Managed service providers (MSPs) continue to play a pivotal role in supporting businesses worldwide. In the dynamic world of technology, they are thriving amidst fierce competition, leveraging innovation and growth opportunities. A recent survey by Datto titled “Global State of the MSP Report – Trends and Forecasts for 2024” explores the current state of MSPs and offers actionable strategies to drive success in 2024. Here are some key insights.
Competition concerns continue to grow
Competition remains a significant concern for MSPs, with an increasing number of players entering the field. 35% of MSPs across all regions have identified competition as their most significant challenge in 2023, up from 29% in 2022. However, this heightened competition is driving innovation and differentiation. Interestingly, as competition rises, revenue is also on the upswing, with a substantial percentage of MSPs experiencing a revenue increase of over 10%. This trend is expected to continue, especially in North America, signaling a robust financial outlook for the industry.
Global MSPs are experiencing revenue growth as small- to medium-sized businesses (SMBs) acknowledge the vital importance of IT and are increasingly relying on MSPs to deliver essential IT and security services.
Customer experience takes center stage for 44% of MSPs
In response to the shifting landscape, MSP priorities have evolved, and delivering a memorable customer experience has become a top strategic priority alongside revenue growth. The survey by Datto reveals that 44% of MSPs prioritize improving the customer experience, recognizing its pivotal role in a fiercely competitive market. Another 47% regard it as a high-priority endeavor, highlighting the industry’s collective emphasis on customer satisfaction. This focus is not merely a checkbox but a strategic initiative which is necessary to thrive in a demanding market where client retention and acquisition are paramount.
Top MSP offerings and growth opportunities
At present, MSPs predominantly offer cloud-based infrastructure design and management (83%), office productivity software services (81%), and networking (73%). As 2024 approaches, notable growth opportunities for MSPs will be available in collaboration software (23%), self-service capabilities (20%), and storage design and implementation (20%). Survey respondents expressed a keen interest in extending their service portfolios and expect to incorporate collaboration software, business intelligence or analytics software, and incidence response and forensics.
Cybersecurity continues to worry MSPs
Cybersecurity remains a top concern for respondents, with computer viruses emerging as the most prevalent cybersecurity issue. North American respondents cite the widest range of cybersecurity challenges, with computer viruses, phishing messages and endpoint threats leading the list.
Despite offering cybersecurity protection, respondents face certain challenges. Chief among them are the complexity of cybersecurity products (47%) and the challenge of hiring skilled cybersecurity professionals (43%).
28% of respondents cited a major cybersecurity challenge that their customers lack concern about cyber risks. This underscores the pressing need for MSPs to be equipped with the tools and knowledge to educate their customers effectively.
More MSPs to offer managed security services
Managed security services are on the rise across all regions, with an increasing number of MSPs offering them. Of the MSPs that do not currently offer managed security services, over half plan to offer them in 2024.
Email security (75%), two-factor authentication (66%), password policy management (63%), and security framework and compliance auditing (65%) are among the top services offered across all regions.
Where are SMB workloads?
Approximately half of surveyed MSP respondents note a significant shift of 50% or more of their clients moving workloads to the cloud. In North America, MSPs anticipate a substantial increase in cloud migration over the next three years, driven by IaaS adoption and the migration of databases and email servers. Nearly half of the respondents project that 75% to 99% of their clients will move workloads to the cloud in the next three years.
Despite the attractiveness of the cloud, some SMBs prefer maintaining on-premises workloads, particularly in North America, where 18% of MSPs expect workloads to shift to clients’ data centers in 2024. This highlights the importance of flexible, hybrid workloads in response to the evolving landscape.
How MSPs can prepare for success in 2024
As we look ahead to 2024, MSPs can adopt several key strategies to thrive in the evolving landscape:
- Embrace Vendor Consolidation: Build strong strategic partnerships with select technology vendors to gain efficiency, cost-effectiveness, and improved service quality.
- Leverage Recurring Revenue: Strengthen the Monthly Recurring Revenue (MRR) model for a consistent and predictable revenue stream.
- Enhance Customer Experience: Focus on providing outstanding service to stand out in a saturated market, making customer experience a top strategic priority.
- Expand Service Portfolio: Add new services such as collaboration software, self-service capabilities, and storage design and implementation to tap into growth opportunities.
- Stay Compliant: Stay updated on compliance regulations to support clients effectively in an ever-changing business landscape.
- Embrace Cloud Migration: Prepare for the continued shift of client workloads to the cloud by investing in skills and resources to manage cloud services effectively.
- Address Cybersecurity Concerns: Invest in solutions to protect against computer viruses, phishing, endpoint threats, and password compromises. Hire skilled cybersecurity professionals and manage the complexity of cybersecurity products.
- Adapt to the Hybrid Workplace: Recognize the ongoing importance of supporting hybrid work models and offer solutions that cater to clients’ evolving workplace needs.
- Continuously Innovate: Differentiate yourself in a competitive landscape by continually innovating and staying abreast of emerging technologies and trends that benefit clients and your business.
By embracing these key trends and implementing actionable strategies, MSPs can not only navigate the challenges of the evolving landscape but also position themselves for continued growth and success.
Featured image credits: Image by pressfoto on Freepik