CompTIA’s MSP Report Sees Influence of Consumer Cloud
IT association CompTIA came out with its Fourth Annual Trends in Managed Services study on Monday, based on surveys of 350 U.S. IT decision makers. Managed services are now a $154 billion industry in North America, according to industry organization MSP Alliance, with a compound annual growth rate (CAGR) pegged at 12.5 percent through 2019.
Carolyn April, senior director of Industry Analysis at CompTIA, spoke with Channel Partners just ahead of the report’s release. She said that while 2013 seemed to see a “plateau” in adoption with only three in 10 companies claiming any use of managed IT service, that number jumped to six in 10 in 2014.
While cost savings are “table stakes,” and adoption grows in line with the shift from capex to opex, key drivers are more strategic now, said April: Companies are turning to managed services to sample new technologies with minimal risk. They are also using them to offload the day-to-day, horizontal IT tasks such as remote network monitoring, application and device management, security, communication and tech support, reserving in-house IT staff for core, company-specific projects.
“Mixed” also describes many providers, typically juggling managed service with traditional resale. April described the bind of many traditional hardware and software IT resellers, now chasing the goal of recurring revenue by building MSP businesses.
“The problem is that most of the channel are tiny companies,” she said, “whose business is transactional or project-based. They can’t commit enough to the newer part of the business to take off.”
April cites full-scale PSAs, such as Kaseya, as a particularly high hurdle in that MSP foundational investment.
“So they keep nurturing existing revenue. They can’t afford to abandon that business, but neither can they afford to shift into MSP mode wholesale. When I give a presentation, 90 percent of the room will identify as MSPs,” says April. “When I ask how many get over 50 percent of their revenue from managed services …
… 10 percent of hands go up.”
Cloud services like DropBox or even Office 365, which can be self-procured, are not counted as MSPs in this survey, as no SLAs are involved. In fact, the report authors suggest that cloud/SaaS adoption has even slowed companies’ moves to outsource IT functions, as the number of MSP holdouts – those who say they have “no plans” to use an outside IT firm in the next two years – has risen markedly.
At the same time, some of the report’s key takeaways concern how much the consumer cloud has influenced the expectations and demands – and new purchasing behavior – of businesses. Like consumers, companies want little to no commitment; they want short contracts and to stop services with little or no penalties. They expect gradual, incremental and frequent upgrades as opposed to major two-, three- or four-year overhauls. They expect user experiences on a par with consumer downloaded apps.
April also cautions budding MSPs against downloading and using “boilerplate” SLAs. She noted that each customer agreement must be carefully customized to precisely spell out liabilities, exit strategy, data control, and “all those worst-case scenarios.”
CompTIA members can view the report in full here.
