Security and Cloud Services Transforming Service Provider Landscape
User demands have consistently driven change in the service provider marketplace. As MSPs continue to shift from break-fix to managed services as a primary source of revenue, this is true more than ever. It is especially evident in the growing divergence between MSPs experiencing high growth and their lower-growth counterparts.
To deliver high-value, comprehensive services, an MSP must continually expand and evolve its offerings to stay ahead of market trends and demands, while at the same time finding ways to work more efficiently through better resource allocation and technology usage.
Security, cloud adoption and new business models are among the top IT problems or service needs for MSPs. Savvy service providers are able to not only identify pain points but also see potential revenue streams and evolve their business accordingly.
The results of the Kaseya 2018 MSP Benchmark Survey bear this out. Among the nearly 900 worldwide respondents, security was once again cited as both a top concern and a key revenue driver presenting significant risk and opportunity for MSPs.
Meeting security risks was cited as the top challenge by 33 percent of respondents. No other problem or service need exceeded 10 percent. At the same time, MSPs are well aware that this need translates into a major source of revenue. As a revenue driver, security leads the pack, having increased for 65 percent of respondents for the 12 months leading up to the survey compared to the previous 12 months. In addition to being the most popular service for growth, security was also the service least likely to be stagnant or decrease; only 23 percent of respondents cited flat security revenue year over year, and 10 percent noted a decline. No other service came close to that combination.
This increase is not surprising given the variety of security services MSPs offer. Of the 11 types of security services respondents were asked about, all but 2 percent offered at least one, and only 15 percent of respondents offered one to three services. The majority (55 percent) of respondents said they offer seven or more services. Antivirus (84 percent), managed firewall (76 percent) and antimalware (70 percent) are the most popular, but all but except three — Active Directory Repository (LDAP), network usage scanning and single sign-on — are deployed by more than half of all respondents. Those three are deployed by 49 percent, 47 percent and 45 percent, respectively.
Cloud Services Still Ripe for Growth
Cloud technology is mature by many yardsticks, but it would be a mistake to equate maturity with stagnation. Among the 86 percent of respondents worldwide who claim some level of cloud adoption, more than half of the respondents said they experienced an uptick in revenue from cloud management services in 2017.
MSPs opting not to offer cloud services are eschewing the technology primarily because of the interest level of their customer base: 75 percent of respondents not offering cloud services have made this choice due to a lack of interest in their current customer base or an inability to sell into their current base.
While this may not be an issue today, not pursuing a cloud strategy is sure to have significant long-term impact on growth and future revenue streams.
The good news is it’s not too late to get started with cloud. Adoption rates for cloud services vary, and while some areas are saturated, others offer ample room for growth. For example, while 84 percent of respondents offer a customer-licensed instance of public cloud, only 45 percent offer an MSP-licensed public cloud (MSP licensed) and only 42 percent offer cloud monitoring. Cloud backup also has room for growth, with only two-thirds of respondents offering onsite-to-cloud backup, and just over one-fifth of respondents providing cloud-to-cloud backup.
The key is knowing which services to pursue. MSPs unable to increase their cloud-based revenue would be wise to expand beyond their current offerings.
Other Areas of Growth
While security and cloud were the most noteworthy, they were not the only areas where services revenue increased year over year. Revenue from desktop support, infrastructure monitoring and management (including server support), and network and connectivity support also increased year over year for more than 50 percent of respondents.
This growth, coupled with a shift away from break-fix and break-fixed-driven pricing, is evidence of a robust and growing MSP market. As MSPs look to managed services as a primary source of revenue, successful MSPs must offer high-value, comprehensive services while also making sure they are fully compensated for the strategic value they deliver to their clients. To deliver this value, an MSP must continually expand and evolve its offerings to stay ahead of market trends and demands.
Download the 2018 MSP Benchmark Survey Results Report to discover how your MSP can be successful in this dynamic and rapidly growing market.
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