Datto MSP Study Reveals Diversity in Operations Enthusiasm for Growth

Datto MSP Study Reveals Diversity in Operations Enthusiasm for Growth

By Matthew Vulpis

Recently, Datto, a provider of cloud-based software and security solutions purpose-built for delivery by managed service providers, surveyed more than 1,800 MSPs worldwide to learn more about who they are and what they care about. (Of those surveyed, only 17% are active Datto partners.)

A number of results that stood out, especially when compared to previous surveys. Across the board, respondents agree that competition is now their top challenge as the MSP industry continues to flourish and more companies are getting into the game.

Another sign of the times is the fact that nearly all MSPs now offer managed security services. Perhaps most revealing is that most MSPs expect at least half of client workloads will be in the cloud by 2023. It’s a great sign for the MSP market going forward. In fact, nearly all respondents say that now is a good time to be an MSP and, while the pandemic was certainlyindeed challenging, MSP revenues were not significantly affected during that time.

Just over half of respondents said they have been in business 6-11, while nearly a quarter have been in business for less than five years, indicating the industry is still attracting newcomers.

Other valuable statistics include:

  • 96% of MSPs expect that revenue will increase over the next three years.
  • The majority of MSPs serve businesses with 20-200 employees.
  • The 50-100 employee-range is most common (24%) followed closely by 25-50 (20%), and then 100-150 (16%).
  • Outside of the 20-200 employee-range, there was a sharp drop- off on either end. Very few respondents serve clients with fewer than 10 employees (3%) or more than 300 employees (1%).
  • On average, MSP clients spend $13k per year on managed services – 27% fell within the $5k-$10k range, and another 28% spent $10k-$15k.
  • Some clients spend more, though: 18% fall between $15k-$20k, and 8% between $20k-$30k.

Telecom (46%), high tech (45%), and healthcare (44%) were the top industries MSPs serve but, in general, MSPs across the globe target a very wide variety of verticals. Many respondents have clients in travel/transport, manufacturing, professional services, energy, media/entertainment and finance.

Nearly all MSPs now offer cloud-based infrastructure design and management, indicating that the shift to the cloud is well underway among SMBs, and given the aggregate estimate that more and more compute is moving to the cloud, the cost for cloud services is important to be aware of and to manage carefully.

We caught up with Ben McGahon, founder, and CEO of Kalibr8, a cloud optimization platform company that tracks and automates money being spent by MSPs on cloud services, and he remarked, “We’ve been talking about SMB’s migration to the ‘cloud of everything’ for years, but this year, based on the data we collect and the studies we read, SMB cloud use has gone mainstream.”

McGahon said this is not going to go backwards, just as hybrid working (which relies heavily on cloud services) is not going backwards.

“According to the research shared by Datto, almost all respondents said that at least half of their clients’ workloads will be in the cloud by 2024 and, among those, 53% said that more than three- quarters of client workloads would be in the cloud,” he noted. “There is no time like the present to start planning ahead, as cloud expenses, especially when multiple clouds are in use, can spiral out of control resulting in massive invoices MSPs were not prepared for.”

Nearly every mission critical IT service will run over the cloud in the next few years, including video collaboration, productivity applications, databases storing sensitive information, email and messaging servers, and cyber security which is designed to protect everything.

“The more reliant businesses become on the cloud, the more important it is for MSPs to not only ensure availability and quality of service, but to also make sure every one of their customers is getting the most value for money,” McGahnon explained. “Nobody wants to have to raise prices in this economic environment, but the only way to control that is to control the cost of services sold, which is why so many MSPs are opting into cloud optimization, especially AI-driven and highly automated optimization software as real time guardrails.”

Since its founding in 2007, Datto has won numerous awards for its product excellence, superior technical support, rapid growth, and for fostering an outstanding workplace. With headquarters in Norwalk, Connecticut, Datto has global offices in Australia, Canada, China, Denmark, Germany, Israel, the Netherlands, Singapore, and the United Kingdom.

For the latest information about the evolving and maturing MSP market, join MSP Expo 2023, delivering a dedicated experience that includes education, networking and business opportunity specifically focused on the MSP community.  MSP Expo 2023 takes place February 14-17, 2023 in Ft. Lauderdale, Florida and is collocated alongside the other #TECHSUPERSHOW events, including the 40th edition of ITEXPO, Future of Work Expo, IoT Evolution Expo, The Blockchain Event, and more. Datto, a Kaseya company, will be in Booth #415 in the exhibit hall.

Edited by Erik Linask
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