A Look Back at the Top 5 Channel Trends of 2017

As MSPs gear up for 2018, there is no shortage of new growth opportunities ahead that they can pursue.

December 22, 2017

5 Min Read
2017 calendar

As 2017 winds down and the holiday season is in full swing, it’s a good time to pause and reflect on the key moments that defined the year. In regard to the channel, these five trends topped our list:

1. Managed Services. Earlier this year, we did a special research project with The 2112 Group on the State of Managed Services in North America and EMEA. The report revealed first and foremost that managed services are driving growth and profitability in the channel. Over the past year, there’s been a shift in SMBs’ attitudes toward managed services in general. Fifty-nine percent of surveyed U.S. channel companies and 60 percent of EMEA companies reported that they increased their managed services prices this year over 2016. Furthermore, 50 percent of EMEA channel companies say managed services margins are increasing, and 55 percent of U.S. channel companies say the same.

Experts attribute the growing demand for managed services to the ongoing IT talent shortage. The fact that nearly every office application is migrating to a services model (e.g., Office 365) appears to be helping, too. Plus, when apps go to the cloud, network security measures must be taken to ensure data is protected, which explains why network security was found to be the No. 1 fastest-growing service among top sellers who responded to our survey.

2. M&As. The IT channel saw its share of M&As in 2017, and some even called it, “the year of acquisition in the managed services market.” More than $6 billion of institutional capital was invested in the past two years. A growing number of well-funded roll-ups, corporations and office equipment dealers are acquiring their way into the managed IT services category, and pure-play MSPs are increasingly looking to acquire (or be acquired by) other providers to increase the scope and scale of their operations. 

3. Security Threats. Earlier this year we saw several major cyberattacks, including the WannaCry ransomware outbreak, which took down more than 200,000 computer systems from Russia and China to the U.S. and the U.K. Victims included hospitals, banks, telecommunications companies and warehouses. Attacks like WannaCry don’t just remind us of the growing pervasiveness of cyberattacks; they remind us how under-protected so many companies are. In this specific incident, every victim was at least two months behind in software patches. This is a huge opportunity for the channel. In fact, studies show that even if an MSP only focused on patching endpoints such as PCs and mobile devices, it could protect its customers from 85 percent of ransomware attacks.

The widespread adoption of Office 365 creates another area in which solution providers can add value with security services. Any public cloud service, including Office 365, is built on a “shared responsibility model.” This means the cloud provider has some security responsibilities, but the end user bears part of that burden, as well. According to research from Skyhigh Networks, the average organization experiences 2.7 threats each month within Office 365. By adding multilayered security products and services such as a next-generation firewall and email security, customers’ cloud and on-premises applications and networks can be much better protected from cyberattacks.

4. Digital Transformation. As organizations’ accounting, CRM, production and other business applications move to the cloud, it’s creating opportunities for IT channel companies to help with the migration process. Another big opportunity is setting up and maintaining the wide area network pipelines on which these types of cloud applications and services depend. This connection has to include ample bandwidth and performance, and it must be secure. Besides gaining more control over network performance and putting the MSP another step closer to becoming a one-stop shop for its customers, providing WAN services simplifies the troubleshooting process in the event a cloud app or service isn’t working properly. Rather than getting into a finger-pointing discussion with a third-party provider, the MSP can quickly pinpoint the problem and remedy the situation more efficiently.

5. Hybrid and Multi-cloud Environments. Most companies have parts of their IT infrastructure and applications on premises and other parts in the cloud. What’s more, they’re not just using a single cloud provider for their off-site computing, they’re using multiple clouds. For instance, a survey of 130 IT professionals with more than 500 employees, conducted by OpsRamp, found that 75 percent of respondents expect to be employing two or more public cloud services over the next two years. Not surprisingly, multi-cloud computing creates a significant opportunity for managed service providers. Each environment has its own management requirements, and there’s no single tool that companies can use to easily create a unified management system. The odds are high that organizations will need to rely on an MSP’s expertise for managing at least one of those environments, not to mention for security and data protection services across all their cloud environments.

As MSPs gear up for 2018, there is no shortage of new growth opportunities ahead that they can pursue. Plus, keep in mind that the top trends of 2017 don’t end on Dec. 31. Each one will continue into the New Year and beyond. While managing and securing increasingly distributed computing environments at scale is not for the faint of heart, it’s a challenge MSPs can solve for their customers with a little planning and the right tools — from the right partners.

Brian Babineau is Senior Vice President and General Manager for Barracuda MSP. In this role, he is responsible for the company’s managed services business, a dedicated team focused on enabling partners to easily deliver affordable IT solutions to customers.

This guest blog is part of a Channel Futures sponsorship.

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