Cloud Migration, Security Gaps Among Top Opportunities for MSPs

The technological fallout from the COVID-19-fueled shift to remote work continues. Organizations keep uncovering compliance and security gaps they missed when rushing to support employees outside of the corporate office. The problems are plentiful, as evidenced by struggles including the number of successful cyberattacks, the fracas over shadow IT and vulnerability to insider data leaks. For cloud-focused managed service providers, all this represents immense demand.

AvePoint’s Jason Beal

“There’s an absolute need and an opportunity.”

That’s the word from Jason Beal, senior vice president of global channel and partner ecosystems at AvePoint.

But can MSPs meet the demand? That’s one of the questions AvePoint, a large ISV that specializes in SaaS for Microsoft 365, seeks to answer in its just-released inaugural Global MSP Preferences Survey.

Last year’s absence of proper planning, due diligence and governance regarding cloud adoption “has created a lot of vulnerability and risks,” Beal told Channel Futures. To that point, AvePoint found that, out of the 1,013 MSPs it polled, nearly 70% see these areas where they could step in.

There’s a hitch.

Only about a third (34%) of MSP respondents offer services that fill the security gaps created during pandemic cloud adoption — even though a full 69% understand what’s at stake. In fact, they categorized security and governance as among the top three IT requirements for their customers.

The disconnect, then, puts the onus on MSPs to build their skills quickly, or partner with a fellow expert who has the requisite capabilities to plug security gaps.

Security Gaps Aren’t the Whole Picture — Don’t Forget Cloud Migration

Meanwhile, even though cloud computing has dominated the technology sector for at least a decade, not as many MSPs offer cloud migration services as one might expect. AvePoint found that 60% of respondents intend to add cloud migration services to their portfolios within the next year. These MSPs will handle the transition from onsite infrastructure deployments to the cloud. Almost three in five (57%) MSPs further will deliver cloud-to-cloud transitions. That’s a somewhat startlingly low figure considering how long public cloud has been around.

“Globally, migration is still seen as a big opportunity for partners,” Beal said. “Even in geographies where there’s more cloud maturity … there’s still huge opportunity where we’re seeing these cloud-to-cloud migrations.”

Perhaps more pressing, though, is MSPs’ battle against ransomware.

The AvePoint survey shows that more than half – 52% – of respondents or their clients have experienced a ransomware breach in the past year.

“Partners are being attacked; their end customers are being attacked,” Beal said.

Even so, just 53% of MSPs polled offer backup services for recovering data should the worst happen.

That glaring issue ties to “this bifurcation in the channel between an MSP and MSSPs,” Beal said.

Most MSPs grew up in the legacy equipment world, reselling Microsoft, HPE, Cisco and similar brands, while provisioning networking, servers, storage, and routing and switching.

“But they didn’t specifically focus on the emerging cybersecurity threats,” Beal explained.

Along the way, these MSPs also “haven’t really doubled down on the human capital, and the tooling and automation, they would need. … Now more MSPs are saying, ‘I need to upskill.’”

Upskill — or, again, team with a peer that delivers security operations or MSSP work as a service, Beal said.

If you think there’s no big impetus to act, think again. AvePoint found that 75% of MSPs know their end users have gaps in network security alone — yet only 51% have services that address the problem. MSPs pointed to identity and collaboration security as leaky, too.

A Word on Recurring Revenue

As a final note, AvePoint’s survey revealed an interesting trend when it comes to MSPs and recurring revenue. For years now, the industry has harped the value of recurring revenue. The subscription economy, one of the main appealing factors of cloud technology, is built on it. And yet, two-thirds (63%) of MSPs responding to AvePoint said less than half their revenue represents recurring sales.

Beal, for his part, sees this as a somewhat natural outcome for cloud MSPs.

“Partners have become agile,” he said. “They’re hybrid and they’re responding to these various technology procurement and consumption preferences.”

Customers, he noted, are “incredibly empowered.” Partners, therefore, are meeting those end users where they are and accommodating choice, he said. The lower-than-expected figure for recurring revenue among MSPs may not reflect poorly on them.

“I don’t necessarily look at that and say, ‘This is not a good thing,’” Beal said. “I think, man, they’re growing, selling through marketplaces, professional services, managed services, referral models. … Partners are healthy.”

Still, MSPs looking for insight into bolstering recurring revenue might consider Beal’s advice in the AvePoint report: “My recommendation would be to focus on building out from your current customers and to be very compelling in your value proposition.”

And don’t forget, you’ll need the right people to get the job done.

“MSPs want to differentiate from their competition and develop new service revenue opportunities — both of those goals require a highly skilled and well-trained workforce,” said Sam Valme, director of global partner experience at AvePoint.