MSPs appear to be in great shape these days. Generally speaking, revenues are rising -- and there are more growth opportunities ahead. Still, IT service providers must navigate a range of inflection points that represent both opportunities and challenges. Chief among them: Managed security, cloud services, value-based pricing and compliance mandates like GDPR.
Kaseya highlighted those issues and more in the company's 2018 MSP Benchmark Survey. In the seventh annual survey, some findings are similar to those we have seen from other reports from such firms as IDC and RightScale, including the shift away from break-fix services in favor of more strategic offerings such as cloud services, and a significant concern about security. Here's a closer look at some of Kaseya's findings...
1. Security services are great for revenue
Fully 65 percent of MSPs have seen their security revenues rise in the past year, and managed security services are the least likely offering to be stagnant or decreasing, the survey found.
Still, managed security services should not be considered easy money. The survey noted that trying to mitigate customer security risks is one of the steepest challenges MSPs now face.
These results make sense, as more companies become concerned with the security issues that are making headlines in recent years. These issues range from malware like the Petya ransomware to breaches at major organizations like Equifax. Businesses know they need to secure their data and their networks, but often lack employees with the skills to ensure that security. Companies will turn to MSPs and MSSPs to provide the services to cover the skills they need. (Related: See the Top 100 MSSP list from MSSP Alert, our sister site.)
From the report, MSPs are well aware that offering security services can be a significant revenue stream for them. The revenue from security offerings has increased 65 percent for the 12 months leading up to the survey, as compared to the previous 12 months. As a popular service offering, it is also least likely to be stagnant or decrease over time, with 23 percent of respondents citing flat security revenue year over year.
2. Cloud services are driving growth
The adoption of cloud services by businesses has officially reached the masses. The survey shows that 86 percent of the respondents worldwide have some form of cloud adoption. MSPs are seeing an increase in revenue from this digital transformation. And market gaps remain: Only two-thirds of the respondents claim they currently offer cloud backup services.
3. Break-fix steps aside for cost and value-based pricing
We know that MSPs have been moving away from break-fix pricing for quite a while now, and currently, only 18 percent of respondents say they use a break-fix model. As such, the survey has found that price match strategies are also declining for the second consecutive year. Instead, price matching is giving way to cost and value-based pricing, with over two-thirds of the respondents claiming to use this pricing strategy, while only six percent of MSPs are currently using price matching.
4. Compliance assessments can set an MSP apart from competition
Still, there are some key challenges on the horizon. Chief among them: MSPs appear to be underestimating the the potential impact of the General Data Protection Regulation (GDPR).
A May 2018 deadline is approaching quickly, and MSPs will need to get themselves and their clients ready. Many MSPs indicated in the survey that they do not believe they will be impacted by the new E.U. regulation. The survey found that only 52 percent of MSPs worldwide (and 55 percent in EMEA) currently offer compliance assessments. Beating others to the punch by offering these assessments can really set an MSP apart from their competition and provide a great revenue stream for the business.
You can download a copy of the report on Kaseya's website.
