2023 will be a good year for managed services organisations, as end customers from all sectors and of all sizes look to outsourcing to address a range of IT challenges. However, differentiation and the customer experience will be critical, because those same customers are also going to be demanding in a difficult economic environment.
Research shows that, globally, 18 per cent of IT budgets will be dedicated to managed services. This is up from 15 per cent in 2020. This is in addition to Gartner’s prediction that IT spending will increase by 5.1 per cent globally in 2023.
What is driving this increased interest in managed services? Part of it is certainly to do with the ongoing skill shortage in IT. Expectations are that the skills shortage will not start to ease until deep into 2023. For now, managed services represent an opportunity to continue to modernise, scale and manage IT environments without needing to compete for expensive and generally unavailable internal IT resources.
There is also a risk management layer to it. As Sean Smith, Business Success Manager (BSM) Lead in the rhipe Cloud Solutions Team noted, customers are looking to MSPs to provide services that help them mitigate risk and address the economic headwinds that are affecting organisations.
In other words, through SLAs and the ability to keep the internal organisation small and nimble, customers are looking to their managed services providers to play a deeper and more strategic role within the organisation.
“MSPs are going to be continually asked to do more with less,” Smith said in an exclusive interview with Foundry. “If we look at how the economic challenges that are now being thrown on top of the post-COVID recovery, what this translates to is customers now expecting the partner to be able to have access to everything and bring everything to the table that they need. They also need to get the most out of the technology that they invest in."
While this is an opportunity for MSP’s, having a deep, broad, and valued ongoing engagement with the customer has always been the goal. MSP’s will need to accelerate their own businesses to meet those challenges leading into 2023, Smith added.
“For MSPs the question is how do I right size my team and have the right resources in place to cope with this change in expectation? That might include technology platforms and areas of IT that the partner hasn’t traditionally needed to cover.”
Why deeper expertise will be the point of differentiation
Technology trends in 2023 will see remote work become firmly embedded, with best practice approach for organisations being structured into policy. From an IT perspective, the enablement in most IT environments has already occurred and organisations have hybrid and multi-cloud computing environments to facilitate their remote working strategies.
However, their IT environments aren’t necessarily running optimally. As rhipe Business Development Manager – Cloud Solutions Team, Santosh Simon, said, there’s a lot that could be done by managed services providers to help deliver value to their customers by taking a more strategic approach to the cloud.
“Many MSPs are claiming to move customers to the cloud under the banner of modernisation, but in reality are just performing a lift-and-shift, and in doing so they barely scratch the surface of unlocking the true potential of cloud,” Simon said.
“I believe it is those partners who focus on skills and solutions to orchestrate, manage, and secure those hybrid or multi-cloud environments that will be the ones that stand out in the future.”
It is the security piece that managed services providers are going to need to be particularly focused on for the sake of their clients. The spate of recent high-profile breaches and data leaks across Australia has inspired the government to consider increasing the penalties for a data breach; to AU$50 million; three times the value of any benefit obtained through the misuse of information; or 30 per cent of a company's adjusted turnover in the relevant period (whichever of the three is greater).
For many businesses in Australia, this could be a business-ending event. And yet, earlier this year, eight in ten Australian CISOs said that their organisations were not prepared to detect, deter and recover from a cyber attack. We can clearly see that there are significant gaps in an organisations security posture. A good place to start would be referring to rhipe’s guide to the essential eight. For MSPs, the biggest opportunity is the increased spending and interest in cloud based services and the resulting need for deep and broad expertise. Customers are struggling with economic and skills challenges, while at the same time facing ever-escalating risk from their IT environments. The solution, and the reason behind the increased IT spending, needs to come from the MSPs.