The rise of the MSP: Unlocking new opportunities in the evolving technology landscape
The world of technology is moving at lightning-fast pace and SMBs are moving with it. We’re seeing seismic shifts in the market, rapidly changing buying patterns and evolving expectations for what SMBs want their partners to provide.
This is a key reason behind the rise of the MSP. Now more than ever, channel partners are recognising the value of diversification. By staying ahead of the curve and evolving with the technology landscape, partners can stand out to SMBs, drive their growth and safeguard their future.
I recently spoke about this at the Margin 2024 conference, where I explored research insights uncovered through collaboration between Giacom and Analysys Mason. The data paints a vivid picture of where we’ve come from, where we are now and where the market’s opportunities are heading. I want to share what I discussed during my keynote and the boardroom session at Margin, and why I believe MSPs are in the best position to capitalise on this opportunity in the years ahead.
Understanding the shift in today’s market
We know the world is hungry for technology. But by understanding the market's transition, channel partners can position themselves for long-term growth.
We’re seeing dramatic changes when we look at IT spending patterns for SMBs, being driven by changing global economic conditions, technological advancements and shifting business priorities. The post-pandemic world has accelerated these changes, with SMBs increasingly looking for strategic partners who can provide comprehensive, reliable, scalable and secure technology solutions delivered as managed services. This shift presents a prime opportunity for partners to align their offerings with SMBs’ evolving needs.
Our collaboration with Analysys Mason in May 2024 revealed that SMBs are switching to channel partners with better service capabilities, gravitating more towards MSPs. IT spending among SMBs is expected to continue growing, however growth is not equally distributed - with the strongest growth in cloud software, cloud infrastructure, cybersecurity and managed services - and much slower growth in telco, end user devices, traditional services and infrastructure.
What is an MSP?
The Analysys Mason definition of an MSP is one that derives more than 30% of its business from Managed Services. It is important to understand the shift in value proposition that this entails. SMBs are voting against traditional service models, where resellers deliver a solution and then provide a reactive break fix contract (call me if it goes wrong). They are voting for always on Managed Services, which at their core are based on proactively monitoring technology in use by an SMB and providing an always on, proactive service to not just fix things if they go wrong but also to continually optimise the solution configuration – to optimise performance, security and cost. After all, modern technology has to continually shift, to respond to software updates, security threats, changing cost dynamics and new service opportunities. A true MSP is able to add so much more value through this constant feedback loop.
MSPs are set to take the lion’s share
In 2023, the UK’s 1.53 million SMBs spent $63 billion on IT solutions, with this figure projected to grow at a CAGR of 5.6% through 2028. But we’re seeing SMBs increasingly moving their spend away from retailers, telcos and resellers and towards MSPs, who are becoming the dominant force. In fact, they’re already growing at three times the rate of resellers. This trend is driven by the need for comprehensive solutions that can address the complex challenges businesses face today.
To capitalise on this shift, channel partners and resellers need to plot a route to stay ahead of SMB customer requirements and tap into higher growth spend categories. Becoming an MSP is multi-dimensional and not straightforward, requiring a reseller to build broader and deeper product specialisations, transition commercial models to subscription and support models to always on managed services. This transformation involves developing a value proposition that positions you as a strategic partner offering end-to-end solutions. It’s about providing SMBs with so much more value than traditional reseller support models, ensuring you become their trusted advisor.
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Adapting to the MSP role
The question for many MSPs will be: “How can I evolve my business to deliver an enhanced value proposition around being a MSP?†Of course, staying ahead of new and emerging technologies will be crucial, but so will investment in continuous training to meet and exceed clients’ expectations.
SMBs are increasingly prioritising remote IT and cloud services and it’s essential we adapt to these evolving needs. At Giacom, we’ve developed a visionary proposition we call the "Super Prop". This initiative is designed to help MSPs become comprehensive solution providers for SMBs, offering a stack of subscription-based technology services that meet all their needs, from cybersecurity to cloud services.
Understanding how and where SMBs allocate their IT budgets is key to positioning yourself as their preferred partner. Our “Growth Accelerator†process is designed to support MSPs to identify and leverage these growth opportunities. We use a comprehensive approach to market analysis, service diversification and client engagement, ensuring our partners have the tools and insights needed to maximise their business growth.
Hunting for growth
The data supports Giacom’s focus, with cloud and managed services projected to grow from 31% of IT spending in 2023 to 38% by 2028. SMBs are moving away from on-premise setups due to the need for flexibility, scalability and cost efficiency. And they’re completely switched on to investing in software to drive automation to unlock efficiency and productivity benefits.
IT and managed services account for the largest proportion of SMB spending in the UK at 26%, followed by UC and digital services at 22%. The changing market presents a significant opportunity for MSPs to align their offerings with these growth areas.
As cyber threats become more sophisticated, the demand for robust security solutions continues to skyrocket. These advanced security needs are driving SMBs to adopt comprehensive strategies, including data security and Zero Trust frameworks. Thinking about mobile device management, mobile security services and endpoint security will be critical in driving growth. In addition, AI-powered IT spending is expected to grow at a CAGR of 35%. Channel partners can play a key role in educating SMBs on the benefits of AI and new technologies, with AI-powered IT products enhancing traditional IT solutions through analytics, automation and predictive capabilities.
Seizing the opportunity and moving forward
The rise of the MSP is a direct result of the shifting technology landscape. By understanding the market dynamics and aligning your offerings with the needs of SMBs, you can position yourself as the partner of choice. It’s about adapting to change, leveraging new opportunities and delivering unparalleled value to your clients.
To dive deeper into these insights, I encourage you to watch our on-demand webinar with Analysys Mason. Alternatively, you can get in touch to discuss new growth opportunities as a MSP in this dynamic market.
Should have Played Quidditch for England
8 个月This is awesome Nathan Marke fascinating subject
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8 个月That sounds like an insightful event. I'd love to hear more about your talk on the MSP rise. Can you share some key takeaways? Nathan Marke
Virtualplatform ★ ICT Services Marketplace & Customer Lifecycle Management SaaS Platform ★ Helping Service Providers Grow ★ ARN Innovation Award Winner
8 个月What a great article.