2014 A Great Year for Managed Service Providers (MSPs)

Some recent studies are predicting a bumper year in 2014 for MSPs. MarketsandMarkets forecast that the managed services market will grow by almost 80%, from $142.75 billion in 2013 to $256.05 billion in 2018 – and state that there is a “high demand” for managed services across every industry vertical. Forrester (News – Alert) predicts that managed services will grow at an annual rate of nearly 18 percent worldwide.

“Managed Services” can be a very misunderstood term, and there can be different perceptions of what it means, so what managed services are these studies referring to? According to the MarketsandMarkets study, the concept of managed services refers to areas within the following: Managed Data Center, Managed Network, Managed Information, Managed Mobility, Managed Infrastructure, Managed Communications, and Managed Security.

Based on these studies, there are 4 key drivers to the predicted growth:

1. Increased awareness of the market to the benefits of using MSPs (e.g. MarketstoMarkets study finds that companies that implement managed services will, on average, reduce their IT costs by 30 to 40%).

2. Improved pricing and offerings from MSPs, caused by maturation of the model, and also increased competition.

3. An increase in areas where companies seek managed services for – for example, there has been an increase in companies outsourcing wireless, communications and mobility areas, and this trend is set to continue.

4. The ‘rising tide’ of the expected growth in the economy.

If you are an MSP and you provide a good number of these services, this is all positive, but you might ask – which specific technology areas should you focus on? What segments should you be looking at? Here are 3 examples:

• BYOD will still trend: BYOD has grown strongly in the past few years. Gartner, Inc. predicts that there will be a doubling or tripling of personal devices in companies in 2014, due to mobile diversity and uptake. BYOD remains a tricky area for companies though, and they often need guidance from their MSP’s in addition to solution and service implementation. Many companies are also doing away with BYOD and instead issuing company mobile devices – and this also represents an area of opportunity for MSPs.

• The Cloud is still ‘Up There’: Growth in cloud systems and SaaS is generally expected to continue, and GigaOM Research predicts that the worldwide cloud market will grow by 126% this year. Logicalis predicts that nearly 80% of companies will pursue a private cloud strategy in 2014. The growth area within the cloud is expected to be with IaaS, where 122% growth is expected in 2014. Again, there can be different perceptions of what the Cloud is (e.g. Forbes recently reported that only 16% of people could adequately explain it), what the benefits are, and companies will lean on MSPs regarding, again, putting MSPs at a strategic level of discussion and consultation, which can only be positive.

• Security Needs Will Increase: Areas such as BYOD and Cloud do of course lead to tricky compliance and security concerns for companies. In one of our previous blog articles, we spoke of how 96% of companies in the UK acknowledge that they have insufficient IT security systems in place. There are plenty of stories that would give any CIO a headache about their security – most recently the SEA hacking of Microsoft’s blog and twitter accounts. So there is strong need in the market for strong solutions, advice, and services in this area. MSP’s that can significantly reduce this headache for CIOs will be in high demand.

The above areas are complex, and companies struggle to understand them properly, let alone understand what an appropriate solution would be. This also creates a challenge for MSPs to communicate a messaging that can be understood by the prospect company regarding these areas, to engage in the right kind of discussions, and adopt the most effective sales and marketing techniques and tactics with prospect companies. IT is at the heart of any solutions involving the above, and therefore MSPs really need to be at the heart of the strategic discussions within companies regarding these areas in order to provide the most value to their clients. MSP Partners and associations are providing training, resources, and material to MSP’s that provide superb guidance regarding sales and marketing approaches. In addition, specialised agencies that understand the go-to-market requirements in these solution areas can help MSPs to get in front of CIOs, and enable the kind of discussions that lead to a better outcome for all parties. I hope that indeed 2014 is a great year for all MSPs reading this – this market seems ready for it, and what’s more… the market NEEDS you.

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