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MSPs getting stuck in ‘digital impasse’

Ingram Micro Cloud shines light on a market that has experienced high growth and the challenges for MSPs in keeping up with the pace of change

Managed service providers (MSPs) have seen customer demand continue to increase, but at a rate that is causing some to struggle to keep pace, according to research from Ingram Micro Cloud.

The distributor has shared the findings of its Cloud technology: the state of MSPs report, which reveals that MSPs have seen demand rise and most know where they want to take their businesses, but a gap is opening, leading to some getting stuck in a “digital impasse”.

Strong demand for managed security and cloud services, including software as a service (SaaS) and infrastructure as a service (IaaS), have driven strong demand over the past year, with customers keen to offload responsibility for non-core systems to MSPs, along with the associated risks around data security.

From an MSP perspective, many believed their greatest opportunities were around delivering more advanced services on the cloud, selling advanced cyber security and offering everything as a service (XaaS).

As they have responded to growth, 96% of those surveyed by Ingram said they had introduced new services, with many looking at identity access management, server support and end-user security training as the most obvious areas to add to the portfolio.

Although it is clear that offering more advanced security and a greater range of cloud services is where more revenues could be made, many MSPs expressed some problems making that jump, with almost two-thirds accepting that they needed to improve. Almost all the respondents shared the view that they needed to be faster at implementing change.

“From interviewing over 600 MSPs, it is remarkable to see how 90% of service providers have seen client demand for managed services grow in the past 12 months, and close to two in three individuals surveyed said a lot of improvement is needed if their organisation is going to be able to adapt to future opportunities,” said Craig Weir, executive director, global SaaS portfolio at Ingram Micro Cloud.

“Today, I believe most MSPs are stuck in a digital impasse. Many MSPs are at an inflection point of knowing where they should go, but they just don’t know how to get there or even how to start.”

There were also signs that the MSP market was dividing into those that were stuck and those that had changed and adapted the business, said the report, and channel players that had made investments were reaping the rewards of being able to evolve the business.

“As we comb through the data, it is clear to us that some MSPs have solved this puzzle,” said Weir. “They have enabled scale and they have found ways to accelerate growth, both of which have increased topline revenue, all while expanding recurring revenue streams to improve their bottom line. We see this today in what we call the Modern MSP.”

Key findings

The Cloud technology: the state of MSPs report added more evidence to the widespread view that the market is experiencing strong growth:

  • 90% of MSPs have seen demand for managed services grow in the past 12 months, with 41% reporting that growth has been “dramatic”.
  • The services most in demand were managed security, managed detection and response (MDR) and cloud services (SaaS, IaaS and PaaS).
  • The reasons why customers are reaching out to MSPs include: giving the customer more time to focus on core IT objectives, accessing the latest technology solutions, and reducing risk.

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