Predicted Managed Services Growth a Double-Edged Sword for MSPs

The managed services market will grow at an annual rate of 20 percent worldwide between now and 2020, according to a new forecast by London-based market research firm Technavio. A key driver of the growth is cloud automation, Technavio says.

“In a competitive business scenario, automation helps in aligning business needs with IT by increasing the delivery speed of services for end users. Since it enables the intelligent use of data center infrastructure, the deployment of sophisticated services across data centers, cloud environments, and mobile devices becomes simplified,” the researcher says in a newly released report.

Americas Dominance

In the report, Technavio says the Americas dominate the global managed services market. This will not change until at least 2020, thanks “to the rising adoption of cloud-based managed mobility services to boost workforce mobility.” Other contributing factors include increased adoption of cloud-based solutions by the financial sector to boost productivity and customer experience.

There’s no question the predicted healthy growth of managed services is good news for MSPs, especially considering Gartner is predicting that overall IT spending will decline .5 percent this year across the globe.

But Technavio’s growth forecast is a double-edged sword. That kind of growth tends to attract more players into the market, and competition from deep-pockets telecom carriers and IT vendors is sure to intensify in the coming years. MSPs need to come up with sound strategies to defend their turf.

Individual Attention

One tried-and-true way to fend off competition from larger players is to continue providing your clients with customized services. Big vendors and telecom carriers always struggle with this and, if they are smart, they’ll ask you to help them reach smaller customers needing individual attention.

Of course, as the field gets more crowded, the prospect of commoditization is very real. Competitors with large economies of scale can undercut smaller providers on price because they can tolerate much thinner margins than MSPs.

That’s why MSPs must always avoid the race to the bottom on price and focus on value. The more you automate your services through repeatable processes built into RMM and cloud-based tools, the more value you can provide. It then costs you less to perform routine maintenance and monitoring, which frees your staff to consult with clients on strategic initiatives.

As your clients look to leverage technologies such as data analytics and IoT solutions to hone their operations and improve customer service, they’ll need help from you to accomplish that. The reason overall IT market spending is declining by half a percentage point this year, according to Gartner, is because customers are trying to optimize costs by leveraging cloud technologies to boost business agility.

And that’s where you, as an MSP, come in. To stay relevant and get your share of that 20 percent growth Technavio is predicting, you’ll have to deliver the expertise businesses need to transform themselves. This way, you’ll fight commoditization while preparing clients for a more productive future.