Over a third of managed service providers (MSP) surveyed in ITWeb's online poll said they make 75% more revenue from services than from hardware or software sales.
The online survey was conducted by ITWeb, in partnership with IT services management firm ConnectWise, earlier this year. It set out to determine the current state of local MSPs, and the challenges they encounter in carrying out their services.
The survey captured a cross-industry sample of 106 responses from professionals working at all levels: executive managers, operational managers and IT staff. Around 43% were made up of pure-play MSPs, 9% were systems integrator firms, while 6% were value added resellers.
An MSP is a company that remotely manages a customer's IT infrastructure and/ or end-user systems, typically on a proactive basis and under a subscription model.
According to B2B research firm Clutch, companies prefer to outsource their IT services to third-party service providers, with more than half of surveyed firms confirming that they employ third-party providers specifically for data security and data management services.
"Two reasons why enterprises partner with external providers for IT are their objective perspectives and industry-specific skills, which internal teams may be incapable of replicating. For example, third-party vendors can provide objective security audits for an enterprise," notes Clutch.
Just under half (45%) of ITWeb survey respondents said their biggest challenge was providing quicker support to clients by assisting them to remediate IT issues without leaving a service ticket.
The second biggest challenge was managing customer portals (43%), which allow customers to submit tickets and view their status online. The third challenge was creating a managed services contractual agreement with clients, to help clearly define services to be rendered, while easily tracking billable hours.
Almost a third (27%) of participants said they expect to extract the most business growth from adding new products and services to their portfolio, while a quarter (25%) expect to increase growth by expanding their current portfolio of products and services within existing customers. Another 21% believe leveraging their current portfolio of products and services with new customers will make a significant contribution to business growth.
Know what's happening
When it comes to solution categories that are most important to customers, network monitoring and management top the list, as is to be expected. Network monitoring, according to experts, is an important requirement for every business to monitor their network's usage and performance, and to check for slow or failing systems.
Backup and disaster recovery, and endpoint security closely follow monitoring on the priorities list.
And what value-add are MPs expecting from their distribution partners?
Simplifying sourcing with operational efficiencies (46 %) emerged as the most valuable service, closely followed by marketing (43%). Just over a third cited training as the most valuable role distributors play.
A majority of respondents (83%) said they provide services that extend beyond normal office hours. Around 45% use a helpdesk system, while 60% use monitoring or remote control tools.
Cloud-as-a service
According to the annual 'Trends in Managed Services' study by CompTIA, the rapid adoption of cloud solutions is changing the way many businesses buy and consume technology.
"At the same time, end-customers are demanding IT-related service offerings that are more sophisticated than basic network and device monitoring," the study notes.
"Think mission-critical business applications, cloud infrastructure management, and data analytics. Finally, on a macroeconomic level, there is ongoing margin erosion, commoditisation and vendor consolidation - a trifecta that necessitates new strategic thinking on the part of most MSPs."
Research firm MarketsandMarkets predicts that the global managed services market will grow from $107bn in 2014 to $193bn by 2019, at a compound annual growth rate of 12.5%.
It came as no surprise then that an overwhelming majority (73%) of respondents are looking to add cloud to their products and services portfolio.
Other new offerings being considered are security services, Internet of Things platforms, backup and disaster recovery solutions, and network monitoring or management.
When it comes to providing cloud-based software and services to their clients, 41% of survey respondents said it is an emerging part of their business, while 22% said it is already a substantial part of their offering. Another 12% said cloud is not particularly relevant to their business model.
About the survey
The 2018 Managed Services Survey was run online on ITWeb for a period of two weeks to examine the managed services strategies of South African organisations.
1 What solutions customers are using for their managed services requirements;
2 Which areas within managed services are expected to grow;
3 Which categories are the most popular.
Who responded
* A total of 102 responses were received.
* 35% of respondents are CEOs or MDs and 38% middle management.
* 17% of survey respondents are from fairly large companies with between 501-5000 employees and 12% are from multinationals with over 10 000 employees.
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