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2018 State of the Channel Survey: Stepping Toward the Future of IT: Page 3 of 3

Experts have been advising channel pros to embrace high-growth markets like security and the Internet of Things for years. Our latest reader opinion survey suggests it’s finally starting to happen. By Rich Freeman
Reader ROI: 
SURVEY evidence suggests that profits are dropping on traditional IT markets like networking, PCs, and servers.
THAT TREND HAS CHANNEL PROS EXPLORING high-growth markets like security and the Internet of Things in mounting numbers.
SOLUTIONS THAT ARE NEW to many IT providers, such as telecommunications systems, are also gaining momentum.
MANY PROVIDERS OF LOW-MARGIN online services are adding higher-margin cloud offerings in areas like HR, ERP, and CRM.
MANAGED SERVICES, though hardly a new market, is generating increased revenue and profits for channel pros too.

Security Is Much Needed and Highly Profitable

Here’s some news from our survey that should surprise no one: Cybersecurity is red hot right now, thanks in large part to a threat landscape growing more perilous all the time. Indeed, monthly attack volumes were 23 percent higher on average last year than in 2016, according to Santa Clara, Calif.-based security vendor Malwarebytes Inc., which also reported a more than 300 percent year-over-year increase in ransomware detections in just the first nine months of 2017.

Businesses aren’t the only ones worried about security either. When asked to rank their concern about today’s threats on a scale of 1 to 10, with 10 being highest, over 64 percent of the channel pros we surveyed rank it 9 or 10, up from 56 percent last year.

Providing more and better security services not only eases such anxieties but boosts profitability as well. According to 32 percent of survey respondents, security offerings deliver high profits; just under 49 percent believe margins will get even higher in 2018. Managed security services are reliable moneymakers right now too, according to respondents. Indeed, 38 percent of them call managed security profits strong currently, and 54 percent forecast even higher profits in the year ahead.

Along similar lines, almost 43 percent of respondents say profits on backup and disaster recovery solutions, which play a critical role in layered anti-ransomware defenses, are high at present, up from just 31 percent last year. Some 44 percent, moreover, expect those profits to grow stronger in the next 12 months.

Better yet, channel pros apparently think the security tools they’re selling are not only profitable but effective. Over 47 percent of them rate their confidence in the solutions they currently offer to customers at 7 or 8 (on a 1 to 10 scale, in which 10 is best), and more than 26 percent say 9 or 10.

It’s Not All About New Markets

For all the talk about burgeoning opportunities like security and IoT, however, data from this year’s survey suggests there’s plenty of upside in managed services too. Though nearly 88 percent of respondents are MSPs at least part of the time, fully 77 percent of them still make less than half their revenue that way.

On the other hand, the percentage of survey participants making 50 percent or more of their money in managed services has risen from close to 15 percent last year to 23 percent now. And while a little less than 48 percent of channel pros we surveyed in 2017 expected managed services to account for more of their revenue in the coming year, that number is just north of 57 percent this year.

Still, few would argue that established markets like managed services are where the big growth is these days. Based on this year’s State of the Channel data, at least, channel pros appear to be seeking newer markets with even greater room to soar.

Methodology and Demographics

The 2018 ChannelPro State of the Channel survey was conducted online from August to October 2017, and was open to everyone in our email database. About 36 percent of the 815 respondents are MSPs, 34 percent are VARs, and 13 percent are custom system builders. Nearly 63 percent hold executive management titles such as CEO, owner, and president; about 16 percent work in unspecified technical management roles; and about 13 percent are sales or marketing managers. Approximately 35 percent work at companies with one to four employees, while roughly 17 percent, 28 percent, and 20 percent are affiliated with firms that have five to nine, 10 to 49, and 50-plus people on staff, respectively. Note: Percentages are rounded to the nearest whole number.


To download a full copy of the 2018 ChannelPro State of the Channel survey results, click here.

Opening Image: Thinkstock Photos


About the Author

Rich Freeman is ChannelPro's Executive Editor

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