MSPs More Confident but Must Always Adapt to Change

 
 
By Michael Vizard  |  Posted 2016-07-22 Email
 
 
 
 
 
 
 
 
 
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    1 - MSPs More Confident but Must Always Adapt to Change
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    MSPs More Confident but Must Always Adapt to Change

    MSPs have made strides but have a long way to go before they are active providers of more advanced services, recent research from CompTIA finds.
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    2 - Managed Services Come of Age
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    Managed Services Come of Age

    Managed services is now the second most popular business model in the channel today. Three in 10 respondents ranked managed services as their leading source of revenue in the last 12 months. Traditional IT solutions deployed on a project basis still come in first place, at 44%.
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    3 - Length of MSP Experience
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    Length of MSP Experience

    Just over two-fifths (43%) say they've been an MSP for five years or more. Another 45% say they've been an MSP for two to five years. Just under 12% have been in business for less than two years.
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    4 - Level of MSP Expertise
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    Level of MSP Expertise

    Two-thirds of the respondents described their organization as having a high level of MSP expertise. The other 33% say their skills are getting better.
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    5 - Managed Services Revenue Expectations
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    Managed Services Revenue Expectations

    Half of respondents expect managed services to comprise three-quarters of their revenue within two years. Another 45% say they will make up half their revenue in that time.
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    6 - Primary Drivers of Managed Services Delivery Model
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    Primary Drivers of Managed Services Delivery Model

    Improving service utilization rates ranked highest, followed by increasing revenues and protecting the customer base.
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    7 - Top Managed Services Offered
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    Top Managed Services Offered

    Security in the form of firewall management and server management are tied for first place at 74%. Storage (72%) and network management (71%) are also top services provided.
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    8 - Top Managed Services Planned
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    Top Managed Services Planned

    The top new offering MSPs plan to deliver is managed print services (32%), followed by help desk (31%), and virtual desktop and database management, tied at 30%. A full 59% plan to increase the number of services they offer.
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    9 - MSP Operational Efficiency
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    MSP Operational Efficiency

    Between half and 60% said they are optimally efficient across functions such as technical processes, sales effectiveness, MSP pricing structures and customer retention. On average, roughly four in 10 said they were close to optimal across all functions and a full 76% described themselves as being a well-oiled machine. Respondents were least confident about efficiency in maximizing ROI in new areas, such as cloud computing or developing vertical industry expertise.
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    10 - Focus on RMM/PSA Tools
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    Focus on RMM/PSA Tools

    Less than a third of MSPs (27%) said buying and implementing commercial professional service automation (PSA) or remote monitoring management (RMM) software is a priority. Primary reasons cited for adopting these tools are managing problem resolution more efficiently, managing customer billing and payments, and managing internal sales and marketing teams. A full 59% of those that have made these investments say it has been worthwhile.
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    11 - MSP Employee Retention
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    MSP Employee Retention

    A full 80% of MSPs say they've had one or more employees poached by an internal IT organization. Depending on their size, 29% to 41% of MSPs say retaining employees is a major challenge.
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    12 - MSP Hiring Practices
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    MSP Hiring Practices

    Just over a third (36%) say they hire a new technician for every 30 customer seats gained. Another 25% put that number at 20 customer seats.
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    13 - Top MSP Priorities
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    Top MSP Priorities

    Adding new customers tops the list, at 62%, followed by expanding the base of services consumed by existing customers (58%), expanding the number of services offered (57%) and improving service utilization rates (56%).
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    14 - Coping With the Cloud
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    Coping With the Cloud

    Just over half (54%) say they have made a strategic investment in cloud computing. Another 44% say they will respond tactically to a customer request. A full 62% admit cloud computing is the No. 1 issue keeping them up at night, and more than half are worried about margin erosion.
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    15 - Cost of Customer Acquisition
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    Cost of Customer Acquisition

    Just over half (52%) put the cost of acquiring a new customer at somewhere between $1,000 and $2,500 each.
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    16 - Rate of Customer Engagement
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    Rate of Customer Engagement

    Most MSPs (33% to 49%) engage customers on a monthly basis, depending on their size. Another 20% to 37% say they engage customers weekly.
 

When it comes to revenue, managed services is still a relatively nascent part of most solution providers' business models, but MSPs are evolving rapidly. A recent survey from CompTIA of 400 MSPs finds that in the next two years, most of them expect managed services to account for half to three-fourths of their revenue. The survey also finds that most MSPs are now much more confident in their abilities to deliver those services efficiently. Nevertheless, the rise of cloud computing has many MSPs troubled. Although the cloud provides opportunities for MSPs, some worry they could lose business as customers are attracted to self-service models. The challenge MSPs face is continuously revising their business models at a time when the rate of technological change has never been higher. However, the report concludes: "Judging by the list of services that MSPs currently offer, it seems they have a way to go before they are active providers of more advanced offerings. Security, server management, storage, network management … are important, but basic, table stakes …[and] most MSPs will need to expand into more complex types of offerings or specialize in a particular vertical industry or niche market."

 
 
 
 
 
 
 
 
 
 
 
 

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