Competition Concerns MSPs Despite Break-Fix Twist

Competition Concerns MSPs Despite Break-Fix Twist

By Greg Tavarez

Many companies have turned to MSPs as the IT environment rapidly changed due to the pandemic forcing remote work. Even today in the post-pandemic world, companies, especially SMBs, turn to MSPs to modernize their IT infrastructure and provide cybersecurity services.

However, SMBs are more acquainted with the value of MSP services, so they seek out the MSP with the best services and tools that fit their needs. This directly impacts MSPs as it creates stronger competition, and competition is a top challenge for MSPs. In fact, 29% of MSPs rate competition as their top concern, according to the Datto Global State of the MSP Report, released by Kaseya.

Competition being a top concern is not a surprise. Think about it. The pandemic increased the demand for IT services from third-party vendors. This provided an opportunity for tech savvy specialists to generate revenue by offering their services, increasing the competition field. Now, it is up to MSPs to make sure their services stand out among the rest in a sea of MSPs, most of which have similar service portfolios. It’s easier said than done.

It should be remembered that MSPs are generally tech savvy, not business savvy. They are not always specialists in sales and marketing. Finding the optimal tools, time and strategy that provide high-quality leads also contribute to the competitive challenge.

“For the second year in a row, the Datto Global State of the MSP Report shows that our partners are worried about the competition,” said Fred Voccola, CEO, Kaseya. “This comes as no surprise. MSPs have had to evolve to keep pace with the competition.”

To do that, MSPs saw the break-fix generate revenue – more than a third of revenue came from break-fix or project-based engagements. Break-fix typically reflected MSPs with flexibility built into their contracts to charge extra for projects that fall outside of their normal responsibilities. Others use it for legacy clients. Either way, the increase in break-fix created new business opportunities.

“The traditional break-fix model is evolving, and it represents a gateway for MSPs to secure new business,” said Voccola.

Another new market opportunity, as agreed by 95% of MSPs, is cloud integration. Clients look to the cloud for better storage efficiencies as well as increased opportunities for productivity and collaboration. MSP clients are hesitant fully moving to the cloud, though, because of budget concerns, stricter compliance requirements and more digital transformation than they are willing to undertake. Despite that, half of MSPs expect 75% of workloads to be in the public cloud in three years.

Break-fix and cloud integration are two examples of services MSPs need to jump on to stay competitive. Other new offerings include dark web monitoring, MDR and privileged access management. The MSP is the one that needs to decide how to evolve to continue to meet the needs of their clients while making sure their services stand out from the rest to pull in future clients.

Datto is exhibiting at MSP Expo in Ft. Lauderdale, Florida, Feb. 14-17, 2023. #TECHSUPERSHOW includes nearly a dozen collocated business technology events that bring buyers, users, sellers and partners together under one roof to educate and build business relationships around the technologies driving business success today. Datto will be in Booth #415 in the exhibit hall.

Edited by Erik Linask
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MSPToday Editor

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