Managed services providers (MSPs) are still growing, but MSPs must now address employee retention and the cloud services wave, according to CompTIA's Fifth Annual Trends in Managed Services report/research study.
The report somewhat echoes what ChannelE2E has heard during a range of private conversations at IT conferences lately. Overall, according to sources, MSPs are less focused on peer networking and more focused on business execution -- wondering how to boost business valuations amid the shift toward more cloud services. As one pundit mentioned to us, "MSPs now want a formula for growth rather than handshakes with peers."
Overall, the MSP wave has gone mainstream. Nearly 90 percent of companies have been offering technology services for two years or more, according to CompTIA's study. Three in 10 companies say their services business was their leading revenue generator over the past year. Half of all MSPs surveyed expect high revenue growth over the next two years, with services accounting for 75 percent or more of total revenue, according to Carolyn April, senior director, industry analysis, CompTIA.
Among CompTIA's other findings (and ChannelE2E's reactions...):
1. MSP Pricing and Margins...
- CompTIA says: Half of the firms cite margin erosion as a factor that keeps them awake at night.
- ChannelE2E says: The best MSPs have avoided price wars. Check in with organizations like TruMethods and Service Leadership Inc. and you'll hear how top-performing MSPs enforce healthy per-user monthly rates. Or, check out the Top 100 Vertical Market MSPs -- which typically generate healthier service margins than horizontal MSPs.
2. Cloud Services Concerns...
- CompTIA says: Topping the list of things that keep MSPs awake at night is cloud computing, cited by 62 percent of companies.
- ChannelE2E says: A healthy number of MSPs have introduced managed services for the major public clouds. Check out this list of the Top 50 MSPs supporting Amazon Web Services. Or track MSPs like G2 Technology Group, which offers managed DevOps services to SaaS customers. And keep track of Aldridge, a Top 100 Vertical Market MSP that has positioned its Arterian business as a Microsoft Cloud Solutions Provider.
3. Talent Concerns
- CompTIA says: A majority of firms say in the past year they've lost at least one staff technician to an end-user organization's IT staff. Employees who leave are usually seeking more stable hours, better pay or a job that's more challenging than simply monitoring and waiting for an alarm bell to go off, April asserts.
- ChannelE2E says: Check out these six tips to help you lead smart -- which may help you to boost employee retention. And keep an eye on ChannelE2E's Talent section -- which tracks how IT companies recruit, train, compensate and retain employees.
Bottom Line
CompTIA's research raises some valid concerns about the IT channel and the MSPs working with it. And it reinforces our own vision of the IT channel and the Entrepreneur to Exit journey. E2E isn't a linear, straight line. Instead, it requires constant course corrections and transformations as new IT and business waves emerge -- cloud, IoT, DevOps, and the list goes on...
