What comes next? No one knows exactly how innovation will impact a business, and which investments will provide the best return over the next two, five or even ten years. Those are a couple of the many things that entrepreneurs find themselves pondering as they look at the long-term prospects of their organization. Predicting how an industry that impacts virtually every business will change over the next decade (with so many potential variables to alter its course) is a formidable task.
Ten years ago, with the help of several channel professionals and a host of resources, I wrote an article on the MSP of the future and, whether due to insight from CompTIA and other researchers or a little luck (maybe both), it wasn’t far off. Those predictions included driving greater recurring revenue streams from cloud, security and print services, as well as support opportunities with mobility and virtual backup and disaster recovery.
Was that blog post a work of clairvoyance or just common sense? Anyone familiar with the MSP business model (now or then) could have predicted that the value of MRR and client retention opportunities would drive managed services growth.
According to Jay McBain, chief analyst, Canalys, as many as 335,000 IT firms now fit that description, though just 86,546 of those organizations count at least 30% of their annual revenue as recurring. Whatever your definition, the MSP model continues to flourish, and the value proposition for owners, employees and business clients is even stronger today than in 2012.
Building on Success
The rapid and continual transformation of technology provides numerous opportunities for managed services providers. MSP owners typically spend a lot of time pondering, planning and experimenting with ways to improve upon their products, services, actions, programs and other key elements of their operations. Investments in people, training and technologies are scrutinized for the value they deliver to each firm’s operations and customers, and those advances are critical to ensure everyone’s long-term success.
Change is constant and it’s only natural for tech-focused business owners to continually refine processes, policies and deliverables to keep pace with the similarly evolving needs of their clients. Generating larger and more consistent recurring revenue streams fuels these transformation and improvement plans and allows MSPs to scale sales, marketing and other vital parts of their operations. Reinvestment ensures proper growth momentum.
Digital transformation has been a major part of that focus. Over the past decade, cloud support requirements for MSPs have expanded from procuring and setting up seat licenses to optimizing networks, training end-users and managing virtual portfolios. They can now leverage vendor and distributor marketplaces and hyperscalers’ platforms (i.e., AWS, Microsoft, Google) to simplify some of those processes.
The rising complexity of IT—and it’s increasing value to business clients—makes MSPs indispensable to SMBs. That begs the question, what will a managed service business look like in another decade? Will the MSP of 2034 offer a significantly different portfolio of offerings? How will client engagements and support differ?
Related content: Moving from Tactical Thinking to Strategic: How MSP Business Is Changing
A Strategic Value Proposition Continues
Managed services have enjoyed tremendous success over the past twenty-plus years for a variety of reasons, but the one point that rises to the top is proactive engagement. MSPs are the lighthouse keepers of technology. In an era where network connectivity can make or break productivity, especially with the growth of remote work options, they offer “safe harbor” to online access.
That job gets harder every day. The value to customers of having a skilled IT team monitoring and proactively addressing the issues in today’s high-risk environment is incalculable today, exponentially greater than just a few years ago. Two decades of success and innovation have fortified MSPs’ position in the business community, especially for companies with few, if any internal IT resources.
Where would emerging companies be without these skilled tech partners? While the general mission of supporting businesses essentially remains the same, the demands of the current IT environment far outweigh those of yesteryear and, if all holds true to expectations, will grow with each new day. Tomorrow’s MSP business model will likely not deviate from its original premise, though the scope of work and deliverables may shift to address additional threats and opportunities.
The Future
Managed services remain one of the most profound developments in the IT industry and provide critical support to a significant portion of the small business community. Projected to grow at a 13% compound annual growth rate (CAGR) from 2024 to 2030, according to Grandview Research, this high-tech segment still holds tremendous opportunities for enterprising MSPs.
The managed service provider of the future will continue to deliver proactive support. However, the level and types of those deliverables is expanding well beyond the basic remote management and monitoring programs of the past to address the ever-evolving needs of the business community. These developing areas of opportunity include:
- Cybersecurity: While not a new offering, data and network protection has become a top concern for SMBs and a solid differentiator for capable MSPs. According to the 2024 CompTIA State of Cybersecurity report, 58% of companies view cybersecurity as a main consideration when assessing new initiatives. That spells opportunity for MSPs with the knowledge, skills and tools to protect businesses today and tomorrow.
- Artificial Intelligence: AI is a relatively unknown entity to the masses and, as the old saying goes, there’s margin in the mystery for those who can make sense of it all. MSPs that understand and can simplify the technology and optimize the algorithms will have greater opportunities to expand their businesses and create “stickiness” with their customers in the years to come.
- Data Expertise: Effective workflow and information management creates competitive advantages for businesses as they optimize and automate processes. Solutions that provide companies with deeper insight into their current operations and benchmarks to improve performance are already gaining traction. The MSPs that can support those technologies and help map and leverage more of their clients’ data to address key business objectives will be even more invaluable in the future.
While innovation continues to shift the IT landscape while customer needs flourish, the core value proposition for MSPs remains the same. Businesses need experts who understand the technologies and their businesses. As digital transformation evolves into the era of data intelligence and automation, managed services professionals are in the perfect position to lead these changes and expand their value proposition for the SMB well into the next decade.
Not every MSP will make that cut. Those who fail to adapt to the continually evolving preferences and needs of their clients could quickly fall behind and either fail or struggle to remain competitive. The future does look bright for customer-focused MSPs with the desire and ability to transform and grow, as has been the case since the inception of managed services. That value proposition should continue to grow through 2034 (and far beyond).
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Brian Sherman is head of the channel group for CommCentric Solutions, a Tampa-based marketing communications and public relations firm.
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