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CompTIA Survey: For MSPs, Cloud Is The Biggest 'Insomnia Driver'

Rick Saia

June 29, 2016, 11:48 AM EDT

MSPs are more confident than they were three years ago but satisfying their customers -- especially when it comes to cloud computing -- is their biggest worry, according to the results of a CompTIA survey of MSPs released Wednesday.

"We're definitely seeing the needle move forward" for MSPs, said Carolyn April, senior director of industry analysis for CompTIA, the nonprofit technology trade association based in Downers Grove, Ill.

When CompTIA surveyed MSPs in 2013, only about one-third of respondents characterized their level of expertise as "skilled" at delivering managed services, while two-thirds said they were not skilled, according to April. Today, those results have nearly flipped, with 65 percent now calling their organizations skilled.

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"Everyone tends to overinflate themselves when they take these [self-assessment] surveys, but the fact that we've got that benchmarking data from 2013 [shows that MSPs have made] real progress," April told CRN in an interview.

Some of this confidence is because of market maturity, CompTIA said in a statement unveiling the results of the online survey of 400 U.S. MSPs. Eighty-eight percent of the MSPs surveyed have been offering technology services for at least two years, with a slight minority – 43 percent – having been established for at least five years, the survey found.

In addition, half of all MSPs surveyed expect high revenue growth over the next two years, with services projected to account for 75 percent or more of total revenue, the survey found. CompTIA also cited research firm MarketsandMarkets’ prediction that the global managed services market will grow from $107 billion in 2014 to $193 billion by 2019, a compound annual growth rate of 12.5 percent.

And what are MSPs' biggest worries? They begin with cloud computing, with 62 percent citing it as the top issue that keeps them up at night. But unlike the 2013 survey, in which MSPs saw cloud as a big concern because it presented a threat to their business, it's now seen as their biggest opportunity, April said.

"I think we've come a long way," April said. "But the fact that we're [still] seeing cloud be the No. 1 insomnia driver is I think less due to 'It's going to put me out of business' and more to 'Where do I play? Where do I plug in?' "

The cloud is a big issue that will help determine who will succeed in the MSP market going forward, according to Carl Gersh, director of sales and marketing at Forthright Technology Partners, an MSP based in Miramar, Fla.

It won't be enough for an MSP to be able to tell a customer that it will manage its infrastructure because the customer can shift that to a cloud provider, Gersh said. Rather, successful MSPs will add value by providing specialty services such as engineering, consulting on new technologies, and services that focus on enhancing the user experience, he added.

"The MSPs that are going to succeed are the ones that are going to be more skilled," Gersh said.

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The second-biggest concern cited by MSPs in the CompTIA survey is customer demands, cited by 57 percent of MSPs, followed by margin erosion at 53 percent.

The finding on margin erosion seems right, April said. "We've seen a lot of commoditization in the market and that's unfortunate. It's part of a maturing model … but we're not at that maturity level," she said.

But, CompTIA's April added, "MSPs themselves as a community have a little bit of blame to shoulder here. Part of the reason ... is that they're not pricing on value." Rather, April said, "they are competing with other MSPs on price, which is only driving down prices … in order to win the deal."

That, she said, leads to a "vicious cycle" in which prices are pushed downward for the length of a contract, which could be three years.