Managed IT services market to grow more competitive in 2021
Kaseya Corp. predicts multiple opportunities for MSPs to expand their businesses next year, but it also points to a backdrop of uncertainty and intensifying competition.
By
Kristen Putch
Published: 23 Dec 2020
2020 has been a year for the history books. The COVID-19 pandemic forced many companies to adopt new working situations, including remote workforces, and contend with an unstable economy. While the managed IT services market was not immune to these circumstances, MSPs received opportunities to shine by supporting their customers throughout the complex changes created by the pandemic.
"As a result of the pandemic, competition is at an all-time high for MSPs," said Fred Voccola, CEO of Kaseya Corp., an IT infrastructure management firm that focuses on remote monitoring and management, endpoint management and network monitoring. "An MSP's go-to-market strategy is more crucial to their success than ever before. Even though SMBs are spending more on technology, there's more competition out there for every IT dollar."
So, what does all this mean for the managed IT services market in the coming year? According to Kaseya, which recently released its 2021 predictions for MSPs, remote work will continue to play a key factor in how partners support their customers amid the ongoing and unpredictable pandemic.
"Relative to the overall global economy, the outlook for MSPs next year looks very promising," Voccola said. "The COVID-19 pandemic showed small and medium-sized businesses just how indispensable technology is to operate their businesses safely and effectively. It became clear that technology not only helps SMBs fight the economic challenges they face today, but that it is also their best weapon against a recession."
MSP sales and marketing demands an upgrade
MSPs that have strong sales and marketing engines will have a significant advantage going forward, according to Voccola.
"Many MSPs focus on having the best technology, but it's rarely the best tech alone that wins new business," he said. "MSPs have to sell themselves better -- both to new customers and existing -- and help their customers stay a step ahead of ever-evolving IT needs in order to thrive in this new marketplace."
Here's a look at what MSPs can expect in 2021.
The coronavirus pandemic accelerated many trends that were already in development, added Mike Puglia, Kaseya's chief marketing officer. The pandemic also forced MSPs to prove their capabilities.
"I'd say that the MSPs did something that hasn't been done in my lifetime -- if you think of technology migrations or changes," Puglia said. "MSPs moved most small and medium[-sized] businesses to work remotely in a matter of weeks, around the globe. Virtually everyone."
Puglia likened MSPs to "first responders" for SMBs, for whom technology has become vital for them to function. MSPs should be marketing themselves as "security- and compliance-first" going forward, he said. "You're seeing a lot of MSPs get out there and differentiate themselves from, 'We're your IT department and we take care of you,' to, 'Here's how we can protect you with regard to security and compliance.'"
Bryan Fuller, CEO of Contigo Technology, an IT services firm based in Austin, Texas, noted a shift in MSPs' sales and marketing strategies as a result of the pandemic. "In normal times, the reason people have sales and marketing was because they wanted to aggressively grow their business. In this day and age, it's even more important to have a strong sales and marketing effort, because you're not just looking to grow your business," but also replace clients who have had to close their businesses due to the pandemic, Fuller said.
In addition to needing to ramp up sales and marketing next year, MSPs will need to adopt new techniques for connecting with prospects. Traditionally, MSPs have relied on word-of-mouth customer referrals and connections with business networks such as a chamber of commerce, Puglia said. In today's far more virtual landscape, however, MSPs should take advantage of digital marketing strategies.
Companies like Kaseya are working with MSPs to use those strategies. "We're trying to help fill the gap because a lot of [MSPs] don't have a marketing organization or a ton of experience with that," Puglia said. "We're helping our MSPs with something we call Powered Services, where we have teams that help guide them on how you can run campaigns effectively in a virtual world, where people are spending time on Facebook, LinkedIn [and other platforms]."
Automation becomes a priority
According to Voccola, prioritizing automation in the service delivery framework will allow MSPs to more easily scale business up or down, based on customers' needs as the economy changes.
As a result of the pandemic, competition is at an all-time high for MSPs.
Fred VoccolaCEO, Kaseya Corp.
Budgets are tight, Puglia said, and MSPs are dealing with a whole host of new issues with so much of their clients' workforces working from home or on flex schedules. "Now, when you're getting into this hybrid environment where some people are in [the office] three days a week and then out, the amount of work [MSPs] are doing is physically more. So, when you have [that combination] of more work for the same or [less] money, you only have a couple of levers. One lever is to become more efficient through automation."
Kaseya recently enhanced its product line to make automation easier. It has also offered hands-on technical training to help MSPs use automation, Puglia said.
Fuller agreed automation is important for MSP business growth over the next 12 months and beyond. "I think automation really, fundamentally, starts with the integration of the products that you already use," he said. He noted that as some MSPs mature, they look to get more out of the products they use by integrating them and capitalizing on the full breadth of their features and functions. "I definitely believe that that's the lifecycle of an MSP: Find [products], buy products, then integrate them and then really get in and get subject-matter experts in your organization to take advantage of everything that those products do."
But Fuller stopped short of jumping onboard for complete automation in the future. He said he believes in the value that people contribute to a business. As far as he's concerned, the help desk can't ever be fully replaced. "
As long as there are people and PCs, and [customers] pick up the phone and they want to talk to people ... there's just no way to automate that," Fuller said. "If you get too fancy with [automation], you're going to lose that natural connection between you and your clients. The clients want to talk to people that they know … and so outsourcing the human element to another type of automated form is not what I would say is a long-term solution."
Competition heats up in the SMB space
SMB customers no longer question whether MSPs can offer value to their businesses, Puglia said. What customers want to know now is how one MSP stands out from its competitors.
"Years back, it was, 'Should I use an MSP?' or 'What is an MSP?'" Puglia said. "Today, for small to mid-sized organizations, it's, 'Which MSP?'"
He noted that while organizations that use MSPs may not always be technically inclined, they see enough in the news to know what can happen if they don't invest in security and compliance with a competent provider.
With the managed IT services market growing increasingly competitive, it's critical for an MSP to have a strategy for differentiating itself, Fuller said. "We have to always continue to find ways to add to our business, and, sometimes, you have to let your clients know what you're doing for them," he said. "Communication is absolutely key. You have to find a way to communicate what's happening behind the curtain at an MSP."
Contigo is aiming to become a leader in regulatory compliance and to marry compliance with its IT support services. "If you don't look for a way to broaden what you're doing and try to find additional revenue sources to supplement [what] the MSP business is bringing in, I think you're always going to stay stuck in this hyper-competitive MSP market," Fuller said.
