The State of MSPs in 2022 and the Challenges They Face
Automation looks to be a huge trend for MSPs in 2022. We asked some of our 501ers about that and other report findings.
January 31, 2022
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“Automation is integral to optimizing processes and business efficiency at Cloud Carib. Significant cost savings are not only realized by reducing the time spent on manual tasks, but also through the avoidance of rework required to remediate human errors. Automating as much as possible is key to ensuring that our internal teams can focus on activities that further the enhancement of our core business and services, instead of poring over manual tasks that are prone to error.
“As part of automation initiatives, digitizing workflows is critical to ensure standard processes are always followed and compliance requirements are met in day-to-day activities without having to rely on manual intervention. As automation within an organization matures, machine learning and artificial intelligence can be applied to increasingly optimize all facets of the business. These benefits give our team added time to work more efficiently and allows them to focus on strategic initiatives.”
[Regarding the fact that the majority of end customers (55%) are spending more and more each year with their MSPs]:
“Part of the increase is due to increasing concerns related to security and compliance. Doing this the right way typically takes an investment. Another factor is the significant increase in tech compensation. Since talent is the largest expense for MSPs, compensation increases will be offset by an increase in MSP rates.”
[Regarding the fact that the majority of MSPs expect most of their end customers to be 100% in the cloud within the next five years]:
“We are nearly there, and rare limitations exist for now. For many we can simply place a virtual box in the cloud. The ideal is beyond going “cloud” but rather going SaaS where the full stack is better managed and we eliminate the systems not just physical footprint. In doing so, looking for software that leverages SSO, Power BI, and API integrations to allow for automation.”
[Regarding the fact that 95% of respondents say automating their processes is necessary to be able to focus on innovation and strategic goals]:
“Yes and yes. In fact, we are now offering data services to our clients that include a team focused on building custom automation for our managed clients. Automation is something every organization needs, but either is unaware of its existence, unsure of their capabilities, or daunted with where to start. We help navigate these items while we are crafting their architecture, strategy and larger big picture plan. Plenty more to discuss on this exciting component of the MSP world ahead.”
[Regarding the points/stats about automation]:
“Automation is 100% critical to MSPs moving forward. We need to increase efficiency and lower the possibility of mistakes, because that’s where we open the door to competitors, or worse, hackers. There are a significant number of functions in an MSP that can be automated and the MSPs that don’t actively look to automate as much as possible will fall behind those that do. We have an engineer that spends most of his time working on automation, API integrations and streamlining workflow, for us or our customers. Customer automation is a big point that many MSPs miss.
“We have found ways to automate processes for our customers and not only does that allow us to charge them more, it makes them incredibly ‘sticky’ because of the time savings and impact we have on their business. Cybersecurity currently dominates the conversation around IT, but it won’t be long before automation takes the top spot. MSPs must be prepared or they will get left behind.”
[Re: the fact that the majority of end customers (55%) are spending more and more each year with their MSPs]:
“We definitely see this. I look at it as a percentage of wallet share. They are already spending on things like phones and conference rooms, but before they paid a conference room technology company and a local PBX provider and maybe they went to GoDaddy or network solutions for their domains. Now they are realizing their MSP can handle all of these things. It does not necessarily cost them anymore and they end up spending more with their MSPs. It is a consolidation of where the spend goes and in my experience 55% of end customers is a low estimate. I see this trend continuing as customers see the benefits that a single provider can bring to the table as MSPs continue to mature.”
[Re: the fact that the majority of MSPs expect most of their end customers to be 100% in the cloud within the next five years]:
“I think a greater percentage of end customers will be 100% cloud in five years when compared with today. However, there are still constraints when it comes to heavy data users like engineering firms, for example. The cost of transport, cloud storage and general bandwidth aren’t at a tipping point yet.
“I think there is maybe another server refresh before customers make the jump. They are just now starting to consider on-prem versus cloud in many cases, and I don’t see all end customers committing to cloud in five years. There will be some, and I believe all will have increased their cloud usage strategy in that time. A hybrid setup will still be the play for the majority. Any new startups will almost certainly start and remain 100% cloud. It is the legacy end customers who will continue to take their time.”
[Re: the fact that the majority of MSPs expect most of their end customers to be 100% in the cloud within the next five years]:
“Cloud is a huge advantage, but it can still be an expensive transition, so MSPs provide a great way to understand and prioritize cloud options for businesses. Security requirements are changing so fast that it’s challenging to hire for it and keep someone up to speed. For example, if PII details must be encrypted during a routine traffic stop, how do local governments move quickly to comply? MSPs with their deep knowledge are critical to moving fast and staying prepared with the fast-moving security landscape.
“IT needs to be the enabler of modern business. IT is no longer about telling people to reboot their machines when there’s a problem. The modern IT team needs to be the driver of solutions that facilitate work in the modern environment – whether that’s in the cloud or on-premises.”
[Re: the fact that the majority of end customers (55%) are spending more and more each year with their MSPs]:
“Customers need a trusted partner to supplement internal teams. Amid the “Great Reshuffle” and the “Great Resignation,” companies do not always need to look within their four walls. Additional headcount can be a difficult sell, but project-based or consultant engagements with MSPs can provide great value on the investments. Further, IT staff – even with an approved headcount – can be competitive and challenging, and MSPs help fill that gap with their stable of experts.”
[Re: the fact that the majority of end customers (55%) are spending more and more each year with their MSPs]:
“Smart business leaders are embracing technology to make their businesses more flexible and efficient. Leaders of small and medium-size businesses especially are realizing that having a strategic relationship with their MSP is beneficial. The MSP can bring in outside perspectives about what tools or technologies might be appropriate for them to implement, keep them up-to-date on the latest trends, and help to reduce risk to their organizations of security threats.
“In our business, we find that those clients who embrace regular strategic business reviews with our team are growing faster and innovating more than their peers who do not invest their time and attention to their relationship with their technology partners.
[Re: the fact that MSP leaders estimate engineers devote 39% of time into manual tasks and 88% say these tasks prevent engineers from spending time on innovation or advancing strategic goals]:
“Many tools that MSPs use offer integration with other platforms, but they can be hard to set up and maintain. However, having a deeply integrated stack of tools and technologies (sometimes requiring custom-written tools) allows an MSP to leverage technology to make their service delivery more consistent, reduce mistakes, and automate processes that previously had to be done manually.
“For example, we have written a tool that audits client contracts and automatically will create tickets in our PSA platform for scheduled maintenance tasks that we have committed to as part of our service bundles. This prevents human errors and ensures that we are delivering services that we committed to. We created another tool that will automatically update customer profiles based on the services that we are billing for (for example, Office 365, BCDR, EDR, SOC, NOC, help desk, etc.) so that our account managers don’t have to dig for information about a client and can see the client’s tech stack represented in a single location that is always kept up to date. These used to be manual processes or checklist items on projects that were prone to human error.
“By implementing automation in our own operations, we’ve become more efficient, less prone to error, and able to serve more clients without having to add additional personnel.”
[Re: the fact that MSP leaders estimate engineers devote 39% of time into manual tasks and 88% say these tasks prevent engineers from spending time on innovation or advancing strategic goals]:
“To automate or not to automate is always the question for any managed provider. With the growth of our industry and the growth of the modern-day attack vectors, clients expect more from their managed providers and employers expect more from their employees. To meet these expectations, companies must discover how to achieve more with less and automation can be a successful option. The goal is to automate the most basic and manual tasks that are low risk and time-consuming to perform. This not only positions the MSSP with a resource and efficient platform but also as an innovative and forward-thinking managed provider.
“The automatable tasks vary for each delivered service and managed provider but what will quickly arise, are the challenges to build automation within a company. Whether a managed provider chooses to build the automation in-house or purchase a tool, they need to be prepared to commit to the continued management and development of the tool. Building an internal development team is just as important as developing the automation itself. Without the structure and staff to support continued development and automation the initiative will quickly stall out and cause frustration for the providers clients and employees. There is no question on the value of automation and automation has become a requirement of providers and is no longer a nice-to-have.
“Ascend approaches automation through several streams. Our individual teams plan and execute automation projects within our daily processes. The cybersecurity team also approaches automation within its processes and flows, our development operations team works to identify tasks that can be automated and proceeds to solve the problem. The cyber leadership is consistently reviewing and setting expectations with our vendors to develop their own automation to support our objectives.”
[Re: the fact that 95% say automating their processes is necessary to be able to focus on innovation and strategic goals]:
“As an MSP, it is essential to automate as many of the day-to-day mundane manual tasks as we can to allow our staff to innovate and to become more strategic for the company and our clients. We have seen this allow and keep us progressing quarter over quarter with a 20+% increase in automation. That then allows a consistent support program across all levels for our MSP clients.”
[Re: the fact that the majority of end customers (55%) are spending more and more each year with their MSPs]:
“As an MSP focused on the SAP ecosystem, we have seen a tremendous “pull forward” on projects the past 12 months. As such, our year over year has increased 214%. End customers have a number of initiatives they want to move forward and are willing to make them happen immediately to get them compliant as well as to get them through the digital transformation they need.”
“‘Automate absolutely everything you can’ is something we preach to our clients and practice ourselves. Highly automated MSPs are much more agile and cost-effective, and even smaller organizations can easily outpace formidable competitors that don’t automate workflows. Without the aid of automation, there is simply no way for even the most productive human engineers to keep pace with the speed and scale of processes powering modern business, much less consider innovation.
“In addition to the benefits outlined in LogicMonitor’s research (improved time efficiency, reduced errors, and increased profits), hyper-automation enables next-gen operational models that can scale quickly to meet changing circumstances, better exploit new technologies, and promote experimentation — as in AIOps. With AIOps, the automation of previously manual monitoring and remediation chores (with minimal human intervention) frees IT staff from burdensome and repetitive tasks while increasing the range of their capabilities and the resilience of their infrastructure.
“Take cybersecurity, for example. Cloudticity serves the health care industry, which is by far the biggest target for cyberthreats (46% of all successful cybersecurity breaches take place against health care organizations). Maintaining a secure posture for mission-critical functionality in this essential space and safeguarding sensitive personal health information requires monitoring monumental amounts of data in real-time 24/7 for anomalous activity. Artificial intelligence (AI) is particularly attractive in cloud-powered managed services for meeting this challenge because it’s so adept at finding patterns hidden in mountains of data.
“Machine learning can be employed to automatically identify drifts in configuration and deviations from baseline performance that represent potential compliance or security violations, and/or opportunities for systems enhancement. Correctly delivered within managed services and integrated for organizational requirements, it’s one technology that delivers on its promise and epitomizes the value of automation.”
[Re: the fact that 88% of MSPs have experienced a brownout or outage in the past year]:
“What is startling about this statistic is the downstream impact it likely had on thousands of businesses. It is exactly why Dataprise continues to invest heavily in our cybersecurity and BCDR solution portfolios as well as our own infrastructure. Just this month we acquired Global Data Vault, a platinum Veeam partner with a unique enhanced data protection capability that combines DRaaS with ransomware protection to solve multiple outage risks. Additionally, we’ve expanded our partner and channel programs to allow SMB MSPs to leverage our investments to increase their own resiliency and product offerings.“
[Re: the fact that the majority of MSPs expect most of their end customers to be 100% in the cloud within the next five years]:
“The vast majority of MSPs serve SMBs, which likely will continue to drive forward to the cloud, though the predictions of ‘100% conversion to the cloud’ have been forecast before, so we’re skeptical that we’ll reach that level in the next five years. Dataprise serves strategic IT decision makers across SMB and mid-enterprise. And the mid-enterprises, while also accelerating the move of workloads to the cloud, are also mindful of the total cost of cloud ownership and that there are likely workloads that do not warrant moving within the next five years – for example, on-prem legacy workloads where the underlying apps are targeted for a complete rewrite to be optimized for cloud deployment.”
[Re: the fact that the majority of end customers (55%) are spending more and more each year with their MSPs]:
“The cybersecurity and BCDR imperative is a key driver we are seeing for clients adding additional MSP services. The risks are high and require significant investments in staff, technology and operational processes to be effective. Layer on top of that the importance of real-world learning, knowledge sharing and an integrated approach, and businesses quickly realize that outsourcing to an enterprise-grade MSP is the only path forward.”
[Re: the fact that 88% of MSPs have experienced a brownout or outage in the past year]:
“This isn’t surprising – between vendor breaches, cyber threats, zero days and occasional outages from cloud providers, I feel as if this is to be expected. As MSPs, we need to always be thinking about redundancy. If your cloud provider has an outage, it’s important to be able to access that data, and possibly even an emergency inbox capability, via a third-party service. If you aren’t offering this type of service in your model currently, you could be exposing your MSP and your clients to unnecessary downtime and risk.”
[Re: the fact that 95% say automating their processes is necessary to be able to focus on innovation and strategic goals]:
“We agree. As our clients demand from their technology, and in turn, their MSPs, we look to automate processes everywhere we can. Where we see the most development these days is around automated onboarding/offboarding and device provisioning.”
[Re: the fact that the majority of end customers (55%) are spending more and more each year with their MSPs]:
“I see this number continuing to rise over time. The pandemic, hybrid work forces, migrations to cloud services, scaling up/down and finally cyber threats – all factors driving this equation. Savvy MSPs that learn how to automate the “low hanging fruit” will then be able to devote their time to more consultative projects with clients, faster growth, and higher service margins.”
[Re: the fact that the majority of MSPs expect most of their end customers to be 100% in the cloud within the next five years]:
“If the pandemic taught organizations anything, it was how important a cloud strategy is to business continuity. Companies that already had a cloud strategy in place pre-pandemic were able to pivot to remote work with little to no issues and were able to avoid little to no downtime, whereas those who had no cloud strategy were scrambling to come up with one and had to shut down until then.
“Two years later, we are seeing just how commonplace hybrid and remote work is. Xceptional has seen a few clients who have completely gotten rid of their offices and all their workers are remote. For those clients, they are 100% in the cloud. In addition, Xceptional is having more and more cloud conversations with clients. These conversations that we are having with our clients typically center around the topics of cloud migration (what can be put in the cloud, how much would moving applications to the cloud save money in the long run, etc.) or cloud security.
“According to a Harvard Business Review 2020 Cloud Survey, 83% of survey respondents said cloud is very or extremely important to future strategy and growth. With that said, if companies aren’t voluntarily going to the cloud due to a remote or hybrid work model, they may be forced to thanks to manufacturers. Cisco, for instance, is starting to put a huge focus on cloud and subscription licenses. They are starting to move away from perpetual licensing and into cloud-based subscription licensing.
“Whether clients are willing to or not, cloud is here to stay.”
[Re: the fact that the majority of end customers (55%) are spending more and more each year with their MSPs]:
“Value- and innovation-focused MSPs are becoming the ‘go-to’ trusted partner and solution provider for the majority of their clients. There are many market dynamics and realities that are driving this such as:
New hybrid workplace and customer experience models. Employee and customer engagement is critical to the ongoing success of every business. Disengaged employees cost the U.S. economy around $550 billion per year. Yet research from Achievers Workforce Institute shows that only 21% of employees view themselves as ‘very engaged’ at work. According to Gallup, employee engagement overall is around 36%. During the pandemic, many organizations went from in-office setups to 100% remote, to hybrid arrangements, dramatically impacting culture, communications and employee workflow. This shift also changed how customers were engaged, serviced and supported. Customers need their MSPs to provide more holistic, comprehensive systems, communications and collaboration platforms, cloud solutions, and managed services to not just survive, but thrive in the new reality.
Growing tsunami of cyberattacks and breaches. According to Microsoft’s Security Intelligence webpage, there were over 94 million devices globally that had cyber threat encounters over the last 30 days alone. Experts estimate that every 39 seconds, there is a new attack somewhere on the web. That is about 2,244 attacks occurring on the internet daily in 2021.There were 1,767 reported breaches in the first six months of 2021, exposing a total of 18.8 billion records.
Some industries have experienced 200%-3,000% growth in cyber incidents over the last 36 months. The growth in cyberattacks and breaches across dozens of industry segments is causing customers to reach out to MSPs and request security and risk related services and solutions. Fifty-five percvent of MSPs reported that most or all of their customers are asking for security related services.
Getting ahead of regulatory compliance and data privacy law changes. Managing regulatory change was the top compliance challenge in 2020, and 34% of companies report outsourcing some or all of their compliance in 2019. The reality is regulatory costs for SMBs are nearly 20% higher than larger companies, and more than 67% of organizations expect regulatory compliance costs to increase in 2022 and 2023. Dozens of states are beginning to review or implement data privacy and protection laws like CCPA. This is creating a large financial burden on MSP customers who are already understaffed and struggling to keep up with regulatory changes, and driving customers to seek out managed compliance services from their MSPs. According to a Q4 2021 Compliance as a Service study by Xceptional, 78% of respondents said achieving and maintaining compliance is a large need for the business, 56% were looking for or already working with a third party to assist them with regulatory compliance, and 65% wanted additional information on this type of service.”
“We definitely need automation in terms of people taking care of specific IT needs because our clients rely on us for everything – the more complex the technology gets, the more tickets we receive, and so it makes senses for us to automate replies and controls so that we’re not bogged down and clients are unnecessarily waiting for us, especially on low-priority help tickets.
“Technology is really what’s driving growth for most of our clients – the ability to process more tax returns, research faster, etc. – everything is at a much faster pace even from 10 years ago. By relying more on technology, our clients are relying more on us, and by relying more on us, we need to automate to avoid repetitive tasks (like clearing caches, checking backups, etc.) so that we’re more available to provide our guidance and support as new technology is introduced or even as old technology continues to require assistance.
“The world is becoming more and more technology-reliant, and because of that, our clients need us to help them navigate how things are done. If they’re focused on their own business (as they should be), they don’t need to learn how to support new technology (nor should they), but they just need to know how to use it. We also see many of our clients spending more time on us as a result of compliance. We monitor over 60 regulatory agencies and help our clients understand what they need to be responsible for.
“Security is definitely an area where we spend a lot of time with our clients. While it used to be that as long as you had a firewall, antivirus software and antimalware software, then you were protected. Now that’s just not good enough, and insurance companies are getting involved by requiring customers to have extra levels of protection – such as endpoint detection and response, managed detection and remediation – by way of a security stack.
“In addition to protection like antivirus software – which can help protect against known viruses – a security stack offers tools to help us see inside a system to understand what’s going on and detect inconsistencies, which may point to a new virus a criminal wrote last night that’s not yet known. These efforts help cybercrime from striking our clients, and require even more time.”
“We definitely need automation in terms of people taking care of specific IT needs because our clients rely on us for everything – the more complex the technology gets, the more tickets we receive, and so it makes senses for us to automate replies and controls so that we’re not bogged down and clients are unnecessarily waiting for us, especially on low-priority help tickets.
“Technology is really what’s driving growth for most of our clients – the ability to process more tax returns, research faster, etc. – everything is at a much faster pace even from 10 years ago. By relying more on technology, our clients are relying more on us, and by relying more on us, we need to automate to avoid repetitive tasks (like clearing caches, checking backups, etc.) so that we’re more available to provide our guidance and support as new technology is introduced or even as old technology continues to require assistance.
“The world is becoming more and more technology-reliant, and because of that, our clients need us to help them navigate how things are done. If they’re focused on their own business (as they should be), they don’t need to learn how to support new technology (nor should they), but they just need to know how to use it. We also see many of our clients spending more time on us as a result of compliance. We monitor over 60 regulatory agencies and help our clients understand what they need to be responsible for.
“Security is definitely an area where we spend a lot of time with our clients. While it used to be that as long as you had a firewall, antivirus software and antimalware software, then you were protected. Now that’s just not good enough, and insurance companies are getting involved by requiring customers to have extra levels of protection – such as endpoint detection and response, managed detection and remediation – by way of a security stack.
“In addition to protection like antivirus software – which can help protect against known viruses – a security stack offers tools to help us see inside a system to understand what’s going on and detect inconsistencies, which may point to a new virus a criminal wrote last night that’s not yet known. These efforts help cybercrime from striking our clients, and require even more time.”
LogicMonitor‘s recent global research report, “The Next-Gen Managed Service Provider,” covers the state of MSPs in 2022. It highlights findings ranging from the time it takes to fill engineering roles to the top IT and security priorities of MSPs and enterprises. It also speaks to some of the key and unique hurdles MSPs are facing.
As the pandemic continues to disrupt the normal course of business, providers are in the thick of it — accelerating digital transformation, and delivering services despite outages, cyberattacks, employee attrition and lack of resources. Many enterprises (55%) are spending more money with their MSPs today compared to previous years. This is as they migrate to the cloud (36%), undergo digital transformation (35%), and focus on managing cybersecurity threats (34%).
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Stats from the Research Report
Eighty-eight percent of MSPs have experienced a brownout or outage in the past year.
The majority of MSPs expect most of their end customers to be 100% in the cloud within the next five years.
MSP leaders estimate engineers devote 39% of time to manual tasks. Eighty-eight percent say these tasks prevent engineers from spending time on innovation or advancing strategic goals.
Almost all (95%) say automating their processes is necessary to focus on innovation and strategic goals.
Top benefits of automating tasks include improved time efficiency (42%), reduced errors (34%) and bigger profits (33%).
The majority of end customers (55%) are spending more and more each year with their MSPs.
We asked our MSP 501ers to share their insights and experiences with regard to these stats. What are they seeing? How have their businesses been affected? How do they see things progressing this year?
Check out our slideshow above to see what our partners think of the current state of MSPs.
Want to contact the author directly about this story? Have ideas for a follow-up article? Email Allison Francis or connect with her on LinkedIn. |
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