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Is Your Managed Service Revenue Falling? Here's What to Do About It
MSPs can help customers learn their entire SaaS landscape, then identify security gaps and offer solutions.
5 Min Read
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Managed service providers represent a fast-growing market that is attracting a lot of attention. As a vital IT service in a rapidly evolving tech sector, MSPs are essential to how many companies conduct and secure their businesses.
A recent report from Grand View Research pointed to an increasing reliance on managed services, and forecast a growth rate of 13.6% from 2023 to 2030. However, while the market demand shows no sign of stopping, many MSPs are facing a constant need to adapt their services to new customer needs and challenges.
The big questions are: What's driving the shifting markets, and what can MSPs do to stay profitable?
Seeing the bigger picture and finding the path forward will be crucial for MSPs as customer demands, IT needs and new threats continue to emerge. Here's what every MSP needs to know:
Understanding Why the Market Is Changing
For years, one of the largest drivers of market change has been ongoing digital transformation. Virtually all large companies are in the midst of transitioning to digital, to the point where undertaking transformation is perceived as essential to survival.
Now, even small businesses are embracing cloud infrastructure, which includes adopting and implementing new technologies that replace those MSPs might typically manage. Those service providers can no longer rely on the regular cycle of refreshing physical infrastructure to drive their business forward.
Companies are also facing wave after wave of new and shifting security threats but are typically not identifying the new threats quickly enough to address them as they emerge.
This challenge is similar to a doctor triaging a patient who has been in a bad traffic accident. The doctor would start treating a damaged artery before worrying about a broken ankle or a lacerated eye. Even though the other injuries are serious and require attention, it's the critical problem that needs to be addressed first.
In our current landscape, it falls on MSPs to correctly triage client needs and shift their approach. Right now, access to cloud tenants is the damaged artery. The emergency care is switching from an on-premises and device-based security approach to an application-based approach, as that is the injury that will take down a company.
According to research, software-as-a-service (SaaS) applications are rapidly on the rise, going from businesses averaging 80 applications in 2020 to 130 in 2024. Once bad actors get into a user's corporate Microsoft or Google account, then all the device-based security goes out the window. MSPs and their clients need to shift their focus to where they are vulnerable now.
Finally, MSPs need to understand that technology is always advancing. The landscape continues to shift as new technologies are created and applied to businesses.
Companies looking for a competitive edge are incentivized to latch onto the newest thing as quickly as they can. And it's been a long time since we have seen anything as potentially transformative as generative AI, so every company is scrambling to get onboard.
Unfortunately, that also means that bad actors also take every opportunity to harm companies and individuals with that technological advancement. During the recent CrowdStrike outages, faked landing pages that attempted to steal corporate credentials were appearing within hours of the news breaking. Companies — and their service providers — must be as diligent as the bad guys.
Finding the Pathway to Increased MSP Revenue
Fortunately, MSPs have meaningful steps they can take to improve their services for their customers and open new channels of revenue:
Ask your customers which applications they're actually using. Most MSPs have never been in charge of overseeing or protecting SaaS applications, so many companies have never bothered to conduct an inventory.
The first step is asking what apps your clients use, and then what each application does for them. The shifting nature of security risk means companies must be clear on this information.
Investigate and understand your customers' current security measures. The next step is to learn how those applications are being secured. Perhaps the most critical step — given the nature of security threats right now — is finding out who in the company has access to each app.
Your customers will almost certainly be surprised at some of the findings. They are unlikely to realize the full scope of applications in their environment and will find people with high-level access that are no longer with the company.
With this information, you, as the MSP, can consider the full scale of threats your client may be facing, taking their industry and applications into account. For example, one of the biggest threats your clients are likely to face is token hijacking. Closing similar holes in security will ensure you create happy (and more secure) customers.
Create truly secure environments. This is the can't-miss final step in bringing your clients up to current security standards. Technology such as comprehensive cloud detection and response (CDR) runs across a company's key operational tools. CDR helps managed services create a solid foundation for customers that constantly monitors for cyberthreats. The more operational tools the CDR scans, the better security an MSP can provide.
Best of all, once MSPs choose the right software partner to secure the new SaaS application needs, they can monetize it. Offering secure solutions to your customers through software partners fills in missing gaps left by digital transformation.
MSPs are a critical part of today's economy as they support the many small businesses that make up the backbone of the country's financial system. As needs continue to shift, there are solutions to replace missing revenue that has been lost to digital transformation, shifting threats and advancing technology.
Through helping customers realize their entire SaaS application landscape, identify the possible security gaps and offer real solutions, MSPs will continue to grow and thrive.
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