April 14, 2020
MSP Challenges and Opportunities in Time of Pandemic
After setting up remote access and work-from-home solutions for their clients in the first few weeks of the pandemic, MSPs are beginning to face new challenges and see new opportunities emerge, according to our latest research.
In the initial stage of the pandemic, MSPs played a critical role providing SMBs with the IT infrastructure to keep their businesses running. With that phase largely complete, MSPs are looking ahead to how the next few months will likely play out.
MSPs cited business growth, financial challenges, and adjusting to client needs as the top challenges they expect to face through the pandemic.
Prior to the outbreak, MSPs worldwide were projecting to grow their revenue by about 20% per year, on average. Those projections have been adjusted downward by 11% for the remainder of 2020. MSPs still expect growth, but selling looks very different than it did at the start of the year. For example, MSPs can’t meet face-to-face with prospective clients due to social distancing rules, and many businesses have frozen new spending. Additionally, some projects have been delayed due to changing priorities and social distancing, while others, such as new client PC rollouts and cloud migrations, have accelerated.
The financial picture of MSPs—driven by that of their clients—is another key area of concern. MSPs noted business and financial instability among their clients will likely have downstream effects for their own business, such pressure on revenue, cash flow, and receivables. MSPs that had been highly verticalized in affected industries like hospitality and retail are feeling the impact already, with clients asking for price reductions, reducing headcount, or closing completely. MSPs with a diversified client base may see these challenges in some clients but expect to partially offset these losses with spending increases from other clients. MSPs note government assistance, if applied in the right places, may offer some relief.
Finally, the shift to remote work has required new tools and exposed new security vulnerabilities. MSPs report having more after-hours calls, as clients are less likely to work standard business hours as they balance work and home responsibilities.
“It’s a challenge to support more remote workers, particularly in organizations that haven't moved to cloud-first solutions,” noted one MSP.
New Opportunities Emerge
MSPs note that the crisis brings new opportunities to provide value to their clients and support them through the recovery. With the initial wave of work-from-home setups complete, MSPs see improvement of those remote access solutions, security, and cloud migrations as the top opportunities through 2020. VoIP, business continuity, Azure migrations, hardware sales, and business resilience solutions are also expected to drive revenue.
Cloud and security solutions were already in high demand, but MSPs see that only accelerating during the pandemic. A remote workforce opens new security vulnerabilities for SMBs, and cloud migrations offer an opportunity to improve collaboration and business resiliency across a distributed workforce.
“The clients that we were pushing towards more robust cloud-based solutions finally get it,” said one MSP. “Some projects on the back burner became a priority overnight. I expect more implementations like that to take place.”
Other MSPs agree. “It helps us put security front and center—and get it the attention it deserves–from a client perspective.”
While concerned that business will ultimately slow down, MSPs also see an opportunity to improve their internal processes and systems. Doing so is expected to provide a stronger foundation for growth when normal business resumes. MSPs with a strong balance sheet and cash flow expect to acquire both new talent and new clients, due primarily to smaller or leveraged MSPs going out of business or missing SLAs.
Just as they stepped in to enable their clients to rapidly shift to work-from-home setups, MSPs expect to provide value and support to their clients through each stage of the pandemic.
“I am growing relationships with existing clients and providing support in any way I can—sharing information, talking to clients, and offering solutions to their problems and concerns,” said one MSP.
Longer term, MSPs see a continuation and acceleration of trends already in place before the pandemic: increasing cloud migrations and a focus on security. MSPs also expect SMBs to better appreciate their reliance on their IT provider and disaster recovery plans.
“I believe our managed clients are feeling they are getting great value from us. As long as they can stay in business, I think we will solidify our relationship even more than it currently is.”
The survey was conducted by Datto April 1-3, and included MSPs from North America, Europe, and ANZ.