Enterprises are Turning to MSPs for Digital Transformation Expertise

Enterprises are Turning to MSPs for Digital Transformation Expertise

By Matthew Vulpis

They Need Help Supporting More Complex Networking, Communications and Business Application Technologies

The managed services provider (MSP) market is a bigger business than ever. What started as essentially an IT reseller role, to provide, install and manage a specific application, has evolved into MSPs becoming an integral part of a company’s IT provision and support network. Today, for many enterprises, an MSP is an extension of their IT team, or in some cases is their IT team, often helping make up the shortfall in skills and resources which are lacking internally, to ensure IT operations run smoothly and successfully.

With more organizations turning to digital transformation, the necessity of MSPs has allowed the industry's market to grow rapidly. The global managed services market size was valued at USD 239.71 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 13.4 percent from 2022 to 2030. In comparison to overall IT services, Gartner predicts the MSP market to grow at three times the rate in 2022 alone.

The growth is largely being driven by organizations relying on MSPs to boost their business productivity and meet growing demands for their services. Another key reason for this increase is the value associated with outsourcing IT and security management. However, the rapid rise of the MSP industry has brought with it not only prosperity for MSPs but unfortunately an abundance of new challenges as well.

“A growing customer base can be a double-edged sword for MSPs. Despite businesses crying out for their services, this is increasing competition within the market making customers more demanding of their MSP than ever before,” said Jeffrey Li, Senior Director of Partner Service Assurance at ConnX Inc, a digital communications transformation as a service platform provider. “As such, MSPs today need to be able to offer a wide range of services to clients to help meet their needs, meaning they must have proficient skills and expertise in a variety of areas, and be at the forefront of technology.”

Among the challenges MSPs are facing during their day-to-day processes, most of the top dilemmas pertain to clients. About three-quarters of MSPs admit that demanding clients and users is a key challenge, while roughly the same number (78 percent) also consider it a struggle to find new customers.

Challenges also relating to clients MSPs have today focused more on customer satisfaction. A priority for many MSPs organizations, retention figures are the main measure of success for 43 percent of MSPs, with 41 percent relying on client satisfaction surveys to assess how well their business is performing.

Finally, at the heart of any business's goals and desires is profitability, which is another challenge many MSPs face when dealing with clients. Roughly two-thirds (68 percent) grapple to maintain profitability today. This stems from the plethora of issues MSPs may have to handle at any given moment. Dealing with the unexpected can have a strain on client relationships and a financial impact on MSPs, making it harder to maintain revenue growth.

“The issue of revenue, along with rising customer demands, is evidenced in the breadth of services that MSPs need to provide and the low levels of nodes they are actually managing per client,” said Li. “To help bolster their value for clients and provide increased revenue opportunity, MSPs today can take advantage of the numerous digital tools at their disposal today. Though MSPs are the IT experts themselves, using other applications and devices are easy ways to ensure a client’s IT services are handled to their expectations.”

Overall, as the world continues to venture into a new digital age, the demand for MSP services is only going to grow as the importance of technology grows. It is therefore vital that MSPs are fully equipped to offer a high level of service and meet the growing demand for outsourced IT services. The myriad of digital tools available can help attract new customers and increase revenues, as well as expand the list of services offered, to satisfy clients and come out on top over their competitors.

For those interested in learning more about the challenges MSPs face, how to overcome them, and the topic as a whole, Jeffrey Li will be participating in a discussion covering the subject matter in detail at MSP Expo, part of the  #TECHSUPERSHOW, being held June 21-24, 2022 at the Greater Fort Lauderdale/Broward County Convention Center in Fort Lauderdale, Florida.  To learn more about the event, click here.

Edited by Erik Linask
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