Managed services continue to drive profitability for solution providers across North America and Europe
A joint report from SolarWinds, a provider of IT infrastructure management software, and The 2112 Group reveals that the managed service market is healthy today and a source of opportunity and growth tomorrow.
The Lowdown: Findings of the report, “2018 Trends in Managed Services,” are based on an Internet survey, as well as data from SolarWinds’ benchmarking tool, MSP Pulse, which offers insights into how IT service providers stack up against their peers in the way of customer engagement, growth potential, profit, revenue, sales capacity, and service selection.
The Details: The report revealed that the overall managed service model is strong, with the average North America channel partner earning 28 percent of its gross revenue through managed services and the average partner in Europe earning 24 percent. For businesses identifying primarily as MSPs, the average percentage of gross revenue derived from managed services was 43 percent in North America and 38 percent in Europe.
Yet channel partners still aren’t capitalizing fully on the managed service market. The report data showed that IT service providers would amplify their opportunities for future growth by focusing more on customer retention, beefing up their dedicated sales staffs, and venturing out of their comfort zones to offer more advanced, high-value managed services, especially those in the security arena such as security information and event management (SIEM), security assessments, and security operations center (SOC) services.
Some of the numbers around those findings:
• In North America, four new customers are gained and three are lost monthly.
• In Europe, five new customers are gained while four are lost monthly.
• Providers with three times the average number of salespeople – two in North America and four in Europe, on the average – tend to see 25 percent growth per year.
• The top services offered are endpoint management (82 percent in North America, 76 percent in Europe), network management (79 percent in North America, 72 percent in Europe), and server management (76 percent in North America, 70 percent in Europe).
• In North America, only 23 percent of providers offer security assessments; the number is 11 percent in Europe.
• In North America, only 12 percent offer SOC services; in Europe, that number is 5 percent.
Background: The 2112 Group is part of 2112 Enterprises, publisher of Channelnomics.
The Buzz: “Competition is fierce among managed service providers. To develop – or keep – an edge, it helps to compare yourself against the competition,” said John Pagliuca, senior vice president at SolarWinds MSP. “In our 2018 Trends in Managed Services report, our research shows how the managed service model is performing in the market and how IT providers compare with the industry at large—helping them to start thinking about what strategic changes they should consider making when it comes to their managed services portfolio. The research offers valuable, deep insights not only into the performance of today’s managed service providers, but also into their habits, practices, and aspirations.”
“We’re delighted to support SolarWinds MSP in the creation of the 2018 Trends in Managed Services report, giving IT service providers deeper insight into their own business and the state of the market,” said Larry Walsh, CEO of 2112. “This business health check gives companies the chance to think more strategically in their planning and fully realize the financial opportunity in a promising market.”