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Managed services now the number one revenue opportunity for channel firms

Savvy MSPs are spotting added value extra services can offer customers’ needs

Man in suit using touch screen for Managed Service Provider

Managed services now offer the greatest potential revenue for channel partners as confidence in the model continues to grow, Barracuda MSP’s Evolving Landscape of the MSP Business Report 2019 has revealed.

The annual report, which delves into the ongoing changes and challenges faced by the managed services industry, found that 54% of respondents now see managed services as the greatest opportunity for their business , more than four times as many as the next response.

This year, managed services beat cloud computing and professional services by a margin of four to one, Barracuda added, dwarfing the margin of four to three back in 2018.

As a result, revenue from managed services also continues to grow, with 66% of surveyed businesses saying it now makes up more than 30% of their overall revenue, compared to 52% of respondents in last year’s report.

Despite these inroads, however, Barracuda also warned that MSPs need to ensure they are suitably equipped to plug the skills gap still present within their customer base.

“Just as it was last year, a basic lack of understanding from customers, resulting in ill-informed expectations, remains the biggest thorn in the sides of managed service providers across Europe,” said Jason Howells, director of the EMEA region at Barracuda MSP. “It’s clearly up to us as an industry to do more to inform, educate and reassure those in the dark about our offering.”

The report also found that MSPs are aware of the risk of customer switching, with 55% of companies stating that customers are increasingly “being acquired by another company”.

“The findings show that the MSP market is thriving – albeit still with certain pressures,” explained independent IT analyst Clive Longbottom. “On the buying side, there is still an abiding problem with misconceptions on what to expect from managed services. The selling side are seemingly ill-prepared to deal with this.

“This is leading to higher rates of customer deflection (either to competitors or with services being taken back in house) than should be the case. It’s apparent we are now moving past the first stage of the MSP.”

He continued: “Although shrink-wrapped, stand-alone services such as backup and restore are still popular, the savvy MSP is seeing that added value extra services offered to meet customers’ needs in an increasingly complex hybrid cloud world are becoming a necessity.”

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