Prospects for managed service providers (MSPs) going into 2021 appear to be rising across a wide range of potential customers.
A survey of 1,200 SMB and midmarket business leaders conducted by cloud data recovery specialist Infrascale suggests that the need for greater security is pushing organizations toward MSPs regardless of some recent high-profile breaches involving managed services.
Business executives in the education (44%), healthcare (51%), and manufacturing (53%) sectors cited the need for increased security as their top reason for selecting an MSP. Security and reduced costs (46%) tied as the top reason among e-commerce retailers, while finance industry executives cited reduced costs (57%) as their top reason.
Rising interest in managed services is in part being driven by the rise of ransomware, says Infrascale CEO Russell Reeder. Organizations are starting to realize the best way to combat ransomware is to have a pristine version of their data readily available in the cloud, notes Reeder. The simplest way for smaller organizations to accomplish that goal is to rely on an MSP, he says.
“It’s astounding that anybody pays ransomware when you think about it,” says Reeder.
MSP business recovers
The Infrascale survey comes on the heels of a report from Information Services Group (ISG) that notes the annual contract value for managed services deals in excess of $5 million reached $7.2 billion in the fourth quarter. Reflective of deals involving larger enterprises, the report notes that contract values in the fourth quarter reached pre-pandemic levels.
Collectively, the survey and the report bode well for MSPs as the global economy climbs back from a sharp decline brought on by the spread of the COVID-19 pandemic last spring. With countries pumping trillions of dollars into the economies, organizations around the world are proving to be more resilient than expected. There have undoubtedly been many organizations that went under or are teetering on bankruptcy, but the number is not quite as high as feared. With the distribution of a COVID-19 vaccine starting to accelerate in the months ahead, future prospects look even more hopeful. The day when MSPs are once again engaging customers on a face-to-face basis may not be all the far off.
Plan for growth
Naturally, it will still be quite some time before the global economy fully recovers. However, MSPs that start laying the groundwork for that recovery now will benefit a lot more than those that continue to wait cautiously on the sidelines. The time is now to be making investments in training on new and emerging technologies that are likely to be funded in the latter half of 2021. MSPs that fail to make those investments now are in danger of becoming irrelevant to end customers.
After all, most organizations of all sizes are not necessarily looking to return to some idealized version of their IT past. They want to move forward toward the next big innovative thing enabled by IT, and they are expecting their MSPs to show them how to get there.