Why Cloud is the Stuff of MSP Nightmares

MSP CloudIn our world of technology, the pace of innovation and change can have a dramatic effect and at CompTIA we work hard to ensure that we have an understanding of the channel and how the industry is performing. For a number of years, we have been conducting our study into the Managed Services landscape and have recently launched our 5th Annual Trends in Managed Services report.

The report surveyed over 400 managed service providers to ascertain their feelings, thoughts and concerns across a broad and varied range of influences and challenges.

We found that in 2016 MSP’s are more confident about the future with 50% predicting good growth in the next two years. In addition, it seems that MSP’s have also grown in confidence, our 2013, research showed that only one third of MSP’s attributed their level of expertise as “skilled”. In our latest study this has jumped to 65% now happy to recognise themselves as “skilled”.

Carolyn April, senior director of industry analysis for CompTIA, said "Everyone tends to overinflate themselves when they take these [self-assessment] surveys, but the fact that we've got that benchmarking data from 2013 [shows that MSPs have made] real progress." 

Another positive message was that over half of MSP’s were forecasting high revenue growth for managed services, with services looking to make up 75% or more of the total revenue in the next two years.

Whilst all of this is great and positive, these are tempered by the challenges that MSPs are facing across a number of different areas. It will come as no surprise that cloud is a crucial part of any MSP strategy, but it is also the number one thing keeping them awake at night, with a staggering 62% of respondents citing cloud as the top MSP concern.

Whilst we have moved away from cloud being seen as something that could put an MSP out of business, many are still unsure how to weave cloud into their services and plans. The research highlighted that not everyone is doing this, and in the survey 44% said they only support cloud services when asked to do so by the customer.  This maybe an area that needs to evolve as MSP’s need to reshape to become strategist rather than just suppliers.

This becomes even more important when looking at margins and margin erosion, ranked as the third biggest concern facing the MSP channel. The erosion is partly due to the increasing consumerisation of services that has given end users ever greater ability to self-select and service. However, some of this erosion is also down to MSP’s failing to see the value in the services they deliver and driving pricing down to close deals.

 “It is crucial for MSPs to take control and start to orchestrate cloud services for their customers,” April said. “It won’t be enough to just resell existing cloud services.”  

Whilst the outlook for the channel is upbeat and positive, the study does highlight areas where MSPs need to start to make changes and take more control. MSP’s need to recognise the value in their services and start to position themselves as strategists to their clients. If slow to change and evolve, it may not be just cloud services keeping them awake at night.

Download our 5thh Annual Trends in Managed Services report Here

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