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New Service Offerings and Business Models Shape Today’s Managed Services Market, New CompTIA Research Reveals

A growing number of managed service providers (MSPs) are embracing new business approaches and adding more sophisticated premium services to their portfolios, new research CompTIA, the nonprofit association for the information technology (IT) industry and workforce, reveals.

CompTIA’s January survey of 400 U.S. MSPs finds that most firms are cautiously optimistic about business prospects due in some measure to actions they took during the pandemic.

“Like many businesses MSPs were buffeted by two years of pandemic-induced economic upheaval,” said Carolyn April, senior director of industry analysis at CompTIA. “Some MSPs saw this as an opportunity to get creative and find new ways to provide value to customers, but others struggled to hold on.”

Savvy MSPs shored up their business by expanding into new services areas and aggressively targeting things like improved customer experience and marketing efforts. Many of the MSPs also capitalized on the mass move to remote work, outfitting and managing customer technology networks that were relocated from centralized office cubicles to home offices. Eight in 10 MSPs said the changes they made in the past two years have had a positive effect. Thus, 53% of MSPs are optimistic or very optimistic about their prospects over the next 12 months.

But not all MSPs had that experience and their concerns about the future are also reflected in the CompTIA survey results. Between 11% and 14% of respondents said they were either pessimistic or very pessimistic about the state of the managed services market and/or their own business over the next year. That compares to just 4% of a similar group of respondents who expressed unease about their future in a survey fielded last October.

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“Much of this nervousness is in large part attributable to events beyond their control – the uncertainties of Covid’s next steps, supply chain woes and concerns about the economy,” April said. “Apprehension may be alleviated as these pressure points become less of a concern.”

Greater focus on customer experience, cybersecurity

With customers having more options than ever to buy their technology solutions directly, MSPs continue to look for areas where they can add value. Providing a great customer experience (CX) tops their priorities. Nearly half (46%) of MSPs said shifts in customer procurement habits are driving change in their own business, while a comparable number (44%) said the demand for business consulting is also pushing them in new directions.

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“Choice-overwhelmed customers need help determining the best solution for their business needs out of hundreds of look-the-same, sound-the-same online marketplace applications offerings,” April explained. “An MSP’s consulting influence can cement a trust and stickiness with customers that can be both lucrative and valuable.”

Complexities in cybersecurity are another area where MSP see opportunities to strengthen connections to customers. A net 93% of MSPs said that the sophistication of cybersecurity is driving change in their business models or will within the next 24 months.

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While network services, help desk, storage and device management continue to be staples of the MSP service menu, firms are also expanding into “premium” offerings. These include business applications-as-a-service, data analytics, cloud-based services and compliance and privacy consulting. MSPs also continue to explore opportunities with emerging technologies such as the internet of things, blockchain, artificial intelligence and virtual reality.

Nearly half of MSP respondents said they have added premium services to their line cards to a moderate degree in the past year and 43% have done so to a significant level. Among MSPs that have added premium services 62% said they expect to see strong growth in this category that’s on par with the rest of their business, while 19% foresee robust growth that’s faster than other services.

But progress in these new and emerging areas is stymied to some degree by the realities of the current labor market. In the CompTIA survey 44% of MSPs said they have a need for technical training among current staff and 37% have found it difficult to hire people with the necessary skill sets.

“The skills are out there, but it’s a jobseeker’s market today and MSPs are competing not just with other tech firms for new hires, but companies in every industry category,” said April. “Smart MSPs are investing in their existing staff by providing internal training and access to certifications and other credentialing avenues for professional development.”

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[To share your insights with us, please write to sghosh@martechseries.com]

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