Study: Managed Service Providers in Growth Mode

Datto, Inc., a Connecticut-based provider of IT solutions delivered through MSPs, has released a new research report showing that managed service providers are raising their game with regard to helping their customers get the most out of technology.

As IT plays a growing role in the success of SMBs everywhere, IT service providers are adjusting their business model to include more managed services. The survey found that more than 80 percent of MSPs report recurring services driving a portion of their revenue, highlighting an industry shift from IT service providers solely modeled on ad-hoc services to becoming more strategic advisors to their SMB clients. Nearly half of respondents stated that more than 50 percent of their revenue is a result of recurring services. 

To better capture managed services revenue, MSPs are expanding their portfolios with services they might not traditionally think to offer on a recurring contract, such as Networking as a service. In addition to taking on a more strategic role and expanding their solutions sets, 56 percent of MSPs specialize in services for a particular industry, with healthcare holding the number one spot for the second year in a row.

To keep pace with the growth in managed services, 71 percent of MSPs plan to hire more employees in the next 12 months. While marketing and sales remain the top challenges, the data shows that MSPs are becoming savvier about this aspect of their business.

Security concerns also remain a top priority for MSPs and their clients. Ransomware and cybersecurity have almost doubled as a pain point, from 14 percent in 2017 to 30 percent in 2019.

“It’s a positively charged environment,” said Rob Rae, vice president of business development at Datto. ”Almost half of surveyed partners have been working in the industry for more than 15 years and nearly 100 percent of them said that right now is the best time to be in their industry.”

Datto’s third annual State of the MSP Report is based on a survey of more than 1,600 MSP partners around the globe.

Channel Impact^®
SMBs frequently struggle with information technology in this era of security threats exacerbated by an apparent shortage in skilled IT talent. MSPs, and other members of the indirect sales channel have a very solid opportunity to build customer loyalty and account stickiness by faithfully representing the best interests of their customers.