Managed service providers are increasingly looking to automation for growth, but cybersecurity is also a priority, according to new research, as Mike Puglia, chief strategy officer and general manager of security products at Kaseya, explains.
For service providers, automation is the key to success. Managed service providers (MSPs) that automate recurring processes such as patching, endpoint monitoring and ticket resolution can work more efficiently, allowing them to take on more clients and boost their bottom line. These benefits are so important that about 90% of MSPs cite automation as crucial for their business, according to Kaseya’s 2023 MSP Benchmark Report.
The research surveyed more than 1,000 MSPs from the Americas, Europe, Middle East, Africa and the APAC region. With responses from technicians and business executives, it gives fresh insights into how MSPs shape their processes to provide IT support and infrastructure management to their small and medium-sized customers.
Automation stood out as one significant factor for growth, but cybersecurity and integration of work tools are also front of mind for the MSP community, according to the report. Additionally, there was a 15% jump from last year in respondents who named cybersecurity as the main IT challenge their clients expect to face this year.
In line with this, the top five services that MSPs are planning to offer fall under the cybersecurity umbrella, covering identity and access management, security awareness training and Dark Web monitoring. Driven by ever-growing cyber threats, the percentage of respondents who back up their customers’ SaaS applications has also increased from 78% in 2022 to 83% in 2023. Consequently, security has become a growth driver: Enhanced security is among the services that recorded the most growth in the past 12 months.
The rise of co-managed services
As MSPs move upstream and more mid-market companies outsource some of their functions, co-managed opportunities have grown significantly. About a third of MSPs make between 26 and 50% of their revenue from co-managed services. Subscription-based managed services are another growth area and are the top revenue generator, according to 68% of executives surveyed. Break-fix, while the most time-consuming, is only the third most lucrative revenue stream.
With the global economy in turbulence, providers are preparing to weather the storm. The primary challenges MSPs anticipate are acquiring more customers (35% of executives) and dealing with advanced and sophisticated security threats (21% of technicians). Supply chain issues, on the other hand, are levelling off: The percentage of respondents who saw significant supply chain impact dropped from 35% to 28%.
When it comes to obstacles hindering business growth, nearly four in 10 respondents cited the inability of technicians to maximise software usage as their biggest issue. A lack of integration between solutions can hamper daily operations and slow down productivity, as constant switching between tools wastes valuable time and results in duplicated efforts. The ability to automate largely depends on integration, too.
MSPs recognise this as almost 90% of survey respondents agreed that integration between core applications is critical to their business – acknowledging that in a saturated market, the efficiency with which they can deliver services, and their speed and accuracy in resolving customer queries will determine their success.
Those MSPs that have used integration to their advantage agreed that it enabled them to take on more clients and expand their business (63%) as well as reduce costs (49%), with 54% of executives finding that fewer technicians were needed to manage the workload, freeing up staff to focus on other business-critical tasks.
The MSP industry will likely continue to see consistent growth. The most successful providers will be those that strengthen their position by adopting technologies that streamline operations and increase productivity, so they can dedicate more time to pursuing their business goals.
