We ask five experts for their opinions on key trends shaping the managed services market (see panel)
1 A growing market
‘There’s never been a better time to be an MSP’ is a common refrain in the technology sector. Over the last 15 years, from the 2008 banking crisis to the pandemic, the technology sector has shown remarkable resilience in not only surviving but prospering while other sectors have suffered. Today, the twin threats of high inflation and a stuttering economy, choked by energy costs and supply chain disruption, are contributing to a very uncertain economic future. MSPs are not immune to these dangers – rising prices and product shortages are a problem for them, too, and no one likes to see their customers struggling. However, our experts are confident that the MSP market will continue to grow, as organisations push on with their digital transformation and look to third parties for expertise and guidance.
Craig Fulton, CCO, ConnectWise
We’ve been surveying our partners recently and 47% are expecting to see 15% or more growth next year. The other 53% are seeing growth of between 0% and 15%. So, what are the trends driving that?
Number one, there’s a global economic downturn that people are admitting is happening or not admitting is happening. Whether companies are seeing a downturn or not, they’re preparing for one, so in the MSP space, larger companies that our partners haven’t seen in a while are contacting them to outsource their IT needs and drive down costs.
Cybersecurity continues to be a driver. Another big one is the number of devices being connected as you see more things move to the cloud and computing power become limitless. Take accounting software as an example. In the past, that would be loaded on a server on prem and the partner would manage that one device for the customer. Well, that accounting company has now moved their software into their cloud. Once it’s in their cloud, they can do so much more data collection and artificial intelligence, so they start deploying more stuff down to the customer, saying ‘put these sensors in, do this, do that’. Because there’s more stuff being added to the internet, there’s more opportunity for MSPs to manage more things.
In our recent survey, the number one growth driver was more endpoints. There’s more for MSPs to manage because they’re getting bigger customers coming to them, and more to manage because of the cloud and the infinite computing power that’s happening.
We are also seeing more MSPs being created. Other types of technology provider are transitioning to managed services, because the word is out that ‘recurring revenue drives business value’. And we’re seeing growth through merger and acquisition activity. Private equity businesses are coming in and buying up companies, combining them, growing them.
We’re predicting about 13% – 15% growth in the market next year, driven by rising demand for cybersecurity, automation and outsourcing.
Lorenzo Fiori, Marketing Manager, Nanosystems
Reports show that more than 50% of EU and US digital companies approached managed services providers in 2021, to improve operational efficiencies and operating expenses; to support their focus on workload and core business; and to reduce security risks by taking advantage of MSPs’ high-level skills. These trends have been accelerated by the pandemic emergency, which, through remote working, triggered the need for automation, business continuity and endpoint security. Expenditure on managed services is growing significantly for SMEs thanks to new working methodologies like a full or hybrid home office, distributed teams and so on.
Greg Jones, Vice President of Business Development, EMEA, at Datto, a Kaseya company
The IT landscape has always done well on the back of an economic downturn; it gives us a springboard because ultimately SMBs are looking to reduce their spend. Now is a great time for MSPs to go in and say ‘we can help you do more with less, we can drive business processes, we can make changes’.
On the back of COVID-19 many businesses became more profitable
and productive just by automating some processes or using technology to drive a bit of change. And it doesn’t have to be cutting edge or bleeding edge technology. It can be quite mundane technology, like Zoom or Teams.
We’re seeing that from big players as well. Fortune 500 companies are saying ‘Actually we need to leverage more with MSPs. We aren’t as agile as some smaller businesses. How can we engage with the MSP community and be more agile and drive more digital transformation?’.
Phil Sansom, Director Business Development and Alliances, at
Barracuda MSP
Because of the difficulty of getting decent techs in the IT space, we’re seeing a lot of businesses being pushed towards the MSP space. MSPs have the same challenge, but automation and all the skillsets they have play into that rather nicely. MSPs are getting interest from businesses that they wouldn’t have been in discussions with before and that skill shortage is a big reason why.
Another trend is the growing focus on cybersecurity. When I started out with Kaseya in 2002, it was all about the move to automation, moving from a break-fix model to automated managed services, and a lot of that relates to doing more with less. What attracted me to Barracuda is the journey they are on to help MSPs move towards to
a cyber-centric offering, the next phase in more automated managed services.
Some smaller MSPs we’re working with are almost revamping their service offering, focusing on cyber security perhaps at the expense of other services. It’s almost a case of ‘we can’t spread ourselves too thinly and do everything, so maybe we need to be a bit more precise about our offering’. Some are choosing to be more cyber-centric as a result.
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The experts
Lorenzo Fiori, Marketing Manager, Nanosystems
For over 30 years, Nanosystems has provided IT consulting services, technical assistance and system integration. In 2006, it launched its Uranium Backup solution, which has more than 100,000 active users. In 2013, it launched SupRemo software for PC and Server remote control via desktop sharing, followed in 2017 by the SupRemo Remote Desktop Android and iOS app. In 2016, Nanosystems brought out an IT management console, SupRemo Console, that allows users to monitor and manage Uranium Backup clients and simultaneously manage and control SupRemo contacts. www.nanosystems.it
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Robinder Koura, Director Channel Sales, EMEA, GoTo
GoTo (formerly LogMeIn) provides a unique combination of remote IT support solutions and business communication solutions for telephony, video meetings and webinars. Widely used by businesses and IT support providers, GoTo is planning to introduce MSP versions of all its solutions. It has already done so for GoTo Resolve, an all-in-one remote IT support solution, and plans to introduce MSP versions of its other offerings in the first half of 2023. MSPs will be able to take advantage of mobile device management through the integration of Miradore with GoTo Resolve, following GoTo’s acquisition of the Finnish company last year. www.goto.com
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Craig Fulton, COO, ConnectWise
ConnectWise supports IT solution providers (TSPs) with
an expanding range of software solutions, services, integrations and the IT Nation community of IT professionals. It enables TSPs to drive business efficiency with automation, IT documentation and data management capabilities and increase revenue with remote monitoring, cybersecurity and backup and disaster recovery. Last year, it introduced the security-centric Asio unified IT management platform for MSPs. www.connectwise.com
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Greg Jones, Vice President of Business Development, EMEA, Datto, a Kaseya company
Datto, a Kaseya Company is a global provider of security and cloud-based software solutions purpose-built for Managed Service Providers (MSPs). Its Unified Continuity, Networking, Endpoint Management and Business Management solutions are delivered via an integrated platform and used by MSP partners to defend their customers against costly downtime and data loss in servers, virtual machines and cloud applications. Datto, founded in 2007, was acquired by Kaseya last year. www.datto.com
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Phil Sansom, Director Business Development and Alliances, Barracuda MSP
Barracuda protects email, networks, data and applications with cloud-first, enterprise-grade security solutions that are easy to buy, deploy and use. Barracuda offers holistic cybersecurity for MSPs through a combination of its platform, solutions and 24/7 SOC that together enable MSPs to offer a comprehensive cybersecurity as a service. www.barracudamsp.com
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2 Automation for MSPs
MSPs have been automating their processes for more than two decades through RMMs and PSAs and integrations between the different systems they rely on. This has been fundamental to their ability to deliver the efficiencies, quality of service and cost savings that customers expect, while also enabling them to improve their own performance and productivity and scale to serve more customers. But how automated are MSPs really? Where can their processes be improved and what is stopping them from making the necessary investment?
Robinder Koura, Director Channel Sales, EMEA, GoTo
The level of automation really varies depending on the maturity of the MSP. In general, most MSPs tend to be a step ahead in workflow automation – they have to be, based on what they’re offering as an optimised service. But it can vary. For example, it can depend on the MSP’s cost contract model. Are they getting paid by the volume of support requests? If they are, they’re not really incentivised to solve problems and be more automated because their income is based on the number of tickets, the number of support requests.
Also, how much does the MSP control the infrastructure of the customer? Do they have software in place to deliver automated support processes or not? That can be a factor.
So, too, can the tools they’re using to support proactive IT automation. Some tools are very complicated. MSPs try to show their value by saying we do the complicated stuff customised for you, as opposed to just a standard vanilla offering. That inherently means it’s not going to be as automated as if the business procured it themselves. They’re creating that complexity, that customisation. That might also hinder the use of automation because they’re not incentivised to be automated to offer these kinds of customised solutions.
That said, there is a big shift towards cloud-based offerings in enterprise software, which is naturally going to drive automation, because those solutions tend to be simpler, more intuitive and with better admin provisioning and reporting capabilities. It’s an inevitable trend.
Greg Jones, Vice President of Business Development, EMEA, at Datto, a Kaseya company
MSPs typically work with 17 different vendors and have lots of different tools and technologies, but when we get behind the scenes, we find they’re usually only using about 20% of the features within any technology. That is a huge concern because it’s money down the drain, it’s eroding margin for MSPs and it’s certainly not helping their productivity.
We lead with our IT Complete platform, which is all about empowering our partners to do more with less. It’s a single pane
of glass that enables IT professionals to manage all their customers and all their technology in one place. Then, we offer a huge and diverse range of technology that we bring to market on average for about 30% less than the competition. We don’t expect an MSP to use all that technology, but it is on offer should they need it.
The proportion of MSPs that use a single pane of glass solution is still extremely low and we can always improve an MSP’s efficiency and drive more profitability, more growth, more margin. The purpose of our IT Complete platform is to really empower MSPs to streamline that whole process. In the case of logging in and out of platforms, we can save around 20% of an engineer’s time by streamlining the process of traversing different platforms. Our IT Complete platform is a true application integration, meaning that when you click on it, it logs in, it automatically populates credentials and details, it streamlines that whole process.
We believe a PSA and an RMM tool should be the gifts that keep giving. As we head into an economic downturn, you should be using those products and services to drive more and more automation.
At the moment, we’re seeing high inflation rates of 8% to 11% and interest rates of about 4%. If an MSP has got money in the bank, unless they’re doing something really clever with it, they’ll be losing money. They should be looking to invest that money to drive more automation.
Craig Fulton, CCO, ConnectWise
We have a very active peer group inside the IT Nation at ConnectWise and something I hear quite often is ‘I feel like I’m only using 20% to 30% of these systems’. And I know anecdotally from speaking to MSPs that they’re not leveraging integrations of systems, which should be the key focus right now, because there’s another wave of automation coming with artificial intelligence and machine learning.
To date automation has mainly been about automating everyday business operations – automating emails and automating searches for exceptions – and getting a PSA and an RMM to work together. The power to automatically create tickets in the PSA and auto-remediate things using the RMM tool, and then log that, track that and report to the customer helps MSPs build a very scalable service delivery model, where they don’t have to increase the headcount overhead in their business to add more customers.
Today, we see a lot of opportunity for MSPs to get more systems working together. This isn’t 2010 when you would just integrate an RMM tool and a PSA tool. MSPs are now using cybersecurity tools like SIEM, EDR, XDR, SOC; they’re using backup devices – and not every MSP is using just one backup solution, they’re using multiple solutions.
The common tech stack right now is a PSA; an integration to an accounting system; a quoting tool – what we call CPQ: configure, price, quote; systems management (unified monitoring management, which will be the RMM tool, remote control); and a backup solution.
Those are the five things we’ve been perfecting until a couple years ago. Now we’ve added the cybersecurity toolset, so there’s a complete tech stack to be had there.
As we see people coming in with SIEM and XDR, extended detection and response, and perhaps adding some DNS monitoring, our message is if you’re adding this toolset, you’ve got to invest the time
to ensure you are making the most of automation, because you don’t want to add tools that require extra headcount to manage and keep going. I see a lot of MSPs that, when choosing their vendors, don’t ask ‘do these integrate together and how do they integrate together?’. They start to take for granted what automation can do and then they get themselves into situations where the tools don’t integrate.
Computing is expanding, there are more devices, and the next wave of automation is going to involve collecting that data and analysing it. MSPs are going to have to leverage automation in order to analyse that much data so that they can be more predictive for the customer, so that they can say ‘to achieve your goals you are going to need a system to do this for you and you’re going to need to implement and bring this technology into your business’. The next wave of automation is going to enable businesses to do that and that’s how MSPs are going to future-proof themselves.
About this time last year, we announced our ASIO platform and started building the things MSPs will need: we’ve got all of this great benchmarking data, operational maturity data that we can combine using our BrightGauge dashboards. We’ve integrated SentinelOne. We’ve integrated our SIEM into these dashboards, so we can say ‘we know cybersecurity is the priority; we’re going to enable you to be predictive with that’.
Before, we had dozens of software solutions with different types of databases, different UIs, multiple ticketing systems embedded in all of them. Our vision is to unify all the great things we have in this platform so MSPs can leverage one ticketing service, one company and contact service, one authentication service and, being in the cloud, more computing power than they can get on prem so that they can take advantage of AI, machine learning, data collection and make that data work for them.
Lorenzo Fiori, Marketing Manager, Nanosystems
MSPs are investing in new services and product portfolio development while engaging in R&D activities to provide affordable yet reliable solutions to their customers.
Their processes can be improved by working on different strategies. First, enhancing cloud services and their approach to AI in order to support the digital transformation of various end-use industries, mostly SMEs. Secondly, increasing usage of CRMs and Business Intelligence tools to enhance relationships with customers and improve understanding of industry trends. This is crucial for automating tasks and addressing R&D activities.
All this does not happen without problems or critical issues. There are barriers that slow down and, in some cases, even derail this process within companies. Lack of skills and culture in ‘change management’ are challenges that can and should be addressed by MSPs.
3 Vendor consolidation
Vendor consolidation is a perennial topic of discussion for MSPs. Sourcing multiple solutions from a single provider can help with automation and affordability, but at the risk of vendor lock-in and lower levels of innovation. The other option of sourcing best of breed solutions gives flexibility and more scope for differentiation but adds complexity and increases the management burden. The popularity of each approach waxes and wanes, but which way is the market moving in 2023?
Robinder Koura, Director Channel Sales, EMEA, GoTo
MSPs might traditionally have felt I’m going to get best of breed in each space and then put together my own customised solution as a way of showing their value, saying ‘I’m providing you with the best of everything in a combined, integrated offering’. That gave us lots of different choices, lots of niche software.
I think we’re coming back the other way now. Vendor consolidation in the market inevitably means you’re going to have more solutions from one supplier. And MSPs today might see a lot more pros than cons of having more offerings from one supplier. They won’t have to do as much integration and there may be a better commercial model from that supplier. The downside is you may not be getting best of breed in each individual solution. You’re compromising that for the value of consolidation.
I think it puts you at risk, as an MSP, if you’re reliant on one supplier. To use a stock analogy, you’re not as diversified so your risk is more in one area versus the reward of having that consolidation. In terms of product development, it may take longer to get new features from one supplier. Because they’re bigger, they might move slower than a niche software company that can be very innovative and develop new features and be leading edge very quickly. That’s a typical trade-off when working with a big supplier: small supplier innovation versus the stability and cost benefits of working with one supplier for multiple solutions.
Having multiple solution offerings from one supplier inherently means you’re going to get a better deal as opposed to individually purchasing those. But again, as you go along, I guess you’re on the hook for more, maybe giving them the leverage to be able to say ‘Well, I’ve got to raise the price’. Against that you have the benefits of an integrated solution that requires less work for you to offer to your customers. I still think that that outweighs the overall negatives of having a more consolidated vendor situation.
Phil Sansom, Director Business Development and Alliances, at Barracuda MSP
In the past MSPs were nervous about being too beholden to a single vendor, but that has changed. I think that’s because the technology offerings from vendors is solid, not just in one area with bits and pieces in other areas, but consistently right across their platforms. That makes a big difference.
One thing that’s clear is an MSP is never suddenly going to switch and come across for everything. That’s never going to happen. So, how do you start to displace your competitors in the MSP space, because a lot of them have been running tools or part of their offering for many, many years? It is all about getting a foot in the door, wherever that might be. It could be email security, it could be backup, it could be the RMM tool and then you’ve got to earn your stripes, prove yourself.
The new business engine that I now run for Barracuda is all about that foot in the door, after which we have a really solid process for gradually, gently opening it up.
Email security is fairly fundamental and a key part of the Barracuda offering, but what we’re seeing with the acquisition of SKOUT in 2021, now Barracuda XDR, is that that’s proving to be a really great calling card because there’s a big thought leadership element to it. We don’t go in with a hard sales pitch from the very beginning. We say this is the problem and then we lead them along accordingly. We have to train them, we have to support them, we have to get on those calls with their end users, we have to hold their hand to get those first few deals done. That’s fine because it’s all part of the process.
The exciting thing is that it’s a real opportunity for net new revenue, net new business and new customers for MSPs. A lot of the feedback
we get from the market is that everyone’s doing similar things so it’s hugely competitive and difficult for MSPs to differentiate themselves. XDR presents a really good opportunity because they can follow our model with their customers, which is to open the door with cyber and then on the back of that open the customer up to all the other services they offer.
Greg Jones, Vice President of Business Development, EMEA,
at Datto, a Kaseya company
Our IT Complete platform comprises security, RMM, MSP enablement, unified backup, documentation, auditing, and compliance and then PSA and service desk. That is a huge amount of technology.
We will never say ‘take all our products and services’ because we have 42 different products now. Instead, it is about giving our customers and our partners choice and opportunity and bringing that to market at a competitive advantage over other solutions.
Since Datto’s acquisition by Kaseya, we’ve been integrating our products into the IT Complete platform and streamlining the process of doing business with Kaseya right down to account management, so there’s one account manager across the board, one single point of contact. By the end of February, all Datto technology will be fully integrated, and we will keep adding to IT Complete.
We are always surveying the MSP landscape in terms of what our partners need to deliver on their promise to customers and are constantly looking at what we need to acquire to continue to help partners.
On the vendor side and the MSP side we’re seeing a lot of M&A right now. My personal view – and this is not a Kaseya or a Datto view – is that the MSP landscape will really consolidate over the next five years. I think there will end up being very big MSP players and very boutique MSP shops. They will be the two dominant types of MSP in the next five to 10 years.
Craig Fulton, CCO, ConnectWise
Vendor consolidation has been a hot topic for a decade. We always look at the platform, the tech stack, the toolset that MSPs use and say ‘OK, where are there gaps here?’ and then ‘Do we build it? Do we partner with it? Or do we acquire it?’. We’re constantly looking at that.
Last month, we announced new partnerships with Evo Security and Exium that filled some gaps in our cybersecurity stack around network scanning, user rights management, elevated access. And then we made a decision to build our own ConnectWise Access Management solution so that we can control permissions so technicians don’t need to share passwords with each other, which is a violation of cybersecurity rule number one. Then, to ensure MSPs can focus on the right things and not be heavily burdened with back-end stuff, we acquired financial tech company Wise-Sync that helps MSPs get paid faster.
Not everyone wants to use a single vendor. We hear things like
‘Hey, I’ve got technicians in my team that have invested a career in understanding these toolsets so these are the toolsets we’re going to continue to use’. That’s pretty common. There’s some brand loyalty; people use one tool and feel good about it.
But at the end of the day, having one vendor to work with is a great thing for a growing MSP. The more vendors you have to work with, the more burdensome your everyday operations become – receiving bills, paying bills, reconciling that with what you’re billing. Most MSPs don’t have a full- time person doing that. Vendor consolidation is good for them.
Sometimes it’s the terms of the agreement that makes them choose which vendor they’re going to go with, or the integration capabilities, the partnerships – ‘I already have Storagecraft or Acronis for backup and they integrate tightly with ConnectWise’s platform, so that’s the direction I’ll go in’.
This wasn’t a point people made 10 years ago, because the tech stack was smaller then. It’s more important now because there are so many more tools and that whole process around usage and monthly billing is become very burdensome to manage.
Then I hear people say ‘Hey, it’s because of the experience they get with that vendor’, which could be down to the community that may be associated with them. At ConnectWise we have IT Nation, a great community of partners working together and networking, building best practices, learning.
Lorenzo Fiori, Marketing Manager, Nanosystems
As the pandemic shifts to new working standards, vendor consolidation for MSPs is demanded to create value in the whole supply chain. The more vendors support MSPs, the more the latter will be able to respond to the growing and increasingly heterogeneous demands of customers and end-users.
At Nanosystems, we felt a pressing need for MSPs to adopt scalable solutions centralising complex tasks and then providing better service to customers, making work go more smoothly and with lower costs. Our SupRemo and Uranium Backup solutions have existed for almost 10 years, but we have now brought them together in the SupRemo Console, an online IT Management Console that allows MSPs, among other things, to perform status monitoring of endpoints (PCs and servers), to establish support sessions for remote support and to handle data protection of information systems, databases and virtual and local machines.
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