Have the golden days of double-digit year-over-year MSP revenue growth ended? Hardly. Most MSPs (60%) expected their businesses to grow by more than 10% in 2024.
That’s according to a survey of 618 large MSPs commissioned by HPE Business OpsRamp earlier this year. (MSPs surveyed reported at least $25 million in annual managed services revenue.)
“This confidence is fueled by stabilized inflation, post-pandemic economic normalization, and increased investments in AI and cloud technologies, suggesting MSPs feel well-positioned to leverage these trends,” said Taruna Gandhi, head of product marketing for HPE Business OpsRamp, told ChannelE2E. “MSPs are remarkably optimistic about 2024,” she added.
MSPs Must Focus on Four Growth Priorities
Just how can MSPs leverage these market trends to grow revenue even more in the years ahead? OpsRamp identified the following four growth priorities for MSPs:
- MSPs must leverage intelligent IT automation to eliminate manual processes and speed up customer problem-solving.
- MSPs must work to dramatically reduce sprawl, which prevents them from reaching their growth and customer satisfaction targets.
- MSPs must find and adopt better tools and expand their expertise to help them grow the complex cloud services environments and offerings customers seek.
- MSPs must expand their use of modern observability tools- and retire legacy tools- to improve their efficiency and stay ahead of customer challenges.
“These are among the most critical takeaways,” said Gandhi. “Leveraging AI and machine learning is vital for addressing challenges like tool sprawl, improving productivity, and enhancing service delivery.”
Cloud services remained the top revenue driver, according to the survey, with 65% of respondents citing them as a primary focus due to the demand for scalable IT solutions, she added.
MSPs must also revamp their licensing models to ensure that their fixed-cost agreements, such as enterprise licenses, “highlight MSPs’ focus on predictable pricing to manage costs and scale effectively,” said Gandhi. In addition, “the renewed dominance of AWS reflects a shift toward simplified, efficient, and reliable cloud strategies for managing hybrid and multi-cloud environments,” which are critical for MSPs to continue their growth, she added.
Tool sprawl was a particular problem for MSPs, she said, with 16% of MSPs now using 20 or more IT monitoring tools, which is twice as many as they were using in 2022. “This growing complexity underscores the urgent need for consolidation and integrated solutions to streamline operations and enhance efficiency,” said Gandhi. “Together, these priorities highlight the importance of innovation, operational efficiency, and a customer-centric approach for MSP success,” she said.
Analyst: ‘Managed Services a Key Driver of Profitability and Success’
The HPE OpsRamp survey also described an overall MSP business rebound in 2024 after business declines in 2022 and 2023. But Shelly Kramer, managing director and principal analyst at theCUBE Research, disputes this claim.
“It is interesting to see the report indicating a decline in the MSP market for the last two years, because some of the data I have seen indicates just the opposite,” Kramer told ChannelE2E. “I have not seen two years of decline, but there is always an agenda from brands developing surveys, so I consider that.”
Yes, many MSPs face the same challenges that all organizations face today, said Kramer, including finding skilled workers and introducing new technologies like automation, AI, and GenAI while also having to navigate an increasingly complex tech stack and a hybrid cloud world. However, she said that MSPs are not seeing business declines, as noted in the survey.
“Their services are needed today more than ever,” said Kramer. “Managed services are a key driver of profitability and success. The bottom line is that, in my opinion, there has never been a better time to be a provider of managed services offerings.”
