Succeeding in a Crowded MSP Marketplace

The lines used to be set in stone. There were original equipment manufacturers (OEMs) who provided hardware and software. And on the other side lay the managed service providers (MSPs) delivering services using the SaaS model.

But over time, the lines blurred. Most OEMs are now in the service provision business. Some focus on providing services via MSPs, while others are competing directly in the MSP marketplace for individual and corporate accounts.

Read more: Biggest Challenges & Rewards of Enterprise SaaS

The Crowded MSP Marketplace

“The services market is becoming increasingly crowded, and once a course has been set, it is not easy to change direction,” said Brian Babineau, General Manager of Barracuda MSP.

In a crowded marketplace, what opportunities remain for new MSPs or those wishing to expand their offerings? Plenty, according to the fourth annual MSP Day Report by Barracuda MSP. Eighty-five percent of MSP respondents believe there is opportunity for them to grow their business in 2021.

59% of respondents expect services to account for 50% or more of their revenues in 2021.

Although the market may be a little crowded in some sectors, most feel it is still not saturated. “One of the biggest challenges for any MSP is knowing what areas to focus on when it comes to offering services,” said Babineau.

In addition, the report finds that a hybrid approach has grown in popularity: OEMS continue to sell their own products as before, but augment this line by adding managed services. As a result, such services are accounting for a steadily rising percentage of total business. According to the survey, 59% of respondents expect services to account for 50% or more of their revenues in 2021.

Another big trend is breadth of services. Not so long ago, it was enough for an MSP to have only one offering. Backup-as-a-Service was popular. Another common one was Disaster Recovery (DRaaS).

Currently, however, there are so many varieties of as-a-Service that it has become more common for MSPs to offer many services. According to the report, 59% of respondents expanded their services portfolio in the past 12 months.

Read more: COVID-19 Driving Desktop-as-a-Service Adoption

Security Services Are in Demand

Security, for example, has become such a problem that certain basic security services have almost become table stakes in the MSP game. And advanced security offerings are becoming increasingly common as an additional service.

SMBs, in particular, are demanding that their regular MSPs bundle in security services.

“Customers are struggling with a lack of skills and resources when it comes to cybersecurity, but they are increasingly aware of the need to have the right tools in place to keep their valuable data safe from unscrupulous cybercriminals,” said Babineau.

He continued: “The fact that so much of their workforce has been working remotely over the past year has left many more at risk, because they couldn’t get a full endpoint protection strategy in place, which made them a prime target for phishing attacks and malware.”

That’s why security came out as the top driver in the growth of managed services. SMBs, in particular, are demanding that their regular MSPs bundle in security services. They would much rather deal with one trusted provider than have to shop around for multiple providers, each with their own specialties.

Read more: VPNs, Zero Trust Network Access, and the Evolution of Secure Remote Work

Top 5 MSP Services

This is a big change from a year ago when rising complexity of IT was the top driver. For 2021, security has taken over. Complexity is still there and is still a challenge, but security is top of mind.

This is highlighted by the fact that the top five MSPs services for the year are all in security:

  • Endpoint security
  • Email security
  • Network security
  • Server security
  • Endpoint monitoring

Two years ago, only one security service ranked in the top five.

Many MSPs, therefore, are entering the security sector. Eighty percent feel security is a lucrative opportunity, just behind remote working (90%). To do well in the security space, however, MSPs must be proactive in ensuring customers are fully protected with the right solutions.

“These companies are looking for trusted IT suppliers who will listen and act on their concerns, and who have the knowledge and skills to take the security headache away from them,” said Babineau.

Read next: Why Is Third Party Risk Management Important?

Drew Robb
Drew Robb
Drew Robb has been writing about IT and engineering for more than 25 years. Originally from Scotland, he now lives in Florida.

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