Managed service providers (MSPs) have a large and expanding opportunity to generate revenue by assisting businesses with their changing ICT requirements, but addressing this will require investment in wide-ranging changes to their business model. MSPs should diversify their portfolios, manage the entire customer lifecycle and become KPI-driven businesses to capitalise on this growing revenue opportunity.
In this report, we answer the following questions.
- What is the addressable revenue opportunity for MSPs?
- How should MSPs best approach this opportunity?
- What services should MSPs offer?
- What are the examples of industry best practices in terms of sales, marketing and support?
- How does customer satisfaction impact the underlying business and how does it help MSPs to differentiate and protect their businesses?
- Research overview
- Challenge: MSPs will need to invest in making wide-ranging changes to their business models and their portfolio to capitalise on this opportunity
- Solution: MSPs should diversify their service portfolios, manage all aspects of the customer lifecycle and become KPI-driven businesses
- Diversify the portfolio
- Diversifying the portfolio can help an MSP to differentiate and improve its margins
- MSPs should provide a set of core services to form the basis of an MSP business and add more differentiable services over time
- M& A can help MSPs to diversify their portfolio and gain specific capabilities
- MSPs of all sizes can enhance their portfolio; partnerships with vendors, tool providers, and other MSPs can be of significant help
- Manage the customer lifecycle
- MSPs will need to perform at all stages of the customer lifecycle, from customer acquisition to support
- MSPs need to invest in sales and marketing in order to increase their revenue
- Direct face-to-face and digital campaigns are the most frequently used and most-effective sales and marketing strategies
- SLA-based pricing is the most-popular model for MSPs, providing scope to differentiate on quality of service and support and the justification to set higher prices
- Acquiring and developing skilled sales and support staff is critical to the success of an MSP
- MSPs’ key opportunity to differentiate lies in effective service assurance and support
- Become a KPI-driven business
- MSPs should be metric-based businesses, tracking and analysing business, service, and satisfaction KPIs
- MSPs should track customer satisfaction and retention metrics; most MSPs do not and, as a result, underestimate its impact on the business
- A number of tools can help MSPs to deliver managed IT services more effectively and can provide the means to track and analyze KPIs
- Survey methodology and sample sizes
- Descriptions of managed IT services
List of figures
Figure 1: Successful business practices that can help MSPs to capture the USD300 billion worldwide revenue opportunity by 2023
Figure 2: MSPs’ revenue by service category, worldwide, 2018–2023
Figure 3: Key factors for MSPs to be successful
Figure 4: Percentage of MSPs that want to add archiving and e-discovery services to their portfolio, by the size of MSP, worldwide
Figure 5: Percentage of MSPs offering different types of managed ICT services, worldwide
Figure 6: Potential services for MSPs, by service category and potential for differentiation
Figure 7: Examples of acquisitions made by MSPs between 2017 and 2019 to gain certain capabilities
Figure 8: Top-three challenges facing small (red) and large (blue) MSPs in managing their own data centres (percentage of such MSPs that report these as key challenges), worldwide
Figure 9: The stages of a customer’s lifecycle with an MSP
Figure 10: Breakdown of a typical MSP’s managed IT services workforce, worldwide
Figure 11: Growth in managed IT services revenue according to the proportion of annual revenue spent on sales and marketing, worldwide
Figure 12: MSPs’ use of, and the impact of, different types of sales and marketing materials, worldwide
Figure 13: Example of a tiered pricing SLA model for MSPs
Figure 14: MSPs’ average annual rate of revenue growth according to the amount invested in training employees, worldwide
Figure 15: MSPs’ approach to developing and training staff
Figure 16: Key areas of service assurance and support for MSPs
Figure 17: The most important KPIs for MSPs
Figure 18: Percentage of MSPs that track various KPIs, worldwide
Figure 19: Average contract renewal rate for MSPs that do and do not track customer satisfaction metrics, worldwide
Figure 20: Percentage of MSPs using types of tools to deliver managed IT services, worldwide