4 Things MSPs Should Know About SaaS Market Maturity and Security

Gavin Garbutt

The software-as-a-service (SaaS) market is on a growth trajectory, with spending on cloud applications expected to reach $195.2 billion in 2023, up from $146.3 billion in 2021, according to Gartner’s latest forecast released in October 2022.

Further, the analyst firm predicted in 2021 that 85% of organizations will embrace a cloud-first principle by 2025. This is evidenced by the growing number of SaaS-based applications in use today. A recent survey of 740 IT and security professionals revealed that SaaS applications experienced an 18% year-over-year increase in net growth between 2021 and 2022, with organizations now using an average of 130 applications.

4 SaaS Growth Path Considerations

So, what does SaaS market growth and maturation mean for MSPs when it comes to managing and securing SaaS applications? Here are four things they should consider as they chart a path toward growth and success:

1. Don’t hold back on SaaS security.

The rush to the cloud has brought with it an imbalance between spending and security when it comes to the adoption of SaaS-based applications. This is especially true in the SMB space, where budgets and staff are already strained. However, these organizations are coming to the realization that they need to move SaaS security up on the priority list to prevent damaging data breaches they cannot afford.

A recent survey of SMBs that were asked which criteria is most important in selecting SaaS applications found that security (70%) was the highest priority, with proven technology coming in second at 61%. To serve their SMB customers, MSPs should already understand the reality of what it will take to provide SaaS application security — applications are not inherently secure, and SaaS providers cannot be relied upon or expected to provide all the needed security.

The answer to this challenge is teaming with vendor partners who provide solutions that bring efficient, automated security, visibility and monitoring, and improved cloud application management to the MSP’s stack.

2. Monetization should be your next move.

When MSPs automate SaaS management and add SaaS security to their stack, they can then resell these solutions to customers who are struggling with less staff, cloud misconfigurations and the troubling sense they aren’t keeping up with the security protection needed for the growing number of SaaS applications used by their customers.

On an operational level, MSPs can use automated threat reports and audits to show numerical proof that they’re adding value. They can help IT strengthen threat defense by remote monitoring, saving staff time. As a trusted security partner, providers can also educate their customers on overall best security practices and preventive measures.

The result will be a more secure SaaS environment for the customer, a new means of monetizing SaaS security services for the channel, a way to differentiate one solution provider’s offering from another and receiving a perceived uptick in value on the part of the end-user customer.

3. Consolidation creates opportunity.

Remote monitoring and management (RMM) first emerged in the early 1990s as a way for IT organizations to move beyond the break-fix model in favor of a system that enabled them to be proactive in maintaining infrastructure and making repairs.

Over time, this market has grown and RMMs, once only available to enterprises due to their cost and complexity, have become widely available to midmarket and SMBs due to innovation and increased competition within the space. This has led to market consolidation, with a smaller number of RMM players emerging as leaders. We’re now starting to see the same pattern within the SaaS applications market, including among providers of SaaS security tools and applications, as they become more widely accessible for both enterprises and SMBs.

4. Choose a vendor-agnostic provider.

One final piece of advice for MSPs looking to add SaaS security to their stack to both improve the security posture of their customers and drive revenue growth is to select a provider that is vendor agnostic. The ongoing consolidation in the industry makes this key to long-term success, and MSPs never know when a solution they’re using will be folded into another provider’s solution. As such, MSPs are well-advised to look for vendors who invested in building out their integrations and supporting the SaaS platforms that enable their customers to be both secure and productive.

As we move into 2023, there’s no doubt that the SaaS market will continue to mature, consolidation will prevail, and security will remain top of mind for businesses of all sizes. MSPs who can build, scale and monetize their SaaS management and security stack will reap the benefits of this market maturation.

Gavin Garbutt is chairman and co-founder of Augmentt. Previously, he was a board member and strategic adviser for THP, a marketing company. His channel career began in early 2000 when he launched N-able Technologies. As CEO, Gavin built the business to become a leading vendor in the RMM space and sold it to SolarWinds in 2013. You may follow him on LinkedIn or @augmentt_com on Twitter.