Trends to Impact Managed Service Providers in 2018
In observing the market and maintaining close contact with many of the company’s one thousand plus MSP partners offering Workspace as a Service (WaaS) solutions, it is clear that there are many emerging trends running in parallel that will increase over the next 12 to 18 months. We have analyzed the trends with the greatest potential impact on the market and expects the following areas to drive change as customer purchasing patterns in major sectors evolve.
Growth in cloud computing
A recent report by IDC indicates that “Worldwide spending on public cloud services and infrastructure is forecast to reach $266B in 2021. The cloud computing market is expected to achieve a five-year compound annual growth rate (CAGR) of 21.0% and public cloud services spending will reach $128B in 2017, an increase of 25.4% over 2016.” The meteoric rise of cloud computing is altering purchasing decisions and changing how solutions are delivered through the channel. This shift is presenting challenges and providing opportunities to MSPs.
Migration from private to public cloud infrastructure
While private cloud environments deliver a type of cloud computing that is similar to public clouds, they also require sophisticated virtualization, technical automation, resource monitoring, and many other expensive resources. Compared to a private cloud, the most obvious benefit to using a public cloud is the savings. With a public cloud, organizations do not have to purchase, install, operate, or maintain servers or other equipment as they would with private clouds. As organizations seek to reduce their annual IT spend, public clouds offer a viable alternative that we expect to grow significantly in 2018.
Increasing acquisitions related to the consolidation of tools that MSPs use to operate their businesses
A recent example of this is the acquisition of Datto by Autotask. However, MSPs can look forward to a rising number of acquisitions and mergers as key providers centralize important MSP enablement solutions under an integrated solution set.
Continued movement down market by Telcos and independent software vendors (ISVs) resulting in the erosion of MSP marketshare
Many telcos are actively trying to make use of their existing scale and IT savvy to move beyond basic voice and data services in order to begin selling a managed service. Additionally, ISVs seeking to expand software availability, delivery, and reach, are augmenting revenue with service-based business units. With managed services proving to be a profitable line of business for telcos and ISVs, established MSPs can expect to feel revenue pressures in the year ahead and beyond.
Increasing demand for secure IT infrastructure
2017 includes string of high visibility malware attacks on a global scale that are of concern to companies that consider their IT environments critical to success. As a result, businesses will look to MSPs in 2018 to ensure that secure service infrastructure is in place before making their provider selection. Security is not only dependent on the security solutions in place but also on the overall IT environment and how it is set up to both defend and recover against such attacks. As such, MSP business models that take this into consideration will lead with a strong point of differentiation in 2018.