New year, new trends? Just before 2019 began, we sat down with a couple of our own channel experts to see what they thought the new year would look like for MSPs. Here’s what they predicted.
Founder and former CEO Chris Day believes that the most mature MSPs will continue to separate themselves from the pack. “I think the delta between what is good and what is great will continue to grow,” he explains. “A lot of specialized services have higher margins, so a lot of MSPs want to add to their service offering. But if they aren’t stable in what they do now, how can they add things? The companies that are more operationally stable and performing well today are in the best position to grow.”
Ilyas Sahib is the Director of Channel Sales at IT Glue, which sits at the intersection between vendors and MSPs. “One of the big trends I see among vendors is the move to the one-stop shop. The major players in the space will be moving towards platform-type products that encompass all of the business needs – the PSA, RMM, backup, security.” Ilyas also points the rising prominence of peer groups. “With the purchase of HTG (now IT Nation Evolve) by ConnectWise, peer groups are now the new norm for anyone wanting to grow a successful business. Peer groups serve as communities where MSPs can safely share best practices with other service providers. Belonging to a peer group better prepares an MSP to meet customer demands and increase profit.”
What do I think? Well, for one, I think the maturation of the MSP space is going to accelerate. There’s just so much more discussion today centred around process, automation, and efficiency than even just a couple of years ago. I feel like this is being driven by the changes we’ve seen in the tools that MSPs use now.
In our 2018 Global MSP Benchmark Survey, we explored what the top 20% of performers in the channel looked like based on their 2017 data. I saw a lot of small shops that were performing very well. I think channel performance is going to be better in 2018 than 2017 in terms of margins and growth. There’s still a lot of market out there for managed services. Plus, improvements in the tools MSPs use and how they leverage those tools, should have a positive impact on margins. It’s what Chris said– the top 20% will have even better numbers and will start to really separate themselves from the masses of MSPs. They’ll do this by taking advantage of more sophisticated tools, with better integrations.
As an example, if you have someone that’s been using IT Glue for 2-3 years, their whole team is using it, they’re taking advantage of the integrations, the API and process features – that’s a company that will really start to build up gains over time because they are exploiting every possible efficiency advantage that’s been built into IT Glue. If they’re using those gains to outcompete their rivals, they’ll find themselves smashing records for margin and growth. That’s what we’re seeing with many of our most engaged partners. As Ilyas said, PSA and RMM vendors are increasing integration and automation, too. So as this all comes together it will bring about a change to the competitive landscape in the MSP business. The companies that get into a leadership position today will be set up to absolutely explode in 2019, pushing the metrics that define top performers even higher than we’ve seen last year.
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