Small and medium-sized enterprises now consider technology an integral part of their business and want to harness technology to drive productivity and will therefore be looking for MSPs to help them achieve those 2024 goals says Fred Voccola and Greg Jones at Kaseya.
Managed service providers, MSPs who provide IT and security solutions to small and medium-size companies, SMBs around the world are in the early stages of a huge boom cycle. Their SMB customers are increasing their spending and investment in technology at a rate three to four times the rate of GDP expansion, with little plans of slowing down any time soon. This is very similar to what we saw in the enterprise in the mid-90s through 2010.
At that time enterprise organisations invested hundreds of billions of dollars on technology as they digitally transformed themselves to become technology-first companies. The same investment cycle has now begun to hit the SMB sector, as technology investments represent the best and often only investment option for SMBs to consider in their journeys.
Considering most SMBs have little to no IT and security employees on staff, they turn to MSPs to deliver the mission-critical systems they require to compete. Private equity, and other professional sources of capital are moving into the 100 billion+ market of SMB-facing MSPs, as this market explodes.
With massive recurring revenue streams and growing TAM, as well as low churn, investment in this sector will soon resemble the move of private equity and other professional investment dollars to SaaS companies in the mid-2000s.
MSPs are currently in a good place, and this will likely continue in 2024. The technology industry often does well in times of economic uncertainty. There is huge potential especially for those MSPs who can pivot and spot opportunities to grow. Adaptability and agility are paramount for success.
Many small and medium-sized enterprises now consider technology an integral part of their business. They know they can harness technology to drive productivity and profitability and they will be looking to MSPs to help them achieve these goals. This is not necessarily about implementing shiny, new tools, but rather about improving business processes, automating and doing more with less.
Security and co-managed services remain growth areas. Against a backdrop of fast evolving cyber threats, MSPs will need to challenge and leverage all their supplier relationships. They will need to work with vendors as strategic partners and invest the time to boost their own as well as their clients’ cyber resilience.
Staffing will be a pain point in 2024. It has become harder to retain good technology talent, so it is worth looking beyond the usual talent pools to find those hard-working plate spinners who can make a difference to an organisation. Of course, the staff shortage affects both MSPs and their clients and is driving further outsourcing, opening up new business opportunities, too.
We are seeing a lot of consolidation, with bigger players buying mid-sized MSPs and investors increasingly interested in the MSP space. One important learning from 2023 is that the technology sector can change with a moment’s notice. So MSPs and their clients should be prepared for all eventualities.
One way of doing that is to build three plans in parallel – one for a market that stays the same, one in case the market drops, and one for blue-sky thinking. It always helps to look at things from different angles. Engaging with customers is key for getting a fresh perspective, as is listening to internal teams – especially the next generation of digital natives.
Attracting new business is still a challenge for MSPs. To address this, they should spend some time defining what makes a good customer. Often, the best customers are not those with the biggest budgets, but those with hopes, dreams and ambitions. Understanding the mindset and profile of their perfect target customer will make it easier for MSPs to engage with the right prospects.
It is always a good idea to ask for introductions and recommendations, so in 2024, MSPs should integrate sales and marketing topics into their quarterly business review meetings with existing clients.
There are plenty of opportunities ahead. Increasing goals, pushing harder and faster, removing head trash and having a healthy dose of self-belief will all help MSPs ride whatever wave comes their way.
2024 survival guide for MSPs
- Adaptability and agility are paramount for MSP success.
- Security and co-managed services remain growth areas.
- Attracting new business is still a challenge for MSPs.
- Many small and medium-sized enterprises now consider technology an integral part of their business.
- This is not about implementing shiny, new tools, but rather about improving business processes and automating, more with less.
- There is huge potential especially for those MSPs who can pivot and spot opportunities to grow.
- Against a backdrop of fast evolving cyber threats, MSPs will need to challenge and leverage supplier relationships.
- MSPs will need to work with vendors as strategic partners and invest the time to boost cyber resilience.
- We are seeing a lot of consolidation, with bigger players buying mid-sized MSPs and investors interested in the MSP space.
- An important learning from 2023 is that the technology sector can change with a moment’s notice.
- Build three plans in parallel: one for a market that stays the same, one in case the market drops, one for blue-sky thinking.
- Engaging with customers is key for getting a fresh perspective, as is listening to internal teams.
- The best customers are not those with the biggest budgets, but those with hopes, dreams and ambitions.
- Understanding the mindset and profile of the perfect target customer.
- MSPs should integrate sales and marketing topics into their quarterly business review meetings with existing clients.
