Is 2018 going to be a continuation of the trends we saw in 2017? Or will the channel be disrupted in 2018? There are a lot of variables that affect your business, so let’s start to unpack some of the macro-level trends that will influence MSPs in the coming year.
1. Rise of the Mega MSP
The mega MSP is created through merger and acquisition activity. ChannelE2E does a lot of good work tracking M&A activity in the channel, and you can see new deals every week. When a fragmented industry consolidates, it means a couple of important things. First, it means that as your competitors get bigger, they can start doing things at scale that smaller companies can’t do. They will have professional marketing and sales infrastructure. They can do security at scale, and invest in high-end tools. A big MSP can be a competitive beast. But with a bigger pond comes the chance to target bigger fish. The mega MSP can target listed companies, which means growth for the channel, and opportunity for companies that target different clients.
2. Emergence of the Modern MSP
The modern MSP is a nimble, cloud-based member of the ecosystem. Low barriers to entry in this business mean that there are a lot of MSPs that enter the channel each year. But this new breed of MSP is lean, efficient, they specialize, they have a fully modern stack, and they’ve learned from the mistakes of older MSPs. This new breed, simply put, is going to eat a lot of older MSPs for lunch. The MSP business is no longer transactional in nature - a strategic mindset is essential for competing.
3. Cloud Migration
The cloud is really a driver of efficiency. As I’ve written in this space before, IT Glue has a paperless office, which eliminates a lot of the waste and friction that bogs down other companies. And while it’s easy for a SaaS company to think this way, your clients are going to start wanting to leverage the efficiency of cloud-based applications, too. Office 365 has been a rock star for a lot of MSPs, and something like that makes for a great launching pad to get your clients to adopt other SaaS applications. In 2018, it’s go cloud or go home.
4. Security
Your clients are worried about security. They read the headlines. And they’re looking to you to secure their environments. As long as cyberspace is a wretched hive of scum and villainy, security will be a great opportunity for MSPs. With things like GDPR coming down the horizon, compliance is going to be a bigger issue, too, if not for you then for many of your clients. All of this creates opportunity to build your status as a trusted IT security advisor and leverage that to drive additional revenue.
5. Marketing & Sales
The MSP business is maturing, and paying more attention to marketing and sales is a big part of that. More MSPs are hiring salespeople, and the bigger ones are getting to a point where they are starting to invest in marketing teams. There’s an absolute abundance of SaaS apps for marketers, so you don’t need a big team - just one or two really savvy people. As MSPs become more efficient, they’ll be able to dedicate more time and money to growing their businesses.
6. Documentation Automation
How did you know documentation would make this list? The thing about documentation is that it has become an essential skill for any MSP serious about leading its market. The easier you make documentation, the better ROI improvement you’ll see. One of the biggest focal points for IT Glue in the coming year is to get MSPs automating more of their documentation, giving you more tools to increase your profits.
7. Blockchain
How does blockchain affect the channel? Good question, actually. But your clients are reading about it. As the year goes on, don’t be surprised to see more enterprises leveraging blockchain, and don’t be surprised if some of your clients follow suit. There’s going to be a big opportunity here - verticals like banking, health care, and anybody with a supply chain seem like the best bets. Get ahead of the curve on this one.
8. Artificial Intelligence
Who isn’t talking about artificial intelligence and machine learning right now? Unlike with blockchain, there are very real opportunities in AI for MSPs right now. The democratization of AI means that a lot of SaaS applications you use already have some form of AI functionality. But more than that, it means that there are AI-based tools that you can sell to your clients. Even a simple chatbot can leverage machine learning to help you streamline your service desk, or find more clients. 2018 is a great year to think creatively about how you can leverage AI to add value to your customers.
9. The Economy
If you run a business, you think about the economy. Life is pretty good for most of us right now -- a positive run of several years is worth feeling good about. In the last couple of months, however, there’s been a lot written about how we might be in a potential bubble scenario. If the economy goes sideways, you’ll want to be able to demonstrate clear value to your clients, you’ll want the lean processes needed to deliver profits even in a reduced-revenue scenario, and you’ll want to be able to continue investing in sales and marketing. Remember: industry leaders weather economic storms while the laggards get flushed out to sea. You might not have a trained economist on staff to read the economic tea leaves, but you can improve your company today to handle whatever tomorrow brings.
Joshua Oakes is a content writer at IT Glue, which develops documentation software for MSPs. Stay tuned for additional IT Glue blogs on ChannelE2E in February.
