A global survey of 1,884 MSPs conducted by Strategy Analytics on behalf of Datto, finds half of MSPs reporting their clients now have 50 percent to 75 percent of workloads in the cloud.
Another nearly 20 percent report clients have 25 percent to 50 per ent of their workload running in the cloud.
At the same time, 99 percent of respondents report they also offer managed security services. Those services are being provided by hiring dedicated cybersecurity personnel in addition to reselling services provided by other MSPs or services provided by security vendors.
The move has mostly been sped up by the COVID-19 pandemic, as organisations looked to make applications more accessible to end-users working from home. Simultaneously, a wave of security attacks has driven more organisations to rely more on external expertise to secure their IT environment.
While MSPs should be doing well as demand for services increased. And yet the survey finds MSPs only saw a modest increase in revenue during the pandemic. A third saw no change and 20 percent saw revenues decline. Many MSPs saw costs rise, with more than a quarter increasing headcount.
The survey suggests the source of that revenue growth is competition between MSPs. The survey finds the biggest challenge for MSPs was competition (34 pe cent ), followed by revenue growth (27 percent), profitability (24 percent ), and acquiring new customers (23 percent ).
As more channel partners add managed services to their portfolio the number of MSPs has grown, the barrier for entry to becoming an MSP is also falling as more channel partners resell services provided by either another MSP or an IT vendor.
Despite those issues, however, nearly all MSPs said that they expect revenue growth in the next three years and that now is a good time to be an MSP (93 percent ). The hope is that demand for managed services will increase faster even as competition continues to adversely impact profit margins.
Datto senior VP for business development Rob Rae said that MSPs need to focus more on making the IT platforms as efficient as possible by, for example, automating processes.
“They need to better use their IT stack to become more profitable”, he said.
