trends in managed services: the art & science of the msp ... · protect customer base 4. ......

Copyright (c) 2014 CompTIA Properties, LLC. All Rights Reserved. | CompTIA.org

Carolyn April, Sr. Director, Industry Analysis

CompTIA

June 2016

Trends in Managed Services: The Art & Science of the MSP Business

Carolyn AprilSr. Director, Industry AnalysisCompTIA

On Tap Today

Why Managed Services?

Internal Operations

Strategic Planning

Wrap Up & Q&A

2

65%

33%

2% By the numbers…

• 77% of the smallest

channel firms (2-9 employees) described themselves as “skilled experts” at managed services, compared to roughly 6 in 10 respondents from larger firms.

Self-Assessment of Managed Services Capabilities Today

Early On/Too Soon to Tell

Skilled Expert

Competent/Getting Better

Source: CompTIA’s Trends in Managed Services 2016: Base: n=400 IT channel firms

Primary Drivers to Entering Managed Services Market

1. Improve service utilization rates

2. Increase sales revenues

3. Protect customer base

4. Minimize financial risk

5. Expand wallet share with existing customers

6. Build recurring revenue streams

7. Control all aspects of an offering

8. Get to market quickly

Note: rank order listings are useful for summary purposes, but should NOT be interpreted quantitatively. For example, the first-ranked item is not necessarily 8 times more important than the eighth-ranked item.


Channel Business Lines: Which Two Drive Most Revenue?

IT Solutions/Projects

44% rank this LOB as

top revenue generator. 12% rank it No. 2

Managed Services

29% rank this LOB

as top revenue generator. 21%

rank it No. 2

Top LOB by company size:• Small firms: 31% • Medium firms: 25% • Large firms: 34%

Top LOB by company size• Small firms: 31% • Medium firms: 43% • Large firms: 61%



Expectations for Managed Services Business Next Two Years

4%

36%

61%

1%

52%

47%

4%

44%

52%

Flat growth: Remains at currentlevels

Medium growth: Comprisingincreasing part of revenue (50% or

more)

High growth: Comprising majority ofrevenue (75% or more)

Large

Medium

Small



Small firms Medium firms

Large firms

Product sales( hardware, software,peripherals)

31% 20% 36%

One-off project-centric work 39% 39% 14%

Pure consulting services 18% 27% 26%

Other (e.g. referrals, extended warranties, etc.

1% 3% 3%

Other areas remain status quo 3% 5% 8%

All of the above 7% 5% 13%

Which Revenue Lines Decline as Managed Services Grows?


Managed Services’ Portfolios Cut Wide Swath

Managed Services Currently Offer

Plan to Offer

Security (firewall management)

74% 24%

Server management 74% 24%

Storage 72% 27%

Network management/monitor

71% 28%

Desktop management 70% 28%

Business continuity/DR 70% 28%

Backup as a service 69% 28%

Software management (patch) 69% 29%

Database management 68% 30%

Help desk 67% 31%

Email 67% 29%

Virtual desktop 66% 30%

Managed print services 65% 32%


28%

59%

3%

10%

Increase overall

Staysame

Mix bagDecrease overall

Services mix in the next year will…

MSP Approach to Offering Cloud-based Services

54%

44%

3%

Strategic part of MSPcatalog

Supported at customers'request

Not part of MSP catalog


Internal Operations


Is Your House in Order? Rating MSP Operational Efficiency

Operational Measures OptimalGetting There

Process efficiency (technical) 59% 41%

HR (onboarding, recruit, retain)

57% 43%

Pricing structure model 56% 44%

Optimal profit margins 56% 44%

Process efficiency (business) 56% 45%

Cost containment 54% 47%

Customer retention rates 52% 48%

Sales cycle relative to other business lines

50% 50%

Sales effectiveness 50% 50%

ROI on new business services (e.g. cloud, vertical focus)

47% 31%


76%

24%

Efficient in places/others need work

Very efficient/Well-oiled machine

Self Assessment


NoChallenge

Minor Challenge

MajorChallenge

Cost of retraining (technical) 11% 39% 45%

Restructuring sales comp models 11% 47% 42%

Cost of retraining (business) 17% 43% 40%

Automating IT functions 14% 46% 40%

Setting pricing structure 15% 46% 40%

Recruiting/hiring right talent 13% 48% 38%

Operational Challenges in Adopting Managed Services



24%26% 23%

13% 10%

Per device Per user Based on userconsumption

Fixed, recurringfee

Fixed, recurringfee for standard

services

MSP Pricing: The Ongoing Enigma



Employee Retention Remains a Challenge for MSPs

17%

47%

37%

8%

51%

41%

23%

48%

29%

Not a challenge

Minor challenge

Major challenge

Large MSPs

Medium MSPs

Small MSPs


Leaving the Fold?

80% of MSP

respondents report that at least one of their staff technicians resigned last year to join an end-user organization’s IT department.


Initial Steps Taken to Launch an MSP Practice

27%

38%

48%

49%

49%

53%

56%

63%

Invested in commercial softwareapplications

Retrained technical staff

Obtained credit/access to capital

Restructured sales comp model

Contracted with third-party NOC

Retrained existing sales reps

Invested in building a NOC

Hired new sales reps with MSP experience


Drivers Behind Commercial PSA/RMM Software Choice

1. Managing efficient problem resolution

2. Managing customer billing/payments

3. Managing internal sales & marketing systems

4. Generating customer reports on IT actions corrections

1. Managing CRM systems

2. Managing internal financial systems/accounting

3. Managing customer trouble tickets/help desk

Note: rank order listings are useful for summary purposes, but should NOT be interpreted quantitatively. For example, the first-ranked item is not necessarily 8 times more important than the eighth-ranked item.

Source: CompTIA’s Trends in Managed Services 2016: Base: n= IT channel firms

Self-Evaluating PSA/RMM Investment & Rollout Experience

Source: CompTIA’s Trends in Managed Services 2016: Base: n= 123 channel firms

2%

39%

59%

Mostly worthinvestment

Well worth investment

Somewhatdisappointing Overall MSPs reported

high satisfaction with commercial software in the following areas:

• Ease of deployment• Length of rollout time• Training needs• Customer impact• Interoperability with

other systems


15%26%

36%

15%

6%

10 new seats 20 new seats 30 new seats 40 new seats 50 new seats

Percentage of MSP firms that say they HIRE an additional technician whenthey gain the following number of new end-customer seats (user or device)

Doing the Math: Mapping Technicians to Customers


Strategic Planning



In the Big Picture: What’s Keeping MSPs Awake at Night

28%

42%

42%

52%

53%

57%

62%

New types of competitors

Changing standards for MSP contracts (e.g.monthly)

MSP market consolidation

Customer acquisition costs

Margin erosion

Customer demand

Cloud computing



Not a Priority Moderate Priority

Major Priority

Increasing volume net-new customers 4% 34% 62%

Expand business with existing base 4% 38% 58%

Expand into new services (e.g. IoT) 3% 39% 57%

Improve services utilization rates 6% 38% 56%

Specialize in a vertical industry 8% 38% 54%

Align with new set of vendors 9% 38% 53%

Target non-IT buyers 7% 43% 50%

Rank Prioritization of Immediate Strategic Goals


Keeping Score: How MSPs Are Tracking Performance

Maintain formal business plan for recurring revenue

Maintain formal sales & marketing business plan

Conduct estimates of customer lifetime value


92% 89% 82%


How Often Are MSPs Talking Strategically with Customers?

20%

49%

27%

29%

45%

23%

37%

33%

20%

Weekly

Monthly

Quarterly

Large MSPs

Medium MSPs

Small MSPs


“Strategically” was defined as time spent with customers on matters notinvolving immediate tech concerns


5% 13%19%

29%23%

7%

$250 percustomer

$500 percustomer

$750 percustomer

$1,000 percustomer

$2,500 percustomer

5,000 percustomer

Respondents estimated the average cost to acquire a new managed servicescustomer in the United States in terms of marketing, sales and staff spend.

Price of Admission: Calculating Customer Acquisition Cost


How MSPs Spend Their Time: Operations vs. Strategic

47%

53%

Strategic planning(revenue/growth goals,customeracquisition/interaction,marketing)

Internal operations(infrastructure, humanresources, automationand processes, training)


Thank You!Questions…


trends in managed services: the art & science of the msp ... · protect customer base 4. ......

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