By Neal Bradbury, Senior Director of Business Development, Barracuda MSP
A well-researched, gradual transition to managed services is best – but don’t wait too long.
The IT industry is moving toward a managed service model. But when is the right time for a VAR to make the transition to becoming an MSP, and how do you take the first step?
The answer to the “when” question is simple, if not specific: soon. The window of opportunity isn’t necessarily going to stay open forever. The managed services market is expected to top $257.84 billion by 2022. That growth is being driven by cloud adoption, a shortage of skilled IT personnel (which has driven up IT professionals’ salaries), and potential cost savings.
There are significant opportunities for increasing revenue by shifting to the MSP model, but there are also risks. By 2021, MSPs will account for 24 percent of what could be a $4 trillion market for IT spending, according to AMI-Partners data. MSPs reported that they have increased their ROI by six times within three years of moving from a VAR to an MSP. However, the transition required an 18- to 24-month time horizon for new managed services profitability, and a 1.4-times growth in the workforce to support expanded services, revenue, and customers.
Technology is evolving at such a fast clip that the skills gap for providers is getting wider; if you wait too much longer to transition to an MSP, the gap may be too big for your company to bridge. Your customers are already looking for MSP partners, and if other MSPs aren’t already making inroads into your client base, they soon will be.