It’s an exciting time to be a managed services provider (MSP). Despite short-term supply chain disruptions that have some wringing their hands over the global economic outlook, research shows that businesses are already on a healthy recovery trajectory post-COVID. In fact, The SMB Opportunity for MSPs: 2021-2026, a new report conducted by Analysys Mason and Hanover Research and commissioned by ConnectWise, found that small- and medium-sized businesses (SMBs) foresee revenue growth of 10% over the next several years.
The pandemic also highlighted the importance of modern technologies in providing first-rate experiences for customers and employees alike. Customers now expect ultra-convenient digital experiences that allow them to shop, socialize, and be entertained from the comfort of their own homes. Employees now expect more flexible remote and hybrid workplaces that give them the flexibility to tailor their schedules and environments to their own individual needs.
All of these factors paint a picture of a future where the demand for MSPs is very strong: The SMB Opportunity for MSPs report discovered that nearly half (48%) of businesses are prioritizing IT modernization as a key business goal. As a result, over $90 billion in new spending will be created in managed IT services by SMBs over the next five years.
While the growth in this market clearly presents an incredible opportunity, MSPs can’t simply sit back and expect new business to come rolling in. Here are three tips your MSP business can use to meet customer expectations and capitalize on IT demand in 2022 and beyond.
Tip #1: Broaden your services portfolio
Is increasing business valuation a top goal for your MSP business? Expanding your services portfolio is crucial for attracting and retaining profitable customers. As SMBs increase their managed IT services spend, they will continue to seek out MSPs with extensive service portfolios for ease of procurement and relationship management.
As many providers and resellers transform into MSPs, service differentiation is becoming more difficult (and is now a key business goal for 25% of MSPs). How can you ensure that your MSP business is growing into areas that will provide the most value in the long run? To pick practical entry points for portfolio expansion, consider the areas that are being prioritized by SMBs over the next three years, such as enhancing cybersecurity (52%), improving collaboration between employees/offices (36%), and migrating more IT to the cloud or external colocation facilities (30%).
MSPs themselves are being increasingly targeted by threat actors due to the wealth of customer data they hold, which means improving cybersecurity expertise presents a win/win situation for both the business and its customers. According to The SMB Opportunity for MSPs report, 20% of MSPs are prioritizing their own cybersecurity and approximately 30% plan to start offering cybersecurity services to customers.
To facilitate your organization’s expansion into this area, consider some of the cybersecurity success factors that are frequently cited by security-specialized MSPs:
- Expertise of senior management in managed cybersecurity services (44%)
- Management of an economically viable number of endpoints (39%)
- Range of cybersecurity solutions that are available to clients (27%)
- Joint sales and marketing activities with a cybersecurity solution/platform vendor (25%)
- Access to an external security operations center (SOC) (20%)
Tip #2: Bridge the tech talent gap
It’s a candidate’s hiring market right now, which means competition for elite talent will continue to heat up as IT firms go up against global enterprises that are also looking to attract — and keep — all-star employees. In The SMB Opportunity for MSPs report, we learned that one in five MSPs view retaining their staff as a significant challenge.
To foster a constructive work culture that makes employees feel that you are furthering their career development, consider investing in regular talent training. This can help technicians stay up-to-date on the latest skills and technologies they need to do their jobs effectively. Showing that you are invested in your team’s career development can also lead to better retention rates. According to one survey conducted by Harris Poll, 70% of US employees say they are at least somewhat likely to leave their role and accept an offer with an organization that is known for investing in employee learning and development.
There are certifications in tools, technologies, and methodologies that can not only boost your employees careers, but also boost your MSP’s credibility and customer trust. This is particularly important when offering cybersecurity services, as organizations want tangible proof that the people in charge of their information security are highly trained and experienced. Our MSP Research Report found that 40% of security-specialized MSPs attribute their success in offering these services to the certifications achieved by their SOC and NOC technicians.
For many, hiring elite cybersecurity talent and/or paying for entire teams to study toward and earn advanced certifications can quickly become expensive. That’s why a growing number of MSPs are incorporating outsourced SOCs and NOCs to bridge talent gaps and scale the business to address the growing demand for these services while keeping fixed costs in check.
Tip #3: Automate service delivery and business management
As your MSP business grows its services portfolio and adopts modern solutions for bridging the talent gap, you will likely find that these changes can contribute to a new degree of operational complexity that you may not be well-equipped to manage. Because the key to boosting your MSP’s profitability is to work smarter, not harder, forward-thinking MSPs are recognizing the need to retool and streamline their technology stacks.
The number and complexity of solutions required by customers will only continue to grow, which means automation software has become table stakes for organizations that want to rise to the occasion while keeping their internal operations running smoothly. When looking to minimize chaos and drive efficiency, many MSPs are turning to professional services automation (PSA) software such as ConnectWise PSA to serve as a single source of truth across all integrated apps. Using a PSA solution to automate workflows not only improves staff productivity, it enhances the customer experience by clarifying accountability and giving clients a more effective way to communicate with your teams.
Another technology that has been proven to provide compounding value for MSPs is remote monitoring and management (RMM) software. These tools make it easier to deal with complex IT environments that span traditional offices and less-secure work from home setups. A solution such as ConnectWise RMM can help drive your MSP business forward by proactively monitoring to prevent problems and automatically fixing common issues by scripting basic tasks and documenting the results.
To reach the next level, a fully integrated PSA and RMM platform consolidates functions to resolve client issues faster and keep the business running while giving leadership teams 360-degree visibility into operational data and key metrics. What’s more, these tools can seamlessly incorporate expert IT services and give you a fully staffed SOC, NOC, and/or help desk to fill any in-house gaps you may have. Savvy MSPs are already seeing the benefits and strong ROI of these technologies: The SMB Opportunity for MSPs report discovered that we can expect to see 100% growth in the number of MSPs using fully integrated PSA and RMM platforms over the next 3 years.
Position your MSP business for success
Thrilled about the bright outlook for the future of MSPs? So are we! As the world continues to shift into a new era of work driven by accelerated digital transformation, MSPs have a golden opportunity to become the trusted IT partners for businesses that recognize the need for guidance as they grow and evolve. Making the most of this situation will require your MSP business to take a disciplined operational and customer-focused approach by remaining laser-focused on the areas that have the greatest growth potential. To learn more about the key growth levers you should be focusing on over the coming years, download The SMB Opportunity for MSPs: 2021-2026.
Author Deepinder Sahni is director of global market intelligence at ConnectWise. Read more ConnectWise guest blogs here. Regularly contributed guest blogs are part of ChannelE2E’s sponsorship program.