Kaseya Annual Benchmark Study Shows Plenty of Opportunity for MSPs
IT management solution provider Kaseya Wednesday released the results of its seventh annual MSP Benchmark Survey. From pricing strategies to service offerings, the results have a lot to say about which opportunities MSPs are leveraging, and which they’re missing out on.
We sat down with Miguel Lopez, SVP of managed services providers at Kaseya, to talk about the top five trends the 2018 survey revealed.
1. PSA is ceding ground to IT documentation.
It was only recently that professional service automation (PSA) was widely considered to be critical to running MSPs’ businesses, but the survey showed that only 16 percent of respondents consider their PSA tool their most critical application. Instead, MSPs increasingly are relying on IT documentation, which came in second place (RMM was No. 1 by a nearly 30 percent margin).
“[PSA] is critical to run your business,” said Lopez. “You’ve got to invoice, manage, things like that. But the interesting part of what came out of the survey is the rise of the documentation standpoint.”
According to Kaseya, the rise of documentation and fall of PSA solutions indicate that PSA isn’t driving MSPs’ businesses forward, and that the technology hasn’t evolved quickly enough to suit the needs of today’s managed service providers.
2. Surprisingly few MSPs are worried about GDPR.
Even in Europe, many MSPs are underestimating the impact that the impending General Data Protection Regulation (GDPR) will have on their businesses and their customers’ businesses. Only 77 percent of MSPs in EMEA said that GDPR would affect their practices. Considering the regulation mandates significant changes to how companies worldwide handle user data for EU citizens, you’d think more partners would be paying attention.
In the U.S., only 10 percent of MSPs say they’ll be impacted by GDPR, which takes effect in May. While that low number might be understandable, Lopez says service providers that aren’t actively changing their offerings to comply with global data-privacy regulations are misguided.
“The reality is based on other countries putting these regulations in place; you are affected even if you don’t realize it,” says Lopez. “If an MSP has a customer that does business in the EU and they’re not up to GDPR, and something happens, you’re probably not going to get hit with fines from the EU. But you’re going to lose a customer. That’s a reality.”
3. MSPs should go further with their security offerings.
Did the never-ending barrage of cyberattacks in 2017 make MSPs double down protecting their clients? Yes and no. Security risks were the most commonly cited challenge in 2018, leading the rest of the pack by a margin of 23 percent. In addition, MSPs know that security will be critical to their success in 2018 and beyond. Security revenue increased by 65 percent for the 12 months leading up to the survey (compared to the previous 12 months) and was the service respondents said was least likely to be stagnant or decrease. So it stands to reason MSPs are maintaining a rigorous, robust defense against cyberattacks, right?
Not necessarily. A closer look at the breakdown of managed security services shows that while the vast majority of MSPs in the Americas offer antivirus (93 percent), anti-malware (82 percent) and managed firewall (80 percent) solutions, a surprising number of partners stop there. For example, less than half of respondents offered services around identity and access management, which encompasses more advanced features like two-factor authentication, single sign on and password management. And in today’s threat landscape, that’s just not enough. Not only does it leave customers unprotected against many advanced attack methods, it opens the door for competitors to swoop in and steal clients.
“An MSP who’s a little bit ahead of the curve … can go to your customer [with solutions] like multifactor,” says Lopez. “Over time, they’re going to wedge their way in deeper because the other MSP is just not offering those services.”
4. Many MSPs are still missing the value-based revenue opportunity.
We all know the break-fix model is nearly extinct. The number of holdouts that still operate on a price-match revenue strategy has declined precipitously for the last three years, down to just 6 percent in 2017.
“There’s been a realization around, ‘I can no longer charge what the competitor charges, not to mention much less, because I have to make some money to survive,’” says Lopez. That shift led MSPs instead to base their pricing strategies on cost. Cost-based pricing works well in the type of commoditized managed-service model we’ve gotten used to seeing over the last several years.
But in an era of services, where partners are expected to provide an ROI above and beyond just technical solutions, MSPs that haven’t switched to a value-based pricing model could be missing out on additional revenue. If you’re helping your customer define and achieve business outcomes, charging on cost alone devalues your expertise and cuts out a lot of opportunity. It’s a definite shift, not only in revenue models, but also in the way MSPs approach their customer relationships.
“Talking about price from a value perspective is no longer really about a technology like antivirus or backup,” says Lopez. “It’s now, ‘What value am I bringing you from a business perspective?’ And that’s a very different conversation than people are used to in the past.”
5. MSPs have plenty of room to grow with cloud.
Cloud has been around for a long time, and it’s rare to find an MSP that doesn’t include cloud solutions in its core offerings. In fact, 85 percent of respondents worldwide have adopted cloud on some level. But when it comes to cloud services, many partners have a lot of runway to higher margins.
Only 67 percent of those surveyed offer managed cloud services, less than half offer cloud monitoring, and only two-thirds offer onsite-to-cloud backup. The missed revenue here isn’t anything to sneeze at. Half or more respondents that provide cloud services reported 11 percent or greater margins from multiple areas, including cloud email solutions like hosted Exchange alone, cloud backup and Office 365 services. With that amount of money on the line, why are many MSPs still dragging their feet on cloud?
“It’s reluctance to change a business offering as well as waiting on the customer to raise their hand and say, ‘I need this,’” says Lopez. Partners still operating in a product-solution-over-services model often let their customers lead the way. In the 2018 channel, however, MSPs have to drive the discussion around what technology customers should adapt to stay ahead of their competitors and take their business to the next level.