Demand for managed services is growing, with security playing a critical role.

by Neal Bradbury, Vice President, MSP Strategic Partnerships, Barracuda MSP

As part of its fourth annual MSP Day event, Barracuda released the Evolving Landscape of the MSP Business Report 2021, which outlines opportunities that have emerged in the MSP space. This year’s key takeaway is the significant impact managed services are expected to have on revenue moving forward, with growth opportunities around digital transformation, cloud, and especially security.

Barracuda surveyed more than 400 partners worldwide for the report and found a high degree of optimism. According to the report, 85 percent of MSP respondents believe there are opportunities in the market right now, including those driven by remote work, greater demand for security solutions and the know-how to implement these solutions, and the need to improve the overall customer experience.

Services are a big part of that, with 59 percent of respondents reporting they have expanded their services portfolio in the past 12 months. Additionally, 59 percent of respondents said they expect services to account for 50 percent or more of their revenue this year, and 39 percent indicated they expect to generate up to 50 percent of their overall business through services.

That growth is being driven, in part, by demand for security services. Other key factors include the increasing complexity of IT infrastructure, the growing remote workforce, cloud migration, and skills shortages.

Here are four focus areas that can help MSPs leverage services as a growth driver over the next year:

Clients are looking for help with security. Remote access raises security concerns for most organizations, and they are increasingly looking to third-party service providers for help. Remote work was seen as a business opportunity by 90 percent of respondents, and 80 percent felt overall security was also poised for growth.

Moreover, the top five services reported by MSPs were all security-related: endpoint security, email security, network security, service security, and endpoint monitoring. 

All in all, high-profile ransomware attacks, combined with a larger remote workforce and a lack of skilled security professionals, will increase the need for skilled security-focused MSPs in the coming months and years.

Security solutions must be proactive. Traditional approaches to network and endpoint security are proving to be woefully ineffective, especially as cybercriminals have stepped up the complexity of their attacks, and network surface area has rapidly expanded via remote work.

MSPs will need to offer proactive security solutions that can better identify potential threats and quickly (and automatically) get to work mitigating the damage. Asked what they felt was the most critical factor in moving to a security-centric model, MSPs reported that protecting users, information, applications and devices would be vital. And that protection has to extend to every user and device, no matter where they’re located.

Almost as important is the need to provide proactive services and remain well-informed of emerging threats. RMM solutions also play an essential role in enabling a shift to a security-centric model, as these tools give the greater visibility and automation required to enable a proactive security approach.

Remote work will remain for many organizations. As noted above, remote work was cited by 90 percent of respondents as factor in increased managed services uptake. The shift to remote work in 2020 was often accomplished in a rushed and ad hoc fashion. To make it sustainable, companies need to invest in infrastructure, tools and services that they simply don’t have the internal resources to create on their own. For MSPs, there will be opportunities to not only provide security services to keep remote access safe; there will also be demand for services related to setting up and managing remote access.

The skilled worker shortage problem continues. The tech industry struggled with a lack of workers before the pandemic, and conditions aren’t improving. The post-COVID-19 recovery will likely include even more challenging labor market dynamics across many industries. With a robust services portfolio, MSPs can help reduce the need for additional hiring and ease the burden on existing IT departments.

As the MSP Day report shows, the outlook for services is bright. Companies need help adjusting to new security threats, new remote work models, and staffing challenges. MSPs could see significant growth as demand for these services increases.

Neal Bradbury is Vice President, MSP Strategic Partnerships for Barracuda MSP, a provider of security and data protection solutions for managed services providers, where he is responsible for generating greater business value for the company’s MSP partner community and alliance partners.