Kaseya MSP Benchmark Survey 2020 Finds Compliance Up, Cloud Declining

The Kaseya MSP Benchmark Survey 2020, released Tuesday, takes a deep dive into the business of being an MSP.. And, what rises to the top among six key findings, is the prominence of security and compliance.

Nearly three in four (73%) MSPs gained revenue providing security services. And almost three in five (59%) increased revenue by offering backup and disaster recovery. At the same time, as IT compliance requirements increase, more businesses struggle to meet those requirements. Two-thirds of MSPs report their clients can’t meet compliance requirements. And, for the past two years, about one-third of MSPs have seen the need for compliance services increase.

Kaseya’s Jim Lippie

“The emphasis on cybersecurity services, in this year’s report, didn’t surprise me. This continues to be a hot button issue for MSPs and their customers,” Jim Lippie, general manager cloud computing and senior vice president partner development at Kaseya, told Channel Futures. “However, I’m surprised that only 83% of MSPs offer antivirus and antimalware solutions. I would expect this to be closer to 100%. Also, only 66% of MSPs perform password resets — again, I would expect this to be closer to 100%.”

In the 2020 survey results, 83% of MSPs offered antivirus and antimalware, just 3% higher than the 2019 survey results revealed. While two in three (66%) MSPs in this year’s survey provide password resets/self-service/password management, 62% reported doing so in last year’s report.

Compliance an Opportunity

This year’s report shows that MSPs are beginning to understand the burgeoning opportunity around compliance. In fact, 90% of high-growth MSPs have added four or five new services to their portfolios, at least one of which is compliance. A high-growth MSP is defined as having an average MRR growth greater than 20%.

“California this past year came out with its Consumer Privacy Act. New York came out with SHIELD [Act] and, we believe, that over the next two to three years, many states will have their own data privacy laws that small businesses will have to be compliant with,” said Lippie. “At this point, not enough MSPs are offering compliance. I suspect that next year we’re going to see more MSPs offering compliance services to their customers.”

The Kaseya MSP benchmark survey is based on feedback from 1,300 MSP firms. Survey-takers were from the Americas (76%), EMEA (16%) and APAC (9%). Two-thirds of MSPs describe themselves as “general purpose,” while 17% describe themselves as MSSPs. Ten percent of respondents selected “network and data center focused” and “specialized by market vertical” descriptions.

In terms of size, MSPs surveyed employ from fewer than 10 up to more than 100 employees. Also measured by endpoints managed, MSPs managed from as few as 1-100 nodes to more than 15,000.

Key Themes

Here are the six key themes in this year’s survey results. They highlight MSP business challenges, concerns, risks and opportunities.

A Closer Look at Cloud

Lippie added some perspective to the cloud support ups and downs. What the survey data show is that …

… MSP management of cloud environments dropped from 70% of respondents in 2018 to 56% in 2019 for public cloud. Public cloud environment examples are Azure, AWS or Google. The data also show a decline in management for private cloud — 59% in last year’s report to 49% in this year’s survey.

“I look at this like a cloud shakeout,” he said. “I think the decline we’re seeing is coming from smaller MSPs who felt the need to start a cloud practice. But they were never truly committed to it. They also didn’t have the tools to build a mature cloud practice. Now they’re saying that maybe it’s not for them.”

At the same time. Lippie suggests that smaller business clients’ public and private cloud needs tend to be limited compared to larger businesses.

“Smaller clients also tend to default to SaaS solutions, which is not covered in those cloud questions,” he said. “I think we’ve come a long way in our community to recognize the difference between SaaS and cloud services [referring to infrastructure].”

Same Time, Next Year

As compelling as the new Kaseya MSP benchmark survey results are, the data was collected and compiled prior to the COVID-19 pandemic.

Lippie expects that MSPs’ sentiment to do more with less, expressed in this year’s survey, will escalate next year. That includes the need to drive more profit with an existing employee base and the need for more workflow integration among their current applications.

Last month Kaseya launched Kaseya CARES to help partners through the crisis. In talking with MSPs since the crisis began, Lippie sees a big disparity among MSPs. Those focused on verticals such as hospitality, travel and retail are suffering.

“They’re getting crushed, and they are organizations that built nice practices,” he said. “And the smaller MSPs tend to be suffering more than the larger MSPs.”

In March, Lippie said MSPs took on a lot more projects and were working overtime. Ticket volumes were up 50%. But in April, business slowed down.

“With fewer customers to support, revenue decreased,” he said. “Some MSPs are down 10-20% in April and May. Some are down as much as 40-50%.”