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Shining a light on the evolving landscape

Barracuda’s EMEA team hosted the second annual MSP Day on May 23. MSP Day was created in 2018 as a way to help create an interactive and connected community with the unified purpose of making managed services more understandable, trustworthy and significant.

This year’s event also coincided with the release of the results of the company’s Evolving Landscape of the MSP Business Report 2019.

Key findings include:

Managed services is the number one revenue opportunity, bigger than all others combined: 54 per cent of channel partners say it offers the greatest potential revenue; almost x4 times as many as the next largest response

The confidence in managed services market is increasing: As in 2018, managed services beat cloud computing and professional services by a margin of 4 to 3. In this year’s survey, it was 4 to 1

Managed services revenue is growing as a proportion of overall sales: Around half (52 per cent) of respondents made more than 30 per cent of their revenue from managed services in 2018, growing to two-thirds (66 per cent) in 2019

MSPs are aware of the risk of customer switching: While price and budget pressure are (unsurprisingly) major factors, the biggest reason customers cancel contracts is ‘being acquired by another company’ (55 per cent)

Lack of internal IT skills is now the main catalyst for MSP demand: 69 per cent of partners said customer skills shortages were the key driver for managed services uptake, while 61 per cent cited cloud migration. This differs from 2018’s findings, where the desire to reduce capex and other costs (65 per cent) was the top reason behind managed services use

Customer relationships remain key to managed services sales success: 86 per cent believe this is a major opportunity in selling managed services; around two-thirds said the same about ‘overall security concerns’ and ‘lack of in-house IT skills’, respectively

Customer misconceptions still undermine managed service offerings. This was identified as a barrier by the largest group of channel partners (89 per cent). It also led the way last year

Overall these findings paint a promising landscape when it comes to growth, understanding and adoption of managed services, albeit in the face of many barriers that are proving to fuel mistrust and frustrating misconceptions.

Independent IT analyst Clive Longbottom said that the findings show that the MSP market is thriving – albeit still with certain pressures. “On the buying side, there is still an abiding problem with misconceptions on what to expect from managed services. The selling side are seemingly ill-prepared to deal with this.

“This is leading to higher rates of customer defection (either to competitors or with services being taken back in house) than should be the case. It’s apparent we’re now moving past the first stage of the MSP. Although shrinkwrapped, stand-alone services such as backup and restore are still popular, the savvy MSP is seeing that added value extra services offered to meet customers’ needs in an increasingly complex hybrid cloud world are becoming a necessity,” he commented.