Canalys: MSP foundations are eroding

The pressure on the traditional managed services model is increasing as customers look for partners to provide a different approach along with help to avoid becoming a victim of a cyber attack.

The sense of a changing world dominated the MSP section of the Canalys Channel Forum event in Barcelona, with Robin Ody, practice leader at Omdia, challenging the audience to consider the foundations of the managed service world could be eroding.

“The question we’re asking is [whether] the very foundation of the managed services will erode it? We went from local, break, fix, reactive, safe, proactive and global based on tools like remote monitoring and management, PSA, ITSM, all of the acronyms in our toolbox, but as we digitalise those environments, we make them less safe. We’re seeing a solid erosion in the confidence of what an MSP is.”

Ody said that when you looked at the strategies of the top four remote monitoring and management (RMM) providers – Kaseya, ConnectWise, N-able and NinjaOne – they were all adding more security and resilience features to their offerings in recognition of increasing threats to MSPs.

“They are building those platforms today for MSPs because they realise that they need to go far beyond RMM. They need to provide MSPs and customers with a way to mitigate that risk of that model,” he said.

He added that security breaches led to partner and customer churn, with a mounting pressure on MSPs to have a solid security position: “MSPs have become the number one threat vector in the channel. If you rob someone now, you don’t go directly to them, you go to the bank and you steal from 1000s of people in one go. That’s the efficient model and it has become very lucrative for threat actors. That’s why those vendors are building cyber-focused platforms for MSPs to mitigate these risks,” he said.

Ody said MSPs need to do more to react to the pressure from customers and to adhere to government guidelines if they are to remain on the right side of the security battle.

“If you look at the accounts of the top 200 MSPs and MSSPs in this region [EMEA], it’s not going very well, because you can see lots of hit, lots of transformation, a lot of people who have been chasing small projects here and there, trying to get sales in the door, not really structuring the business properly, and not crucially looking at the risk that their customers pose to them – or, indeed, that they pose to their customers,” he said.

“There is a lot more scrutiny on MSPs,” he added. “Government regulation is now coming down on you. Cyber insurance companies are paying out at record lows, with premiums at record highs. That’s why we’re talking about this today.”

He said that despite the Cyber Security and Resilience Act and DORA, there continues to be too many breaches, with risk continuing across the MSP world: “Imagine this scenario, a cyber security or cyber insurance provider comes out and says they can no longer insure a customer because they have an MSP. And that’s already happening, the risk of being an MSP is now too much for many cyber insurers to modify when it comes to customers.”

Ody said the MSP focus on security had to increase: “Every customer must be a cyber services customer. They don’t have to be your cyber services customer, but you do have to have insight into their journey on cyber services. They cannot be taking on IT support customers and [be] too much of a risk to you.”

He said that the approach from the MSPs is changing and the co-managed model is the fastest-growing area as partners start to work with customers to cover security needs: “[Co-management is] where you work with your customer to co-manage the IT environment very different to what MSPs did in the past, where they wanted to manage everything themselves. Co-managed is the grown-up way of getting the job done.

“For years, we talked about making sure that resellers can build managed services, and that is still very important, but what’s interesting is we’re seeing MSPs building resale practices, building more professional services, spreading the load and helping to mitigate some risks of their business in the channel,” he concluded.

Last month, Stephen Cook, sales director at Espria, outlined the reasons why the co-managed model would become more widespread, pointing out the preference for that approach from mid-market customers.

“We regularly speak with IT managers who are under significant strain, yet are hesitant to engage with service providers,” said Cook. “Their concern is not just about job security anymore. It is about maintaining strategic oversight and ensuring that any external support is aligned with their organisation’s long-term goals.”