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Growing enterprise demand driving up MSP budgets

Managed service providers indicate that they are spending more to make sure they can react to customer needs

Managed service providers (MSPs) are increasing their budgets on the back of rising customer demand.

According to a report from ETB Technologies, as many as 80% of MSPs are looking to crank up their budgets to respond to higher enterprise demand, with significant investments being planned across the channel.

The report found that of those looking to increase budgets, 70% were looking to spend more, with a significant number (67%) having doubled budgets, and a smaller portion having gone even further to get themselves prepared for a better year ahead.

MSPs were making investments to ensure that they were in a position to deliver hybrid cloud services, which is facing strong enterprise demand. The growth in the desire by many customers to take data management control back in-house was also driving interest in the hybrid approach.

Twinned with the findings around rising budgets was the revelation that MSPs are increasingly looking at using refurbished IT to reduce costs and improve their sustainability positions.

Just shy of a third of those MSPs quizzed indicated that they already used refurnished kit, and the vast majority revealed they had used it in the past, illustrating a willingness among the channel community to use the products.

“The past few years have been particularly challenging for the IT industry. The impact of the pandemic, Brexit, geopolitical and economic turbulence, climate change, and supply chain disruptions – to name a few – have created a challenging business environment for the industry. Despite these challenges, spending is on the up, but budgets are having to spread further than ever, making maximising value for money vital,” said Nick Stapleton, managing director at ETB.

“There’s a number of reasons why spending is on the up. Growing industry costs, increased security threats, and structural change are just a few examples. While the change in budgets is significant, what’s clear from our research is that cost-efficiency, quality and service are key strategic considerations,” he added.

Stapleton said those pressures were leading to a more open-minded approach to using refurbished kit: “As common misconceptions of refurbished equipment begin to dissipate, it’s encouraging to see so many MSPs embracing this technology in today’s climate.”

Towards the end of last year, Datto shared its Global State of the MSP report, with it clear that many were expecting 2024 to be a year of increased growth.

Last year saw the average MSP revenue globally improve by 10%, with fending off security threats and helping to increase awareness at the top of the activity areas.

“While MSPs have long been the unsung heroes of tech, this year’s survey results clearly speak to a growing understanding of the critical role technology plays in a sustainable business,” said Holly Pateman, Kaseya’s senior vice-president of product marketing.

“With revenues and competition on the rise, and a focus on the need for a superior customer experience, MSPs have a front row seat to what makes their customers successful. As a result, these MSPs have a clear view into what keeps a major cornerstone of our economy – small and mid-size businesses – running,” she added.

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