Since the inception of managed services back in the 90s, businesses have had different experiences with MSPs- tremendous success and challenges to some measure. MSP market has grown over the years, and it is expected to hit a market value of 229.59 Billion USD by the year 2020. We can therefore confidently say that the MSP industry has matured over the years gaining an upward market trend. However, the ever-evolving technology stands as a significant hurdle and MSPs are prompted to develop and implement strategies that will cope with the dynamic nature of technology. MSPs in the situation last year is entirely different from the current situation since the sector is always evolving to meet clients’ needs. In this piece, we outline the managed services trends.
Managed services market trends
At the start, managed service was not well known among businesses, and only a few companies were providing the services. Integration of IT in many services today has led to the concurrent growth in the managed services market. Many businesses today wish to keep in the market by using the latest technologies while they lack the facilitation as well as the expertise. Managed services have provided an answer to many businesses of this kind and are now well embraced in most parts of the world. The US being the largest tech market globally with a whopping 31% revenue promises even more potential for further growth and the situation is manifest in New York City. The popularity of managed IT services in New York is commendable as the city is full of tech enthusiast business and now there are over 100 MSPs based in New York City. Competition among managed services providers is also eminent in the city, and this requires the companies to enhance their services to outdo their rivals.
Managed IT services industry trends
Mergers and consolidations
Several MSPs are now pooling resources together to ensure they provide better services to their clients as well as stand the stiff competition experienced with the market growth. With businesses now requiring a broader menu of services firms unable to stand alone in meeting all these expectations will get together with others and form a bigger and more capable entity. Resistance to such changes will see your company get obsolete and get phased out. Furthermore, a mega MSP can win big contract since it is well enabled in term of professional capacity as well as marketing infrastructure.
Cloud computing growth
IT managed services trends require MSPs to adapt to cloud computing in order to survive the turmoil market situation in regards to the economic impacts of technology. A desired next generation MSP should be nimble and cloud-based in the ecosystem thus efforts to transform the system are made daily towards the desired set-up. Cloud migration will minimize wastage and friction currently witnessed with some paper dependent organizations. However, the major stakeholder; the clients should be intimately involved in this advance, and the transition process should be smooth and seamless enough to win their trust. The efficiency witnessed by cloud computing should be reciprocated to the clients and office 365 has notably aided this. The adamant firms not willing to move to cloud computing may soon be coerced to pack and go home.
Regularizing managed services
Is there a code of performance required for managed services? Presently there is no regulatory body to establish guidelines on how managed service providers should operate; however, the need for standardization is significant, and you will probably note many similarities in services offered by many MSPs. This can constitute the spectrum of services as well as the premium charges. As of 2016, 43% of MSPs were offering standardized managed services, and this experienced a rise to 63% in 2017. Pressure is mounting on federal governments to create laws regulating activities of MSPs, and perhaps we may have some soon enough.
Strategies to focus on efficiency and profitability
New policies are formulated by MSPs globally to ensure they accrue as much profit as possible and this ought to be reflected on the productivity of the affiliated businesses as well.
MSP Industry trends 2018
Increased utilization of bundling
Bundled services offered by MSPs include; network management, storage, cloud applications, and information security management. All these services are availed to customers at periodical fees in order to make the MSP services more appealing. Many MSPs are now using this strategy to boost their revenues.
Increased collaboration between SaaS companies and MSPs
A shift in motive is seen to create a new relationship between the sellers of services and the producers of such services. A survey shows that the level of collaboration is poised to skyrocket this year with several referral programs set in place. This has improved service delivery. Besides, there is an increased need for MSPs to provide more SaaS choices thus close working ties is inevitable.
Commoditization of managed services
With increased players in the market, erosion in gross margins is unavoidable. Increased competition drives to a shrink in margin and customers are likely to get more services at lower prices. Similar to any product that supply dictate prices, lower rates will force an invention of mechanisms to cut costs for instances, laying off of staff and automation of some processes. This underscores the essence to improve efficiency while minimizing costs.
Enhanced security concerns and expectations
More calculated attacks are expected to continue and advance yearly. Clients are worried about the losses, but then MSPs are putting in place new machinery to combat such attacks and ascertain the safety of your business. Both the clients and MSPs are expected to participate in this.
MSP Industry trends 2019
MSP trends confirm a brighter future for the industry and its undeniable that certain additions are expected in the coming years which will make the services even better.
- Artificial intelligence and machine learning; MSPs are expected to seize the opportunity that comes with this new technology in a bid to improve efficiency and maintain relevance.
- More integration of IaaS and SaaS; This hybrid approach is expected to even get more widespread as it has seen enhanced service delivery and customer satisfaction.