Service Leadership Survey Reveals Mood, Expectations of MSPs

Earlier this year, Service Leadership released the results of its The Future of Best-in-Class MSPs surveys. The company, which provides solutions to help managed service providers (MSPs) maximize profit, queried MSPs worldwide to assess their attitudes toward the market and overall
industry performance.

The overall results painted a positive picture of the MSP market. Only 12.7 percent of respondents said they were bearish about the future of managed services, while 63.5 percent said they were bullish. The remainder, 23.8 percent, said they were neutral. Interestingly, lower performing MSPs were least likely to be bearish (8.3 percent), and best-in-class MSPs were most likely to be bearish (18.3 percent). Service Leadership attributes this to more profitable MSPs being more aware of the challenges to maintain a high level of profitability.

Almost three-quarters (73 percent) of the respondents said they would start another managed services business again given the opportunity. Only 7.1 percent said they would not. The less profitable the MSP, the more likely they were to not want to start another managed services business.

Most respondents feel that vendors will increase their efforts to disintermediate their businesses. Those with mid-range profitability are most concerned (73.6 percent), while half of the low-profitability MSPs feel threatened by vendors. Nearly 70 percent of the most profitable MSPs see vendors increasing their efforts to disintermediate.

However, fewer respondents believed that the vendors would have more success taking business from them. The most profitable MSPs were the most pessimistic with 43.5 percent saying vendors would increase their share. Only a quarter of the least profitable MSPs thought vendors would take business from them.

The vast majority of respondents do not outsource all or parts of their service desk or network operations center (NOC) services to back-end service providers, or what Service Leadership calls master MSPs. Roughly 80 percent of respondents provide all their own services. The most profitable MSPs were most likely to use master MSPs (21.7 percent).

When asked about the likelihood of using master MSPs in the future, about a third of the respondents thought that they would. Again, the most profitable MSPs were the most likely to outsource in the future (39.1 percent). Presumably, those MSPs have learned which services are most profitable to keep in house and which to outsource.

The survey also covered topics such as the effect of cloud and internet of things on managed services, which vendors will become more or less important, MSP pricing, best and worst performing segments, risks, and M&A. The full survey is not free, unfortunately. It costs $1,495 and is available here.