Top 6 Findings From the Second Quarter Channel Futures MSP Study

We recently reported on our second quarterly survey, this one focused on Q2 2021. Taking a look back at the first quarter, there were several interesting shifts we wanted to dig into a little more.

The biggest themes were:

• Quarterly realized business activity
• How Q2 2021 recurring revenue compared with Q2 2020
• Biggest challenges in the quarter

Recurring Revenue

In terms of recurring revenue, we noticed that the “Increased over 20%” and “Increased 11% to 20%” categories jumped a bit in the second quarter when compared to the year-ago quarter. According to Jay McBain, principal analyst of channels, partnerships and ecosystems at Forrester Research, this is pandemic-related.

“The first quarter had less impact last year than the second quarter on revenues,” said McBain. “The growth numbers are indicative of smaller baselines (versus market growth).”

Realized Business Activity

For this category, our data showed that recurring revenue increased pretty sharply for many MSPs. Security sales rose moderately, while cloud sales saw a slight decline.

Regarding questions that were more long-term in scope (annual forecasting 2021 compared to 2020) and overall economic outlook (confidence in the U.S. economy and confidence in the industry), we didn’t see much change from the Q1 survey to Q2. This makes sense when it comes to revenue forecasting since we are discussing a full year. But we wanted to get a better sense of economic outlook confidence and industry confidence. According to McBain, this speaks to the benefits that changing work partners are having on MSP businesses.

“Companies are now looking at a permanent shift in how they work — reassessing workflows, processes, business logic, and even real-estate investments,” McBain wrote in his “What I See Coming For the Channel: 2021″ predictions back in January. “The output of this will be a remote (or residential) topology that will require new levels of service, support, infrastructure, security, compliance and continuity. I expect the percentage of firms that outsource some or all of their IT will start to increase again by double digits — for the first time in five years.”

Biggest Challenges

The “biggest challenges” category yielded some head-scratching data from our respondents. According to McBain, the delta variant of the coronavirus might have impacted some partners in the second quarter.

“Companies that may have [seen] the end of the pandemic tunnel in Q1 may be recircling the wagons on a digital or digital-first marketing strategy to acquire more customers (which is No. 1 in both periods),” said McBain. “Also interesting is that hiring-tied customer acquisition in Q2 showing the impact on the labor force that has been well publicized in retail, restaurants, etc.”

In the slideshow above, we further break down our important benchmark survey findings. What will we discover as we head into Q3 and beyond?