Managed service providers may be the only folks in IT who believe 2009 will bring more economic joy than sorrow.
But it also will bring more competition.
So says a managed services survey conducted by IT industry association CompTIA being released this month. The study looked at 200 MSPs in the United States and Canada, their current business climate and both present and future business objectives, and determined that, at least for the managed services market, the sky is not falling.
In fact, more than half of the MSPs surveyed believe their revenues will increase an average of 25 percent next year. That amount is on top of the average 28 percent operating profit margins the MSPs anticipate this year.
On the heels of a projected revenue increases comes a slew of new competition, the survey noted. While about 20 percent believe the MSP market is competitive today, about 40 percent believe that increased competition from both local and national MSPs will be a reality in 2009.
One of the keys to MSPs’ current success and projected growth seems to be on knowing their market — 46 percent of MSPs surveyed reported they garner their revenues from a single industry. Indeed, the most popular industry for MSPs in 2008 was financial services, at 37 percent, followed closely by health care services, at 36 percent. Professional services, manufacturing and government/nonprofit/education rounded out the top five with 30 percent, 27 percent and 24 percent, respectively.
For 2009, however, the picture looks much different. Manufacturing tops the industry with the most projected growth for MSPs, at a whopping 78 percent. Runner up is government/nonprofit/education at 52 percent. Health care is third at 42 percent, followed by professional services at 37 percent and financial services at 34 percent, according to the survey.
Pricing, or the method by which MSPs determine their rate of service, also is a factor in the success of many MSPs, according to the survey. Those MSPs who are considered in the survey to be “profit leaders” tend to focus heavily on research-based pricing strategies.
“The data suggests that what is important, ?rst of all, is that MSPs develop a deep understanding of their customers. Then they can set price based on the value that managed services create for those customers,” the survey noted. “They can also focus on those customer segments where their services offer the most value.”
The survey further noted that that MSPs should abandon convoluted pricing structures and instead choose a framework that is simple enough for salespeople to apply in a consistent, disciplined manner. “Complex pricing structures tend to be harder to implement consistently, which in turn can lead to mismatches between price and delivery cost,” according to the survey.
And when it comes to breadth of services, more is not always better, the report noted. Indeed, although the majority of respondents ranked “breadth of services” as their second highest value proposition to their customers (at 24 percent, second only to “relationship with customers” at 39 percent), when comparing the “profit leaders” to the “profit laggards,” both groups reported covering virtually the same devices. “The difference … was not statistically significant,” the survey noted.