SME market trends supporting further MSP growth

The CEO of Kaseya has shared his thoughts on the reasons why the year ahead will be a positive one for managed service providers

Many across the channel are expecting 2024 to be a stronger year after a difficult recent period, but those in the managed services world are best placed to serve a customer base that is reaching out in greater numbers for assistance.

Small firms are recognising the need to use technology to remain competitive and lack IT knowledge, and in the mid-market there has been a growing trend of turning to the channel to help co-manage the infrastructure.

Fred Voccola, CEO of Kaseya, has seen these trends develop over the past few years, and is expecting momentum to continue as small and medium-sized enterprises (SMEs) continue to undergo digital transformation.

“We’ve been saying for a long time, it’s the right time to be an MSP and it only continues,” he said.

“Small to mid-size businesses around the world, which are the customers of the channel, are digitally transforming the same way that the enterprise did in the ’90s and early 2000s.”

He added that the firm carried out research into customer investment plans and it was clear more growth was coming.

“Some 91% of small to mid-size businesses said that in 2024 they will spend a larger portion of their revenue on technology than ’23,” said Voccola. “Not just spend more money, a larger percentage of their revenue, and they expect in ’25 to spend a larger percentage than they did. It’s so much opportunity if I’m the channel – that’s huge.”

Complex demands

Voccola said security was an area where customers had turned to MSPs for help because protecting data and adhering to compliance regulations was becoming more complex.

“They’re looking to get assistance from third parties,” he said. “The third parties who do that are MSPs. Our data tells us that by the end of this decade, about 80% of those companies will be either co-managed or fully managed by MSPs, and that triples the total addressable market of MSPs.”

Voccola added that despite the narrative around ’23 being “tough” and “challenging”, the majority of MSPs experienced growth, and the demand from SMEs for channel support would only continue to increase. “We saw a pretty steep increase in the curve of MSPs successfully delivering that quasi-outsourced work,” he said. “We think in ’24 that the growth rate of that curve is going to increase even further. This is a monster opportunity.”

Voccola said those MSPs that were taking a business, rather than just a technology approach, were best positioned to grow in 2024.

On the Kaseya front, the focus is on its April event, where the firm is planning to deliver a significant announcement.

Voccola said it knew where the market was going, and had been making investments for the past few years to ensure it was in a position to support MSPs. “What we’re going to announce is exactly what that market needs and wants,” he said, adding that the firm remained committed to a customer-centric approach and was determined to make sure its partners and staff were supported.

Read more on Cloud Platforms