Chris McKewon, Founder and CEO, Xceptional

[Re: the fact that the majority of MSPs expect most of their end customers to be 100% in the cloud within the next five years]:

“If the pandemic taught organizations anything, it was how important a cloud strategy is to business continuity. Companies that already had a cloud strategy in place pre-pandemic were able to pivot to remote work with little to no issues and were able to avoid little to no downtime, whereas those who had no cloud strategy were scrambling to come up with one and had to shut down until then.

“Two years later, we are seeing just how commonplace hybrid and remote work is. Xceptional has seen a few clients who have completely gotten rid of their offices and all their workers are remote. For those clients, they are 100% in the cloud. In addition, Xceptional is having more and more cloud conversations with clients. These conversations that we are having with our clients typically center around the topics of cloud migration (what can be put in the cloud, how much would moving applications to the cloud save money in the long run, etc.) or cloud security.

“According to a Harvard Business Review 2020 Cloud Survey, 83% of survey respondents said cloud is very or extremely important to future strategy and growth. With that said, if companies aren’t voluntarily going to the cloud due to a remote or hybrid work model, they may be forced to thanks to manufacturers. Cisco, for instance, is starting to put a huge focus on cloud and subscription licenses. They are starting to move away from perpetual licensing and into cloud-based subscription licensing.

“Whether clients are willing to or not, cloud is here to stay.”

[Re: the fact that the majority of end customers (55%) are spending more and more each year with their MSPs]:

“Value- and innovation-focused MSPs are becoming the ‘go-to’ trusted partner and solution provider for the majority of their clients. There are many market dynamics and realities that are driving this such as:

• New hybrid workplace and customer experience models. Employee and customer engagement is critical to the ongoing success of every business. Disengaged employees cost the U.S. economy around $550 billion per year. Yet research from Achievers Workforce Institute shows that only 21% of employees view themselves as ‘very engaged’ at work. According to Gallup, employee engagement overall is around 36%. During the pandemic, many organizations went from in-office setups to 100% remote, to hybrid arrangements, dramatically impacting culture, communications and employee workflow. This shift also changed how customers were engaged, serviced and supported. Customers need their MSPs to provide more holistic, comprehensive systems, communications and collaboration platforms, cloud solutions, and managed services to not just survive, but thrive in the new reality.

• Growing tsunami of cyberattacks and breaches. According to Microsoft’s Security Intelligence webpage, there were over 94 million devices globally that had cyber threat encounters over the last 30 days alone. Experts estimate that every 39 seconds, there is a new attack somewhere on the web. That is about 2,244 attacks occurring on the internet daily in 2021.There were 1,767 reported breaches in the first six months of 2021, exposing a total of 18.8 billion records.

• Some industries have experienced 200%-3,000% growth in cyber incidents over the last 36 months. The growth in cyberattacks and breaches across dozens of industry segments is causing customers to reach out to MSPs and request security and risk related services and solutions. Fifty-five percvent of MSPs reported that most or all of their customers are asking for security related services.

• Getting ahead of regulatory compliance and data privacy law changes. Managing regulatory change was the top compliance challenge in 2020, and 34% of companies report outsourcing some or all of their compliance in 2019. The reality is regulatory costs for SMBs are nearly 20% higher than larger companies, and more than 67% of organizations expect regulatory compliance costs to increase in 2022 and 2023. Dozens of states are beginning to review or implement data privacy and protection laws like CCPA. This is creating a large financial burden on MSP customers who are already understaffed and struggling to keep up with regulatory changes, and driving customers to seek out managed compliance services from their MSPs. According to a Q4 2021 Compliance as a Service study by Xceptional, 78% of respondents said achieving and maintaining compliance is a large need for the business, 56% were looking for or already working with a third party to assist them with regulatory compliance, and 65% wanted additional information on this type of service.”