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SMEs increasing looking to MSPs

Datto's latest State of the MSP report paints a picture of a market in rude health that is enjoying an expanding customer base and widening service offerings

The theme of the second half of this week is going to be managed service providers with tomorrow being the second annual MSP Day.

Started last year to celebrate and promote managed service providers the last twelve months have been ones of constant change with MSPs having to support the demand from customers for help with digital transformation projects.

Ahead of the big day Datto has released its State of the MSP Report 2019 and found that there has been a movement by many to become strategic advisors to customers.

Many commented that the current market conditions were favourable to those that had developed managed service expertise and SMEs were signing up to subscription models.

“The survey shows what we see every day -- it's a great time to be an MSP. It’s a positively charged environment,” said Rob Rae, vice president of business development, Datto. “Almost half of surveyed partners have been working in the industry for more than 15 years and nearly 100 percent of them said that right now is the best time to be in their industry."

The last year has also seen an expansion by many MSPs on the number of options they can deliver with networking as a service increasing in popularity and a greater degree of verticalisation, with health the top category. There has also been more emphasis placed on security, given the increasing levels of threats that users are trying to fend off.

As a result of the positive environment many MSPs are planning to hire more staff in the next year with sales and marketing roles becoming open as a result of business expansion.

The move by SMEs in particular to adopt subscription based services has seen the number of MSPs enjoying high levels of recurring revenues climb in the last year. Datto found that 44% of those it quizzed were gaining more than half of their turnover that way.

“SMBs in particular struggle with increasing IT complexity, an explosion in security threats, greater compliance demands, and intensifying skills shortages. More than ever, companies are turning to trusted IT partners to help solve these challenges,” said Alastair Edwards, chief analyst, Canalys.

“Canalys research shows that more than 80% of channel partners around the world now offer some form of managed service. To stay ahead, IT service providers must evolve their businesses, shifting towards more recurring revenue and greater industry specialization. Partnerships with the right technology companies and platform providers will be critical to success," he added.

Tomorrow should bring some more research into the state of the managed services market as MSP Day dawns for a second year and brings with it The Evolving Landscape of the MSP Business Report.

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