MSPs
WHAT THE FUTURE HOLDS FOR MANAGED SERVICES PROVIDERS
Terry Storrar, managing director UK at Leaseweb reveals what’s next for MSPs. F
irst emerging during the 1990s in the form of Application Service Providers (ASPs), the outsourced managed services model has gone from
strength to strength. Worth over $275 billion last year, the global MSP market is expected to reach around $373 billion by 2028. Powered by the burgeoning cloud infrastructure
and services approach, there are now thousands of organisations around the world that position themselves as MSPs. In the UK alone, for example, there are now over 11,000, according to a recent UK Government report. Te definition of what an MSP actually is, however, is somewhat nebulous, with the same report pointing out that there is, as yet, no Standard Industry Classification for the sector. So, what are we actually talking about when using the MSP acronym?
Te Gartner Glossary definition requires over 100 words to cover a broad range of relevant service types, hosting options, technologies and other nuanced capabilities – underlining the variety inherent across the industry. Put more succinctly, it’s perhaps more straightforward to view an MSP as “a third-party company that remotely manages a customer’s IT infrastructure and end-user systems”.
Growth potential But where is the industry heading, and how might the MSP concept evolve in the years ahead? In a rapidly growing sector, ambitious and innovative MSPs are broadening their scope even further to add more capabilities under the managed services umbrella. From cloud-based management to cybersecurity, the arguments in favour of outsourcing some or all of an organisation’s technology infrastructure have become hugely compelling. Te growth potential for MSPs adding cybersecurity services to
their portfolios, for instance, is enormous. McKinsey estimates that the total global addressable market for cybersecurity technology and service providers stands at $2 trillion, and clearly, many MSPs are positioning themselves to capture a share of this wealth. Behind the headlines, there are a range of factors contributing
to the bottom line success of MSPs and their ability to continually innovate and renew. Chief among them is the unrelenting pace of global technology innovation, with Artificial Intelligence (AI) an
42 | May/June 2024
obvious growth driver for years to come. It seems certain that organisations everywhere will turn to their MSP partners to help steer them through this latest wave of digital transformation. Te continuing shiſt towards the ‘as-a-Service’
model also gives MSPs the opportunity to capture valuable recurring revenue while also pursuing a range of cross-selling and upselling strategies. In doing so, they can embed themselves more deeply into their customer partnerships over the long term. Elsewhere, MSPs are benefitting from those
organisations looking to move workloads away from
public cloud providers, with over 70% of respondents to a 2023 IDC survey planning full or partial repatriation. Whether it’s offering strategic advice, execution experience or the infrastructure alternatives customers are looking for, there is a clear role for managed services expertise. To give this some important context, this is occurring at the same time as a forecasted 20% increase in global public cloud services spending, where MSPs are also playing an important enabling role. Even though challenging economic conditions have led some
organisations to focus on cost control, including optimising technology budgets, the overall industry-wide outlook remains generally positive. Gartner predicts that worldwide IT spending will grow by 8% this year to over $5 trillion in total, with the soſtware and IT services segments seeing ‘double-digit growth in 2024, largely driven by cloud spending’. Te list of growth opportunities for MSPs goes on. From
organisations looking for tech partners who can provide strategic, long-term guidance to the continuing impact of remote and hybrid working patterns, effective service provision is now fundamental to successful IT investment.
Delivering customer requirements Clearly, competition is fierce, and in the maturing MSP sector, the concept of ‘service’ continues to rapidly develop. What many of the top performers have in common is a demonstrable commitment to a customer-centric approach, deep technical expertise and the kind of ‘agility’ that many businesses value so highly.
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