Blog Articles
Read MSP360’s latest news and expert articles about MSP business and technology
Managed Services Provider Problems

Top Challenges for MSPs in 2021

Top Challenges for MSPs in 2021

While MSPs undoubtedly are looking forward to the new year, they may want to first look back at 2020. Many of the challenges they faced in 2020 are simply rolling over into 2021, and if MSPs aren’t careful, they’re going to fall into the same traps.The COVID-19 pandemic threw out the playbook for everyone, including MSPs. There were a variety of issues they and their customers faced initially, but MSPs adapted over time and learned how to deliver effectively and efficiently for their customers. In order to succeed in the new year, MSPs must remain vigilant.
There are several challenges MSPs to pay close attention to in 2021.

Customer Behavior Is Changing

The COVID-19 pandemic has changed the way customers think about technology for the better. In a world where remote work has become the new normal, they’re now more aware of the technology challenges when working from home. For example, some end users initially faced bandwidth issues. Others had problems with VPN connections. After a while, many technology issues were resolved, but only as IT professionals came to the rescue of their customers.

Customers saw first-hand how MSPs delivered business results during the early stages of the coronavirus crisis. As a result, customers today better understand the importance of working with MSPs to achieve business objectives. Without the help of MSPs, many business owners would’ve had to close up shop within the first few months of the COVID-19 pandemic. Fortunately for them, MSPs and other IT professionals were able to assist with transitioning their employees to remote work.

While working remotely was foreign to many businesses at the time, they’re now more familiar with what it takes to operate efficiently from afar. Additionally, they may now keep some of their workers remotely to cut overhead expenses, especially if sales are down. Instead of spending time, resources and money on monitoring and managing their employees and keeping hardware and software up to date, businesses are turning to MSPs once again for guidance.

When businesses do, MSPs must be ready and willing to lead them. For instance, businesses today need MSPs to take things up a notch when protecting their systems and networks. New security approaches are required, especially with everyone shifting to the cloud.

Further reading SMB Survival Guide: Dealing with Crisis

Cloud Migration Is Gaining Momentum

Everyone’s moving to the cloud. While cloud migration has been happening for a while now, things are picking up. In fact, the cloud computing industry is expected to grow from $371.4 billion in 2020 to $832.1 billion by 2025, at a CAGR of 17.5 percent. Some of the top drivers for this shift in mindset include security and data protection, data modernization, and cost. As more businesses migrate to the cloud, MSPs must learn to adapt to the growing needs of their customers.

Further reading Best Practices to Develop a Cloud-First Approach and Increase Margins

For instance, security is now more important today than ever before. Since the beginning of the COVID-19 pandemic, there have been 4,000 cyberattacks a day, which represents a 400 percent increase from what law enforcement agencies were seeing prior to the coronavirus crisis. While this is concerning, it also presents an enormous opportunity for MSPs in managed security services.

Further reading COVID-19 and Cybersecurity: Main Threats and Protective Measures

The interest in managed security services is growing. The global managed security services (MSS) market is projected to grow from $31.6 billion in 2020 to $46.4 billion by 2025, at a CAGR of eight percent. While the increasing number of cyberattacks worldwide is driving the market’s growth, cloud adoption is playing a key role.

If MSPs provide MSS solutions that focus on risks when mitigating to cloud, they oftentimes can protect their margins, even when they’re eroding.

FREE ASSETS
Marketing Toolkit for Selling Managed Security Services
Win new clients with these white-label marketing templates for selling managed security services
New call-to-action
WP icon

Expect Margin Erosion to Continue

MSPs have always struggled with maximizing their profit margins. They typically fail to recognize when they’re losing money. As margins continue to shrink, MSPs unable to adapt are going to find themselves out of business.

Customers are sometimes no longer profitable or vendors fail to deliver profitable partner programs to MSPs. Also, with many businesses transitioning to cloud-based services, MSPs aren’t making as much on their services as they used to in years prior.

For MSPs to survive in the new year, they must adapt to changing customer behavior. MSPs must also be able shift in the new year by reevaluating vendor pricing, assessing their customers and selling services with higher margins.

Whitepaper icon

New call-to-action
Guide to MSP Profitability in 2021

Download our free guide to learn how MSPs can change their business approaches to maintain high profits in 2021. In this guide, you will find:

  • Key ways to analyze your opportunities and business health
  • Practical steps for boosting your profits
  • Tips on how to review your marketing strategy