Are the golden days of double-digit year-over-year MSP revenue growth over? Barely. Most MSPs (60%) expect their business to grow by more than 10% in 2024.
It is according to a investigation of 618 large MSPs ordered by HPE Business OpsRamp earlier this year. (MSPs surveyed reported at least $25 million in annual managed services revenue.)
“This confidence is fueled by stabilized inflation, post-pandemic economic normalization and increased investments in AI and cloud technologies, suggesting that MSPs feel well positioned to take advantage of these trends,” said Taruna Gandhiproduct marketing manager for HPE Business OpsRamp, told ChannelE2E. “MSPs are remarkably optimistic about 2024,” she added.
MSPs should focus on four growth priorities
How can MSPs take advantage of these market trends to increase their revenue even further in the years to come? OpsRamp has identified the following four growth priorities for MSPs:
- MSPs must leverage intelligent IT automation to eliminate manual processes and accelerate resolution of customer issues.
- MSPs must work to significantly reduce the sprawl that is holding them back from achieving their growth and customer satisfaction goals.
- MSPs must find and adopt better tools and expand their expertise to help them develop the complex cloud environments and service offerings customers want.
- MSPs must expand their use of modern observability tools and abandon existing tools to improve efficiency and stay ahead of customer challenges.
“These are some of the most important takeaways,” Gandhi said. “Leveraging AI and machine learning is essential to address challenges such as tool proliferation, improve productivity and improve service delivery. »
Cloud services remain the main source of revenue, according to the survey, with 65% of respondents citing them as their main objective due to the demand for scalable IT solutions, it added.
MSPs should also revamp their licensing models to ensure that their fixed-cost agreements, such as enterprise licenses, “highlight MSPs’ focus on predictable pricing to manage costs and scale efficiently,” Gandhi said. Additionally, “AWS’ renewed dominance reflects a shift toward simplified, efficient, and reliable cloud strategies for managing hybrid and multi-cloud environments,” which are essential for MSPs to continue growing, she said. added.
Tool proliferation is a particular problem for MSPs, she said, with 16% now using 20 or more IT monitoring tools, twice as many as in 2022. “This growing complexity underscores the urgent need for consolidation and an integrated approach. solutions to streamline operations and improve efficiency,” Gandhi said. “Together, these priorities highlight the importance of innovation, operational efficiency and a customer-centric approach to MSP success,” she said.
Analyst: “Managed services, a key factor of profitability and success”
The HPE OpsRamp survey also describes an overall rebound in MSP activity in 2024 after a decline in activity in 2022 and 2023. But Shelley Kramermanaging director and principal analyst at theCUBE Research, disputes this assertion.
“It’s interesting to see the report indicating a decline in the MSP market over the last couple of years, because some of the data I’ve seen indicates the exact opposite,” Kramer told ChannelE2E. “I haven’t seen two years of decline, but there’s still an agenda from brands developing surveys, so I’m looking at that.”
Yes, many MSPs face the same challenges as all organizations today, Kramer said, including finding skilled workers and introducing new technologies such as automation, AI and GenAI, while also having to navigate in an increasingly complex technology stack and in a hybrid cloud world. However, she said MSPs are not seeing a decline in business, as the survey indicates.
“Their services are needed more than ever today,” Kramer said. “Managed services are a key driver of profitability and success. Ultimately, in my opinion, there has never been a better time to become a managed services offering provider.