CompTIA recently released its “5th Annual Trends in Managed Services” report, which surveyed 400 U.S. managed services providers in March 2016, tracking questions it has asked over the years to get an overview of the trends in today’s MSP space.
There are some interesting takeaways from this year’s survey. Managed services has certainly matured over the years — it is the second most popular business model in the IT channel, with three out of 10 respondents ranking it as their leading revenue generator over the last year (first place was IT solutions). Most have been in the market for at least two years — 43 percent have been in it for five years or more, and 45 percent between two and five. And today’s MSPs are skilled! Two-thirds described themselves in that way, as opposed to just 39 percent in 2012.
So MSPs are getting good at being MSPs. But what is an MSP? Does that include the MPS providers who also sell managed IT? Have they become MSPs? How long do you need to provide managed services before you become an MSP? Do the ones who added it on two years ago count? How about the ones who got into it five years ago? Have they become MSPs or are they still MPS providers who offer other services?
I suppose part of the reason I’m asking these questions and that I found the study particularly interesting this year is sheer timing. We’d just made some upgrades to The Imaging Channel website that had me spending a bit of time in the archives, particularly in some of the older issues. In 2011 and 2012 we saw a lot of talk about the convergence between MPS and managed services. Print was dying at the time, if you recall (when has print not been dying over the last several years?) and providers were looking for the next big thing.
For instance, Gordon Flesch had just added managed IT services to its lineup when we covered “The Converging Worlds of Print and Managed Services” in the October 2011 issue. It was a logical fit for companies that were jumping onto networks for remote monitoring of now-network-connected imaging hardware. However, it was also a bit of a land grab, since when those networked copiers and printers began popping up on the network, traditional MSPs also began to eye a potential new revenue source. In the same article we looked at Mythos Technology, which had contracted with OKI for MPS. My favorite line in the article, a quote from the company’s CTO, really sums up the IT/MPS relationship: “Quite honestly, the biggest thing that was stuck in my mind with managed print was, if we get involved, we’re going to have to go touch the printers, and we’re going to have to change the toner.”
Mythos’s method of partnering was not unique to the MSP-to-MPS equation. Many office equipment dealers looking to enter managed services saw partnering as the way to go too. In “Taking a Closer Look at Offering Managed Network Services” in January 2012, we explored the “build, buy or partner” options available, particularly for the SMB, for whom additional revenue streams are critical. Again, this is a fun one to look back on, as it discusses the various evolving technological options, such as cloud computing, mobile devices, etc., that open the way to supporting internal IT environments. The cloud, of course, has opened whole new doors when it comes to providing managed IT — yet it’s also the thing that has MSPs most concerned in CompTIA’s study. Sixty-two percent cited cloud computing as the biggest worry — as customers become more comfortable with cloud-based applications and services, they may cut out the middle man.
Getting back to the idea of “build, buy or partner,” it’s not only the SMBs that look for answers. In July 2012 we explored some of the newer M&A activity — Nuance and Equitrac, Konica Minolta and All Covered, Xerox and NewField IT — in “M&A Activity Connects Print With Other Services.” In that article, Konica Minolta’s Sam Errigo says, “I absolutely believe that there’s going to be continued consolidation in managed IT, and when the big ones are gone, the valuations for the ones that are remaining ... drop. It’s a matter of economics.”
Sam is a smart guy. On the list of “what keeps MSPs awake at night” that was topped by cloud computing, we also see “MSP market consolidation” — 42 percent cited that as a concern. Also on the list were “customer demand,” “margin erosion,” “customer acquisition costs,” “changing standards for MSP contracts,” and “new types of competitors.”
Once again, the MPS and MSP channels have a lot in common. A recent guest blog that took a look at some of the challenges the imaging channel has faced was “Seat-Based Billing: The Future of Managed Print.” It outlines the challenges faced by MPS providers, the concerns for the future, and the need to find new opportunities. Interestingly, one of the reasons seat-based billing has such appeal is because so many dealers have added managed services to their offerings, which are often billed on a per-user basis, paving the way for similar billing for MPS.
So it seems that the more things change, the more they stay the same in all markets. Once the purview of the “high-tech” field, the managed services market has become increasingly available, and therefore increasingly in danger of erosion and commoditization. And yet, it’s still a viable market with new technologies creating new paths for entry all the time.
If you’re a CompTIA member you can take a look at the full report — it’s a interesting read and well worth the time. https://www.comptia.org/resources/5th-annual-trends-in-managed-services
Want to know more? We’ll be at CompTIA’s ChannelCon event in Hollywood, Florida, next week and will be reporting back on the latest in the latest from the event, including coverage of the CompTIA Managed Print Services community meeting.