It’s the simple life of an MSP for me
I’m going to say something here that might seem a little bit strange, bizarre even, but some times the truth can be like that. So what is it that I trying to say? This: “You’d have to be mad not to want to be a MSP.”
Now, I know that means there are plenty of ‘mad’ people walking around, me included. But just look at the facts. Well, not quite facts, more like stats. The results are astounding.
According to the Datto State of the MSP 2023 Report, when asked what their revenue expectations were for the next three years, only 1% of MSPs in Europe thought they would decrease. That’s 1%. And Europe was not an outlier. The figure was the same for MSPs in APAC. And as for North America… well, the answer was a big fat zero. Not one single MSP in North America expected revenues to decrease over the next three years.
Where else would you get that kind of result?
This confidence in the future is probably linked to the fact that MSPs in all regions reported increases in revenue in 2023. The only variable was in terms of how much their revenues rose. In North America, for example, 38% reported revenues increased by more than 10%, with another 26% growing revenues by between 6% and 10%. In Europe, however, the majority (59%) reported revenue increases of 5% or less. Still, any increase is a good increase, as they say.
Datto speculates that revenue increases may be because SMBs are turning to MSPs to provide key IT and security services.
That said, MSPs are still not particularly content with the size of their business, suggesting many would like to grow further. In 2023, only 21% agreed or strongly agreed that they were happy with the size of their business. Admittedly, that’s up from 17% in 2022 and only 2% in 2021, but it’s still not a very large percentage.
The report made slightly less happy reading for vendors. “One resounding theme that echoed throughout the survey results,” the report notes, “was vendor consolidation. MSPs are increasingly looking to streamline their vendor relationships.” Around three-quarters said they preferred to use fewer vendors. Why? To make their operations more efficient and achieve significant savings in time and costs and to reduce complexity.
Deeper analysis of the figures revealed that MSPs with “a higher percentage of recurring revenue
are more interested in consolidating vendors and far less content with their current size. This supports the idea that companies that consolidate vendors are on their way to achieving higher overall revenue”.
Despite all the positive feelings in terms of future growth, MSPs identified competition as their biggest challenge for the third year in a row – as well as being a catalyst for growth and innovation. “In an industry marked by intense competition, MSPs are focusing on enhancing the customer experience,” the report states. “This newfound emphasis on customer experience is driven by the desire to stand out in a saturated market.”
Wait, what? Hold on a minute. A saturated market? Isn’t that normally bad for things like future revenue growth? That’s what you’d expect, isn’t it? Lots of suppliers, lots of competition, reduced prices, falling margins. But then again, it doesn’t always have to be that way if the market keeps growing, which is what it appears to be doing. As the report argues: “Interestingly, even as competition steadily increases, so too is revenue. This is clearly not a race to the bottom.”
Like I said, “You’d have to be mad not to be a MSP, wouldn’t you?”
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