MSPs to Account for Quarter of IT Spend by 2021

A new study concludes that MSPs are becoming more selective with the vendors that they choose. And the MSPs that know how to specialize will find success.The future looks bright for managed service providers (MSPs).

The AMI-Partners study shows MSPs gaining a larger and larger foothold in the IT spending of SMBs and enterprises. The study forecasts businesses to spend $4 trillion on IT by 2021, with MSPs accounting for 24 percent of that.

AMI-Partners’ Deepinder Sahni

Last year, the total IT spending number was about $2.5 trillion, with 18 percent of that going to MSPs. The managed-services strategy is growing in popularity as more and more value-added resellers (VARs) adopt its business model.

While MSPs have a lucrative future, complexity is also part of the equation. The study says the average MSP uses more than 11 monitoring and management tools to serve its clients, and works with more than 15 technology vendors. And profitability doesn’t occur immediately; the study says it often takes 12-14 months.

“Those MSPs winning and gaining share are more in tune with their customers’ business challenges, especially vertical industry-specific issues,” said Andy Bose, CEO of AMI-Partners. “This is paramount, for highly regulated industries, such as health care and finance, where customers demand customized security, disaster recovery and compliance controls.”

Deepinder Sahni, senior vice president of AMI-Partners, tells Channel Partners that the growing importance of technology in everyday business changes the role MSPs play. They need to consider how digital, business, branding and customer experience are intertwined, Sahni said.

“As more of the business environment becomes digitally transformed, MSPs that succeed and stand out will be the ones that are ‘strategically partnered’ with their customers,” he said. “Besides delivering vertical industry-specific technology solutions as a core service, successful MSPs will also be conversant and loosely coupled with their clients’ broader branding, supply chain and customer experience (CX) imperatives, since much of the brand, operations and CX will operate digitally going forward. We already see evidence of this where top MSPs have taken upon themselves to deliver vertical industry-specific compliance solutions as part of their value proposition.”

Recent studies by the 2112 Group, Intronis and Ingram Micro have interesting implications for MSPs in North America.