October 6, 2011

3 Min Read
SMB Managed IT Services Spending: Growing $1B Per Year?

By Dan Berthiaume

Techaisle predicts that managed IT services spending within U.S.-based small and midsize businesses will grow from $7 billion this year to $12 billion in 2015. We’re always skeptical when we read research reports because long-term IT spending forecasts can change from one year to the next. But generally speaking, MSPmentor is confident the managed IT services market continues to grow. We’ve got our own built-in biases — yes, we’re bet a portion of our business on this market — but we also have a pretty good feel for why managed services demand continues to climb.

First, the Techaisle survey: The company gathered data from 2,000 US SMBs and 600 of their channel partners. In particular, Techaisle says U.S. SMB managed services spend as a percent of support & maintenance (break-fix) will increase from 27% in 2011 to 40% in 2015. More than one in five small businesses use some type of managed services, with greatest use observed among businesses with 50-99 employees. And 65% of midsize U.S. business use more managed services.

More Competition

Techaisle research shows there is still plenty of room for new entrants to the SMB managed services market. While nearly 67% of SMB channel partners offer one or more types of managed services, only 30% of MSPs are pure-play managed services providers. And the largest share of them are offering storage services (34%), but very few of them have their own infrastructure and most rely upon their vendor partners or other datacenters.

In addition, Techaisle’s survey reveals that more than 30% of SMBs do not know who to go to for managed services solutions. Those using such services subscribe to an average of three managed services solutions, showing an obvious agnosticism when it comes to using one SMB over another.

While the SMB managed services market is currently open, that does not mean it will stay that way. Many MSPs are already being proactive, with more than half (54%) already initiating discussions with SMB customers. And needless to say, Techaisle believes that cloud and mobility are fast-growing technology areas offering the most synergies and biggest gains.

So overall, the future looks pretty bright for the SMB managed services market in the next few years. The question for MSPs serving this market is, will you go toward the light, or stay behind in the darkness?

Weak Hiring Equals Strong MSP Demand

Let’s ignore Techaisle’s research for a minute and focus on  MSPmentor’s own gut instinct. Why do we believe the managed services market will keep growing? The answer involves bad news and good news.

The bad news: In recent years, amid the credit crunch and economic uncertainty, many small businesses have been reluctant to make new hires. We believe that’s especially true in the IT market, especially as small businesses look to leverage cloud and hosted services rather than internal applications that need on-site, full-time support.

Now the good news: We believe MSPs have benefited greatly from the the SMB hiring slowdown. In fact, we think the trend will continue forever. The reason: More and more SMBs are used to leveraging outside help — VARs and MSPs — for IT maintenance and IT innovations.

So even if Techaisle’s forecast proves overly optimistic, we think the managed services market will continue to grow. Indefinitely.

Additional insights from Joe Panettieri.

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