Competition remains a major MSP concern

Managed service providers (MSPs) view competition as their biggest threat and there are signs that concerns about profitability and revenues are also vexing those running channel partners.

The latest Datto Global state of the MSP report echoes the main findings in last year’s, with a fear of competitors a tangible worry, but it also shared widespread feelings that now is a good time to be an MSP.

Top areas where MSPs had invested included cloud-based infrastructure and management, office productivity software, and business continuity and disaster recovery (BCDR).

There were also signs that demand for break-fix was also increasing as customers looked to partners as a source of help to make existing technology work, rather than opting for a fresh vendor.

Christopher McKie, VP, product marketing security and networking solutions at Datto, a Kaseya company, said there were some findings that were highlights from this year’s research.

“Several things stand out, the first being that 95% of the respondents believe that now is a good time to be an MSP,” he said. “That is encouraging and certainly bodes well for market sentiment. From a cyber security perspective, it is exciting to see so much growth opportunity in additional security services, including managed detection and response [MDR], dark web monitoring, endpoint detection and response [EDR], access management, and more.”

McKie said the survey also showed that the MSP world was in a good state, certainly according to the 1,800-plus respondents.

“The MSP world appears to be healthy and growing, with three out of five MSPs stating that they increased revenue over the last 12 months,” he said. “However, with growth comes greater competitive pressure. Competition was the number one challenge reported, which indicates MSPs will be forced to become better marketers to stand out and continue to increase revenue.

“Considering that 95% of respondents say that now is a good time to be in the industry, and with 82% expecting revenue to grow over the next three years, it would be easy to conclude that the vast majority of MSPs are confident in weathering rough economic headwinds.

“Economic downturns often drive demand for more cost-efficient technologies, such as leveraging cloud-based services. With 95% of MSPs seeing new market opportunities in the cloud, one could imagine that moving more workloads securely to the cloud will actually accelerate revenue while the market slows goes through its turbulent cycles.”

In terms of priorities, the survey showed where MSPs were identifying areas of investment (see box above) and McKie said there were areas of opportunity.

“MSPs are taking on new services, such as cloud workload migration, cyber security and even noting an increase in break-fix demand,” he said. “Given the numerous growth areas, as well as reported challenges in hiring, the number one priority for any MSP will be to increase operational efficiencies, which will most likely be driven by adopting tools that are easy to use, manage and deploy.”

For Datto, the survey will provide it with an opportunity to make sure it is delivering the right type of support to MSPs.

McKie added: “Knowing that MSPs are challenged in so many ways allows us to focus on providing solutions that are highly effective, efficient and easy to use, manage and deploy.”