Managed service providers have often been the unsung heroes of the office tech sector, but now there is an increasing appreciation of the value that they provide. But how can MSPs ensure they maximise the opportunities they find in a changing marketplace?
As technology plays an increasingly important role in many businesses, especially smaller ones, more and more are outsourcing their tech requirements to managed service providers (MSPs).
Indeed, Gaidar Magdanurov, president at Acronis, notes that Canalys estimates that the channel’s total managed services revenue will grow at least 12% in 2024. “Based on interviews with Acronis partners, we see the potential for growth as well, as more small and medium businesses are outsourcing IT infrastructure management to MSPs,” he says.
“Given the shortage of IT professionals on the market, MSPs can offer lower costs and higher quality. The most powerful driver of demand for outsourcing IT infrastructure management is a lack of cybersecurity talent.
“Therefore, the demand for managed services will continue to grow, specifically the market for managed cybersecurity, leading to more MSPs establishing cybersecurity practices or setting up partnerships with managed security vendors.”
Greg Jones, VP of business development, EMEA at Kaseya, agrees, saying that the company is seeing more demand for services from MSPs as small- to medium-sized businesses (SMBs) need help, support and guidance traversing the technology landscape. “No matter what vertical a small company operates in, they are all in the technology space now we’re in the digital age,” he says.
Nick Bannister, vice president sales for Arrow’s enterprise computing solutions business in the UK, Ireland, Central & Eastern Europe & ANZ, adds that the ability to manage costs and cashflow, as well as ensuring access to the latest technology and security to protect against the increasingly complex digital landscape are also reasons for the growth in demand for managed services. “Managed services are attractive to as they are flexible and scalable and can grow with business demand, while allowing the customer to focus on core activity reducing the need for some in-house IT skill sets, which can produce additional cost savings,” he says.
The right stuff
Markus Rex, head of SYNAXON Managed Services, says that demand for managed services continues to grow – but that customers are looking for certain criteria in a provider. “What our partners and their customers want are simple services that are affordable and easy to manage,” he says. “Most smaller resellers want to provide managed services such as backup, endpoint security and desktop services to customers, but don’t have the capacity or set up their own operation.
“This is why we created our range of ready-to-deploy services that enable our partners to start small and grow their managed services business without having to make any up-front investment in technical resources or infrastructure.
“The concept of managed services is well understood in the B2B market now, yet a lot of smaller business customers remain wary of putting the responsibility for IT functions into the hands of a third party. That’s why it makes sense for partners to start by offering simple services that are easy to understand and deliver.”
Mark Appleton, chief customer officer at ALSO, also believes demand for MSPs will continue to grow in the coming years, for several reasons. “There is cybersecurity, AI and there’s still a lot of cloud adoption, migration and optimisation that’s continuing to happen in the market,” he says. “That’s what’s coming up in the next two to three years.”
But Mark adds that customers need to find the right partner and it depends on what market and vertical they’re in. “More MSPs are specialising in niche verticals and not being so widespread, so customers have to find the right MSP to partner and move forward with,” he says.
Steve Grey, head of sales at ALSO, adds MSPs must be experts for the customer. “Their IT teams can’t know everything about everything, so they want a trusted managed service provider that perhaps can go deep in one particular vertical,” he says.
AI influence
One of the bigger considerations for MSPs currently is the development of AI. As the benefits of AI become clearer for businesses – and more start to utilise it – it is something that MSPs need to be on top of.
“MSPs need to be able to go to their customers confidently about AI before another one turns up and knocks on their customers’ door,” says Steve. “With AI, the challenge is making sure everything’s secure, especially data, and that the customer getting the best out of it and using it effectively to save time and provide that return on investment.
“ALSO’s AI Academy is upskilling our MSPs on the sales part of selling Copilot, but then also on the technical part, making sure everything’s secure and that the customer is going to be happy with what they are going to have access to and who’s going to have access to what moving forward.
“But also, there are upsell opportunities within that, for instance, around compliance and security that they can add on as an additional service along with the licence for Copilot.”
Steve adds that AI presents a huge opportunity, but we are at the beginning of its impact on business. “The key factor for most of our resellers is not being left behind, so they need to act now,” he warns. “Because within a few short months, they could be way behind the competition.
“AI is not really replacing anything, it’s brand-new technology and a huge opportunity for MSPs to grab market share and revenue.
“If customers come knocking on the door saying, what can you tell us about AI? And they don’t know, then they’re going to look elsewhere, which is where our AI Academy helps those MSPs with not just the technical and sales training, but marketing support et cetera, to help develop that AI practise.”
Automation and efficiency
Greg adds that AI, GenAI and automation are currently the top requests from business owners across the globe. “They are looking at how they can embed these technologies into their day-to-day business processes,” he says. “This is creating great value add opportunities for MSPs.
“AI, GenAI, machine learning and automation should be key focus areas for all businesses as these technologies can help them gain a competitive advantage in the marketplace. With low interest rates and high inflation, spending money on AI and automation is a great way to outperform the markets if implemented correctly: Businesses can save a vast amount of money on tasks that could be automated, alleviating the need for human intervention in many day-to-day activities.”
Dan Smale, senior service owner of Fasthosts ProActive, adds that there is more automation and AI adoption to enhance service efficiency and provide predictive maintenance. “There are also growing concerns over regulatory compliance, which is driving the demand for MSPs to navigate these often-complex legal requirements,” he notes. “Investing in automation tools helps MSPs deliver services more efficiently and reduce operational costs. Automation can also improve service quality by reducing human error and freeing up skilled staff to focus on more complex tasks or customer interactions.”
Ross Teague, CEO at Nebula Global Services, recently attended a MSP summit in the USA where AI and how this will influence the market was discussed. “Will the introduction of AI tools enable customers to better self-serve or add a layer of complexity?” he says. “My view is companies are always better when they focus on their core business, and I believe this is only magnified when looking at SMBs, so it will be how the MSP’s introduce better self-service tools using AI technologies that enhance the services they provide for their customers that will be the winner in my opinion,” he says.
“If MSPs get this right, they can enhance their service to the customer in terms of speed of response without losing the white glove human to human check and balance. This is where I feel the best MSPs will succeed, bringing automation and white glove together and I truly believe this is what customers want.”
Security
Another key trend for MSPs is security and dealing with the increasing number and variety of cyberthreats to businesses.
“With rising cyberthreats and almost every day a new data breach reported, MSPs are putting a heavier emphasis on the importance of security services,” says Dan. “We’re also seeing MSPs expand their offering to include more cloud services, thanks to the greater adoption and integration of the cloud across the board. Clients are also demanding more customised and bespoke solutions to their needs, and flexible service contracts that adapt to meet their ever-changing requirements.
“With remote and home working in the mainstream, many MSPs also need to offer solutions that offer this approach of working away from the office.”
Mark Watkinson, head of market insights at Adarma, adds customers often want to expand their security programmes and leverage new innovative tools to enhance their security, but often lack the expertise to deploy, integrate and manage these effectively to realise the promised benefits and ROI. “As a result, security teams are becoming increasingly frustrated by handovers or hand-offs from one partner to another, and the management that requires, which creates inefficiencies and additional overheads,” he says. “They are, after all, the security team, not the partner management team, so their focus should be on security rather than managing partnerships.”
This means for MSPs, there will be more opportunities in ‘exposure management’, Mark says. “With the rapid evolution of cyberthreats, traditional approaches to cybersecurity such as periodic vulnerability assessments and reactive threat detection and response are no longer sufficient,” he says.
“Organisations are increasingly realising the importance of continuous monitoring of their environment to identify vulnerabilities and weaknesses. This helps to enhance their overall security posture and reduces the likelihood of successful cyberattacks. Consequently, organisations are investing in and purchasing tools to address this problem.
“We predict that customers who have invested in, or started to invest in, tools for discovering exposures, mapping the attack surface, prioritising issues, or validating how potential attackers can exploit them, will require support in joining these disparate and conflicting tools together.
“They will need services to help them better define and streamline processes and better operationalise the telemetry that is coming from all these different exposure assessment technologies. They will also need an end-to-end support for exposure management and help to mobilise the remediation efforts based on threat exposure assessment findings.”
Mark adds that another important security consideration is whether customers have their identities locked down as much as possible with things like multifactor authentication and protecting emails – including employee awareness of phishing scams and the like with what to look for, what not to click on. “It sounds obvious, but we know that things get through the net, especially as they get more sophisticated,” he says.
“Such as the ones where it looks like it’s from internal accounts or things that you would normally trust, it’s making sure that you’re suspicious of everything.
“It is about making sure that customers have got the right security products that can help them, whether its email security, M365 security or whatever to protect them as much as possible. But it is also about awareness of the changes and new potential risks that come with things like AI and keeping ahead of that. It lies with the reseller to make sure that everything’s secure.”
Fierce competition
With rising demand for managed services, and more businesses developing offerings in this space, it means that competition is fierce. But there are ways MSPs can ensure they stay ahead of their rivals. Gaidar says that vertical specialisation is the strongest tool. “By focusing on a few industries or specific profiles of businesses, MSPs can offer a tailored solution for the type of business,” he says. “Customers tend to prefer specialised MSPs with similar companies in the portfolio, and the vertical approach allows MSPs to get a competitive edge in specific scenarios.
“Another way to compete is to focus on local businesses, offering unmatched service by having a technician arrive on-site in case of a significant failure in very little time. Combining those two advantages gives MSPs a solid competitive edge.”
Nick adds that MSPs are evolving, and those that thrive have become consultants and advisors – their customers are looking to them for authority and expertise. “It is providing an opportunity for them to differentiate,” he says. “By leaning on technology providers and distributors like Arrow, MSPs can in turn draw on the expertise and programs offering support and training to help their businesses
to grow.”
Greg adds that MSPs shouldn’t let customers tell you what they want or need. “They might think they know, but the only thing they truly know are the pain points within their business and the outcome of what they would like the business to achieve.
“If you let the customer control the sale or solution, then you are in danger of not delivering a true ROI and possibly doing more harm than good. Remember, MSPs have the option to walk away from a deal if it is felt it is the wrong solution for the business. You will be surprised how many will come back due to your integrity.”
Likewise, Greg also advises MSPs to not compete on price. “That is a race to the bottom,” he says. “Have a strong message and story about how you empower the businesses that you work with and don’t allow them to mandate or control your service offering.”
Dan adds that it’s important to try and specialise where possible. “Perhaps by developing a niche or bespoke service,” he says. “In a similar thread, can you adopt a proactive approach to your services? Consider moving from reactive to proactive and predictive service models to help your customers before problems develop.
He adds that strategic partnerships, which involve collaborating with tech providers and other MSPs should also be considered. “Collaborating with other companies can extend your capabilities and reach,” he says. “This might involve partnering with specialised service providers, or software vendors, to offer complementary services, enabling a more comprehensive solution set for customers.”
Partnering with tech providers
Indeed, partnering with specialists could be valuable. Greg says MSPs should be leaning into all vendors and tech providers they work with. “Most, if not all vendors offer a vast amount of support for MSPs to help them grow their business,” he says. “MSPs should look at their vendor relationships differently and not just pick up the phone when they need a new licence or piece of hardware, for example. The vendor relationship should become an integral part of the business.
“Of course, you need to consider how you can expand your service offering by partnering with software and hardware vendors, but beyond that MSPs should be looking at how they can provide business help and support in areas such as sales and marketing, education, training, development and give advice and guidance.
“MSPs should ask their vendors two questions: What help and support for my business can you offer that we are not using now? And what are some of your fastest growing partners doing to win new business or succeed in the market?”
Dan adds that partnering with tech companies can help provide access to advanced technologies: “Resellers can leverage and make use of the latest technologies without significant upfront investment on their part,” he says.
Likewise, they can gain access to specialised skills and knowledge from tech providers, which can help to enhance service quality and offer a broader range of services, attracting a wider customer base. Partnerships can enable resellers to scale services up or down more easily based on demand,” Dan adds. “Also, unique partnerships can provide a competitive edge by offering distinctive solutions. Also shared resources and expertise can lead to lower operational costs, improving profitability.”
In a similar vein, Gaidar foresees more partnerships between MSPs and cybersecurity providers as cyberthreats continue to grow and develop in complexity. “More MSPs will offer EDR/XDR solutions and partner with MDR vendors, as traditional security is no longer enough for their customers,” he says.
“There will also be a proliferation of partnerships between MSPs. Due to a lack of cybersecurity talent and a general lack of qualified IT professionals, more and more MSPs will have to outsource some of their responsibilities to their partners. We already see that some MSPs are becoming more of a cloud aggregator, with more revenue shifting towards reselling software and services to other MSPs than the directly offered managed services.”
Huge opportunities
There is also a huge opportunity for MSPs to provide more leadership and consultative services, Greg says.
“Leading edge technologies such as AI are never out of the news now and businesses need help and support on how to integrate these technologies into their daily business,” he says. “Remember, they don’t know what they don’t know, IT and technology is not their specialist subject area, they need advice and guidance and to be shown what is possible.
“Business and technology have converged, which means SMBs need MSPs more than ever. It is not possible to have a good company without good technology behind them.”