The managed IT services market size is exploding, growing at a rate that looks a lot like the growth rate of cloud computing, storage, and communications. Research Dive predicted the market will hit $411 billion in 2027, up from $174 billion in 2019.
MSPs are benefitting from – while at the same time fueling – digital transformation across every industry in the world. There are over 150,000 MSP companies globally, according to MSP Alliance.
Grand View Research pegged the global managed services market size at just shy of $240 billion in 2021, and it expects the market to expand at a compound annual growth rate (CAGR) of 13.4 percent from 2022 to 2030.
Grand View’s analysis of the industry shows that we’re seeing growth concentrated in several key segments, with the fastest-growing as cloud-based management, cybersecurity, and managed networks. The adoption of the cloud by businesses has been a key driver – if not the key driver – of MSP market growth.
MSPs have been one of the biggest beneficiaries of the broader 2022 digital economy, and while all the new business is good, what are the biggest challenges?
“There is so much activity in cloud computing, storage, and communications today, including new offerings, new pricing and policies, new business models, and a landslide of innovative everything-as-a-service business applications that run on the cloud, it can be mind-boggling,” said Ryan Walsh, COO of Pax8, a cloud marketplace designed specifically for MSPs. “Successful and profitable growth happens with scale, and scale cannot happen profitability without streamlined operations, from the back office to the front office and customer-facing portals. We tackled this problem early on, knowing competition and chaos were inevitable, and we addressed the root cause: insufficient operating platforms.”
While Pax8 mainly serves MSPs (more than 25,000 of them) who, in turn, service SMBs (over 250,000 of them), the company is also seeing major interest from global enterprises.
“Our differentiator compared to other cloud marketplaces is how we have integrated with top PSAs used by our MSP partners,” Walsh said. “Continued development in AI and cloud services will bring even more value in automation of the entire process, from discovery to procurement, provisioning and management, pricing, margin setting, forecasting, and cost optimization. We never stop working on this, as the world of MSPs is more about calculus than math. The context never stops evolving.”
MSPs will be in demand more than ever as the transition toward a new, tech-focused world continues, the world of IT converges with OT, and more organizations take advantage of the Internet of Things, edge computing, mesh networking, wireless 5G private connectivity, and more.
“Managed Service Providers live or die based on providing consistently excellent services to their customers while doing so profitably,” Walsh explained. “They live in the margins. We know – MSPs are our partners, and we get up in the morning every day to bring them the best cloud marketplace, best guidance, and best-related training and services available. Our team comes from the IT and cloud services industry, and we’ve witnessed the dramatic impact the rapid evolution of technology has had on what used to be called ‘resellers’ and ‘value-added resellers.’”
Pax8 invested in the inevitability of cloud dominance, given the overwhelmingly positive economics of cloud and the innovations massive cloud platforms enabled as part of a sweeping digital transformation that is still underway across industries and regions.
“The greatest struggle our MSP partners faced when they moved to the cloud was reconfiguring their own business operations before they could truly help their customers reconfigure theirs,” Walsh said. “It was the friction in the flow through, combined with constant changes to cloud provider’s offerings, business models, pricing, interfaces, and crowded application marketplaces that became impossible to conquer – without automation.”
There are opportunities for optimization everywhere, and for MSPs, one of the biggest areas is between their Professional Services Automation (PSA) tool and their distributor’s platform. Historically, these two components did not interact with each other, and much of the management work between them had to be performed manually. Today, MSPs can integrate their PSA tool with their distribution platform, allowing for cloud management to be optimized in several ways.
“Constantly switching between numerous platforms, usernames, passwords, and accounts can be a dizzying experience, and it can lead to a lot of unnecessary headaches for MSPs,” Walsh said. “It also increases the risk of human error, as employees have to navigate multi-step processes just to accomplish simple tasks. In one intuitive experience, when PSA tools are integrated with the Pax8 platform, our MSP partners can do things like order, provision, bill, and more, all from the comfort of either tool.”
“With the time saved, our MSP partners are taking on more clients and managing their growth more profitability with visibility, analytics, and insights,” Walsh added. “MSPs can take on more clients and manage their growth more effectively. They are also capturing more billable time per engineer that otherwise would be spent on unnecessary manual processes while losing revenue to human errors in the invoice process, thanks to automated billing. Better operations – happier customers – more profit.”
Edited by
Erik Linask
