CompTIA Tells MSPs Where the Growth Lies

Business, MSP, MSP Tips
2017 Graph

CompTIA knows a thing or two about MSPs. As a channel advocacy group, it talks to service providers every day, counts hundreds as members, and does regular surveys.

That’s why Kaseya was so pleased to have CompTIA board of director member Tracy Pound speak at our recent Kaseya Connect Europe event. Pound is also managing director for Maximity Ltd., an IT training firm.

In a workshop session “CompTIA MSP Trends and Insights: Growth Opportunities”, Pound shared highlights of what the organization has learned by working so closely with providers. Pound had one area of focus that stood out — how to achieve healthy growth in large part by embracing the cloud.

Playing the Cloud Card to Win

While CompTIA does plenty of channel specific research, it relies on dedicated research firms such as IDC for a more global view.  And IDC finds IT is bullish on the cloud, which means SMBs, and the MSPs that serve them, should be too.

According to IDC, spending on the cloud will more than triple between 2016 and 2020 – hitting over $500 billion in three years. This includes cloud platform solutions  SaaS, PaaS, IaaS, as well as cloud-related professional and managed services. At the same time, close to 80 percent of today’s businesses make significant use of the cloud or plan on doing so this year. Contrast that with a mere 8 percent of businesses with no cloud plan, a result significantly lower than in 2014 when 21 percent had little or no interest in the cloud.

In sync with these findings, CompTIA believes that MSPs should move to support more workloads in the cloud, and embrace SaaS in particular. While MSPs’ customers may be adopting more or less self-service cloud apps such as Box, service providers are still need to help “shepherd” more complex, higher end solutions.

While it may seem like good news that over half of MSPs surveyed last year by CompTIA made the cloud a strategic part of their service portfolio, CompTIA  senior director, industry analysis Carolyn wishes it were higher.

“They (MSPs) still haven’t figured out whether the cloud is a good thing or a bad thing,” April remarked. “They fear that customers will simply bypass them and look to cloud providers for their basic needs.”

Instead MSPs should strive to become “cloud orchestrators”. “Just as they remotely managed on premise devices and applications, they can manage what a customer has in the cloud,” she explained. “It’s a natural spot for an MSP.”

In fact, some 62% of respondents said that worrying about the cloud was one of the things that keep them up at night.

Comptia Chart
Source: CompTIA

Plenty of Good News

Pound’s presentation, as well as April’s comments, was based largely on CompTIA survey of 400 US-based MSPs professionals, 5th Annual Trends in Managed Services.

The overall news is great.

MSPs are looking forward to seeing revenues rise in the next two years. And when it comes to high growth, it turns out that small is beautiful. 61% of small MSPs anticipate high growth, and by that we mean growth of 52%!

Expectations for Managed Service Business Next Two Years

The Pricing Conundrum

Pricing is always a tricky deal for MSPs. There are many legacy pricing models and an array of new ones. While we don’t have the space for a deep pricing analysis (you can always read one here:  2017 MSP Pricing Survey.

The below graph is what CompTIA found are the main ways MSPs price services:

MSP Pricing: The Ongoing Enigma

While there is a healthy amount of confidence, there is also a dose of worry. “The level of confidence among MSPs in how they are running their businesses is quite high,” said CompTIA’s April. “Two-thirds of the companies we surveyed consider themselves to be skilled experts at managed services.”

One reason for feeling good? Some 90% of MSPs surveyed have been doing this work for two or more years.

And many MSPs, 3 out of 10, are making most of their money through services. The future is bright for services, as some half of MSPs believes that their revenue will grow strongly and that services will rise to make up 75% of total revenue.

While bringing in more revenue is a great thing, MSPs are also faced with shrinking margins. More than 50% say they worry about margin erosion. “Naturally occurring market commoditization accounts for a portion of slimming margins, but some of the blame also falls on MSPs themselves, many of whom continue to compete with one another solely on pricing,” April said.

MSPs must also act to stem the persistent problem of employee churn. A majority of firms say in the past year they’ve lost at least one staff technician to an end-user organization’s IT staff.

“Employees who leave are usually seeking more stable hours, better pay or a job that’s more challenging than simply monitoring and waiting for an alarm bell to go off,” April said. “It’s a problem that MSPs will have to address.”

Be the Best MSP You Can Be

There is a difference between highly successful MSPs and those that don’t achieve their potential. Discover the secrets of MSP growth and prosperity with our eBook “Building a Bionic MSP Practice: Best Practices from the Highest Growth MSPs in the World.”

In this Playbook “IT Complete: Your Roadmap in an MSP 2.0 World”, we outline technical solutions that help MSPs achieve 2.0 status, and gain the rewards MSP 2.0 offers.

The Kaseya MSP 2.0 Definition:  In order for MSPs to succeed and thrive in this new environment, MSPs must evolve. That requires that MSPs:

  • Embrace the changing dynamics of the market
  • Change their investment profiles
  • Leverage a modern unified MSP Management Platform to ensure their ability to continue to succeed in the era of MSP 2.0. Such a platform should combine the business management need of an MSP with the richest current and forward-looking suite of software applications that MSPs can build managed services around to generate revenue and meet all the needs of their continually demanding SMB customer base.
Posted by Doug Barney
Doug Barney was the founding editor of Redmond Magazine, Redmond Channel Partner, Redmond Developer News and Virtualization Review. Doug also served as Executive Editor of Network World, Editor in Chief of AmigaWorld, and Editor in Chief of Network Computing.

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