The IT services market is set for continued growth in 2023 as IT departments across Canada and around the world struggle with staff shortages.
Canadian managed services providers (MSPs) need a clear strategy in order to future-proof their businesses, and turn challenges into opportunities. MSPs must be able to address key issues, including competitive positioning, revenue growth, hiring top talent, and acquiring new customers.
Datto, the world’s leading provider of MSP-delivered IT solutions, recently surveyed more than 1,800 managed service providers (MSPs) worldwide. The aim of this study was to more precisely understand MSPs – who they are, what they care about, and what challenges they are currently facing.
MSPs surveyed have a strong core business, and the growth of the market is filled with opportunity (this will likely continue for the foreseeable future). However, with growth comes increased competition.
In the study, 29 per cent of MSPs said their top challenge is competition. As new companies enter the market, many smaller MSPs are absorbed by larger ones.
Industry intelligence is essential to MSPs as they navigate an increasingly competitive environment. Datto is meeting that need with this year’s Global State of the MSP Report, which provides the latest industry data and insights, and looks ahead to 2023.
Datto’s report identified key areas in which MSPs are finding steady or increasing success, including:
- Security – Email security first, followed by security frameworks, compliance auditing, and identity access management. Other areas expected to grow include: managed detection and response; monitoring; dark web and compliance; and privileged access management.
- Break-fix – More and more MSPs are targeting larger companies with break-fix – what they now call co-managed IT services. These offerings assist overstressed internal IT departments, and provide an on-ramp to other services. Once the MSP is onsite fixing an issue, discussions with the company’s IT team about their managed services provides an opportunity to educate the client on the additional services and value of the MSP partner.
- Cloud integration – While MSP clients have resisted moving to the cloud due to compliance security or budgetary concerns, the next few years are projected to bring double-digit growth in cloud services and offerings. This is a huge area of opportunity.
MSPs are uniquely positioned to offer services in the above key areas. Break-fix and other services to address the resource and skill shortages in IT departments are natural extensions of classic MSP services. In addition, MSPs should prepare to address two additional areas of growth: cloud and security services.
Cloud and Cloud-Enabled Services
Cloud is another area of huge opportunity. Some MSP clients are still resistant to move to the cloud due to compliance, security, or budgetary concerns. Yet Datto’s report still found 76 per cent of MSPs clients have half of their workloads in the cloud.
The migration to cloud leaves a lot of opportunity for MSPs to expand their services. Nearly all MSPs surveyed said they now offer cloud-based infrastructure design and management.
Infrastructure as a Service (IaaS) allows companies to move a range of on-prem services to the cloud, especially email servers, databases, and application servers. Survey respondents anticipate a wider range of movement in North America than in other regions.
There are additional related areas of opportunity for MSPs – the survey noted business continuity and disaster recovery tools as two key areas of growth.
With changing workplaces and staff shortages, the demand for services related to office productivity tools is also an area of growth. Additionally, more clients are looking toward the cloud for better storage design and implementation, and to provide better productivity and collaboration across teams.
This is why 95 per cent of MSPs in the survey clearly see a wide range of new opportunities in cloud-related services.
Security Services and Offerings
Security has become a huge priority for their clientele, and MSPs must rapidly adapt to provide offerings that can be both attractive and competitive in this market. They need to look at their offerings and decide how they must grow or modify their services.
Chris McKie, VP, Product Marketing Security and Networking Solutions, Datto, noted that MSPs must look at security holistically and ask, “‘Okay, I have some measures in place – now how do I better that? What frameworks should I implement with my clients? What other tools should I add?’”
McKie said the data indicates that things like managed detection and response as well as endpoint detection response are hot growth areas.
“Many MSPs are already doing cybersecurity. They’re doing things like email security, managing a firewall, and things of that nature. But cyber-attacks are becoming more and more sophisticated.”
That means MSPs must also up their game not only to protect their clients, but also to protect themselves.
“When you look at the threat actors, certainly for small businesses, MSPs are the low-hanging fruit,” said McKie. “They’re the ideal targets because they have the keys to the kingdom. Many times, they don’t have enterprise-grade security solutions in place.”
Become a Datto Partner
Datto’s report offers a clear view of both opportunities and challenges.
“MSPs must push themselves into a higher gear,” said McKie. “We invite those who are looking to step up to these opportunities to become a Datto partner. We provide key research, services, and support to help you grow your business and succeed in this competitive market.”
Download the report to see how your MSP business can continue your success in 2023.