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New research reveals MSPs struggling to keep pace with changing market dynamics and customer preferences face significant hurdles in the race to capture market share and grow profitably.

London – A new report from ConnectWise highlights how rising demand for IT managed services means managed service providers (MSPs) face significant pressure to adapt fast to capitalise on new opportunities, or risk losing out to more nimble providers that have a greater grasp of what customers want and need.

As demand for managed services continues to surge, 87 percent of MSPs surveyed for the ConnectWise report Managed services: the winners and losers in 2018 admit their organisation is at risk of missing out to competitors should they fail to get their service portfolio right or deliver new services better and faster.

The research, conducted among decision-makers at MSP firms based in the UK and Australia, reveals that while over half (53 percent) had experienced increased customer demand for managed services in the past 12 months, over two-fifths (43 percent) say fast-paced growth is already proving too much for their organisation which, they concede, is having to take short cuts to keep up with the pace of demand.

“The race to the top of the MSP sector is already underway and MSPs will have to develop, innovate and adapt to ever changing technological and business conditions as fast as they can, if they want to keep up,” says Greg Lalle, VP, International Sales & Strategy ConnectWise.

“But in the rush to scale up service delivery, organisations must not lose sight of the fact that building a sustainable and profitable business is also dependent on identifying the right solution strategy and maintaining a strong customer focus.”

The report findings indicate how the current pace of growth is already putting a strain on the operations and customer-facing interfaces of many MSPs:

  • 92 percent plan to introduce additional services over the next year, with security services (57 percent), cloud services (45 percent) and/or cloud service monitoring services (45 percent) being the most popular solution areas that will be launched in response to customer demands
  • Over half (57 percent) are finding it harder to meet the needs of customers compared to 12 months ago, and say this is having a knock-on effect on customer satisfaction
  • Over four-in-ten (42 percent) admit to lacking the insights required to offer the right variety of solutions to customers

Other key findings include:

The changing landscape of delivery: top challenges for MSPs

Evolving security threats, maintaining margins in the face of service commoditisation and building market share all represent a constant challenge for providers of IT managed services:

The service expansion conundrum: MSPs risk falling down a technology ‘rabbit hole’

With the pressure on to keep up with technology innovations and launch new services, many MSPs are struggling to keep their eye on the ball when it comes to improving customer interfaces and interactions:

The ConnectWise research also benchmarks the operational capabilities and readiness of MSPs against a select number of providers who are members of an MSP peer group, whose members collaborate to achieve business transformation.

The findings indicate that MSPs who are members of an industry peer group already appear better prepared to exploit the opportunities offered by a rapidly expanding managed services market:

“In an increasingly competitive marketplace, differentiation derived from technological advantage will not in itself be enough,” comments Todd McQuilkin, Chief Executive Officer at MSP, Air-IT.

“MSPs looking to embrace new revenue streams and remain pertinent to their existing customer base will need to master the ability of expanding their service delivery options in line with customer expectations, while adopting a more strategic approach to enabling new levels of efficiency and profitability.”

The ConnectWise Managed services: the winners and losers in 2018 report is available for download here.

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