Digital Transformation and IT Modernization Will Continue — with Caution

By Allison Francis

MSPs and customers alike, it seems, will likely continue to pursue digital transformation and IT modernization initiatives in 2023, despite a less than optimal economic outlook. The steps may be a bit more carefully planned, but the overall goal and highest priority will always remain increasing the customer experience and ultimately fueling revenue.

PwC’s third quarter Pulse survey of 657 U.S. executives uncovered that 81% believe a recession will occur in the next six months. However, in the same vein, 82% of the business leaders (CFOs, COOs and CIOs) expressed confidence in their ability to stay on track with their transformation initiatives. Calculatedly, of course, but marching forward nonetheless.

This trend, clouded somewhat by the aforementioned negative economic factors, will help the channel not only survive, but thrive. Digitalization is vital for businesses vying for an edge and visibility in a hypercompetitive market. Therefore, managed service providers, system integrators and consultants will find themselves integral to helping customers make the most of their digital presence in 2023.

Economic Reality

Whatever economic reality we’re facing into will indeed not halt spend next year, but it will likely temper it.

This means, simply, that leaders won’t make huge gambles. Forge ahead, yes, but the creative, exploratory ideas may be stored in the vault for the time being. What organizations will need are ideas that will more than likely yield payback. Now is not the time to make bets.

For many years, the as-a-service model has been on a static incline, and the next year will be no exception. While customers look for cost reductions, technology will still be needed. The unfortunate reality is that cash may become less fluid, which will cause old-school tactics such as capex projects (like hardware and software upgrades) to not be available option for some businesses. Instead, businesses will likely work to shift toward driving down operational expenditures such as optimizing XaaS-style contracts and concentrating on projects that deliver the highest business value.

The best part is that customers are stating “technology is not where we plan to cut, technology is where we plan to invest to help navigate the recession.” 

The MSP Angle

This may be one of the best times to be a managed service provider. Customers are more interested in technology solutions and more open to innovation and emerging tech than ever before. The recent world events proved that technology was necessary to keep money flowing, and now, many are looking to make technology solutions a primary in their businesses. Again, this will also give them a competitive advantage to reduce friction in the buying experience as well as service delivery. Technology providers capitalizing on this trend will continue to win the wallet share of business with innovation and collaboration coupled with secure solutions.

2023 Thoughts for MSP to Focus on for Success

·       Change – Prepare for change internally and externally

·       Compliance – Focus your customers on compliance and implement best practices.

·       Cost – Help your customers understand your value and the costs. Most importantly, plan for profits in your costs.

·       Continuity – Keep your customers going, build solutions that solve your customer problem make sure that you’re tying it all together to make it work.

·       Coverage – Ensure that your helping protect your customers appropriately. Help them understand the needs for appropriate coverage in all aspects of their business.