is favorable. Partners are wiser and have a better idea of what’s out there. And, as MacBean points out, they seem to be operating in a more empathetic and human-centric fashion. 

“We’re all a lot more sensitive than we were in thinking through the impact of workflow, work balance and collaboration using technology tools,” he says. “These are the things that are going to guide purchasing decision-making for how technology plays a role in the work ecosystem. And it sort of bubbled up into the discourse. Empathy is driving way more technology decisions than it was two years ago. It is now less about the economy and more about the character of the people that we’re selling to. I think things are changing to become much more human-centric. This all speaks to that longer-term decision-making we see reflected in this data.”

Fluctuations Between Q1 and Q2 in Terms of Biggest Challenges

We also wanted to know what challenges managed service providers are seeing in Q2 compared to Q1. While expanding customer bases and hiring remained fairly level, marketing jumped a whopping 10%, from 6% in Q1 to 16% in Q2. Why the sharp uptick? Why the overall lack of movement from the other challenges?

Many MSP’s are now getting their feet under them from a chaos standpoint. Ironically, as we get back to business, now we have a new set of problems.

“There are a couple of things I see in the ecosystem that are contributors to these stats,” says Fernandez. “Our competition got better, buyers are shopping online for the best fit and the employment market is HOT for remote workers. MSPs grew like weeds during the pandemic and we hired like crazy. But now, MSP’s are feeling the pains of ‘how do I keep everyone busy?’ That is where many are looking to try and increase marketing and sales capabilities.”

The flip side of the coin, according to Fernandez, is the hiring problem. Many IT professionals have left their day jobs for the remote work opportunities that many MSPs are offering. 

“The problem lies in how you differentiate yourself from other MSPs. It’s an employee market right now. Good support professionals and engineers can name their price, which is becoming a bit of a thorn in the side of the smaller MSP.”

‘Fear of the Unknown’

Marketing is becoming more competitive as the MSP ecosystem advances. Many are experiencing an identity crisis, and are unsure of which way to go. Cybersecurity, managed services, managed security (oh my) and the cherry on top, social selling, are all being mixed together. 

“Social selling is a thread that many MSPs are afraid to pull, and they are looking for help,” adds Fernandez. “We know we need to do it, but it’s not clear what will happen next. Fear of the unknown is the reason we are seeing the stat grow and that will continue to grow as the…