6 Big Trends Shaping the Managed Services Market

The single most-often asked question of us is, “What are the trends shaping the managed services market?” It’s a question asked of us every day regarding the health and well-being of companies that deliver managed services to customers of all sizes.

With so much of today’s IT being consumed via managed services on a recurring or subscription basis, monitoring the state of the MSP market has become our industry’s pastime. It won’t replace baseball anytime soon, but it is still fun watching the day-to-day market gyrations of our MSP 501 and the greater managed services market. So below are answers to some of the most pressing issues of the day when it comes to the MSP market.

What’s Not Changing?

Well, there are some things that aren’t changing, perhaps for the better. Over the past few years, security and cloud have been the main growth drivers for most MSPs. Based on our ongoing conversations with the MSP 501, along with our managed services research, we don’t see that changing any time soon. We will be the first to admit those are very broad category definitions which deserve more detail, but for anyone who wants to know where MSP leaders exude the most confidence, it would be around cloud and security solutions.

Do All MSPs Think and Act Alike?

Don’t lump all MSPs together. Another major trend we are examining is the distinction between small, medium and large MSPs in terms of their market outlook and behavior. We’re finding some very real differences in the opinions of leaders of small, fast-growing MSPs and those of much larger organizations.

Let’s dig a little deeper on this point. When we asked the MSP 501 about their top revenue producing solutions, about one-fifth cited infrastructure-as-a-service. However, the number of large MSPs driving IaaS sales to new heights with storage and server technologies was nearly double that of smaller partners. Of course, one could argue that IaaS is a better fit for enterprise customers. But either way it does show a sharp contrast. The same is true for MSPs who said data center services. So, no, not all MSPs move in the same direction.

What’s Going on with the MSP Market and IT Security?

Even though IT security overall is one the fastest-growing segments for MSPs, there are some variations. While MSPs of all sizes are seeing similar growth prospects for endpoint, network and managed detection and response, the same cannot be said for identity access management. When it comes to that segment of IT security, nearly twice the number of large MSPs see identity access management as big source of growth.

Are MSPs Focused on Midmarket Opportunities?

We are huge fans of middle market — you know, those companies with 100 to 1,000 seats that make up the backbone of the U.S. economy. But it’s in this customer segment that differences among MSP business models get really interesting.

While the majority of MSPs serve customers that are similar to their size — e.g., small MSPs overwhelming sell to small businesses — there are some huge market gaps. This has major implications for vendors, tech suppliers and distributors who look to their MSP partners for revenue growth. The data show the upper end of the midmarket is …