By contrast, 59% of respondents to our survey continue to see stable profit margins in the old-school networking hardware and software space while, 58% report little or no change in margins for PCs and peripherals, 56% in storage solutions, 56% in break-fix offerings, and 53% in backup and disaster recovering, including DRaaS.
The Managed Services Landscape
It’s no secret that the managed service space is expanding. A 2022 report from Precedence Research found that the global managed services market is growing by about 12.6% annually and it will reach US $757.1 billion by 2030.
Yet, many channel pros are struggling to make this transition. Last year’s survey found that 24% of respondents earned less than 10% of their annual revenues through managed services. That number jumped to 43% in this year’s results. And only 11% earn 75% or more of their top line through monthly recurring revenue, down slightly from 16% last year. What’s more, just 34% see their revenues increasing through managed services in the year ahead, while a resounding 61% expect it to remain the same.
At Avant-Garde-Technologies Corp., an Atlanta, Ga.-based MSP, CEO Albert Gustafson believes that a key to success in managed services is building a “platform” that supports various products and services, typically through the cloud. He is avoiding getting into a commodity business model—charging separate fees for every product and service—and instead working to build a more “holistic approach” that bundles offerings. “We want to deliver greater value,” he said.
Channel Pros Head into the Clouds
For firms offering cloud services, the top offerings at present include: security products and services such as backup and disaster recovery (68%), consulting (67%), anti-virus, spam filtering and EDR (65%), storage (63%), and networking and Wi-Fi (62%). Among the products and services channel pro firms are looking at adding, Infrastructure-as-a-Service (30%), Platform-as-a-Service (23%), cost optimization (21%), analytics (20%), managed hosting (19%), and data migration (19%) all scored high.
All of this supports the trend that many channel firms are shifting to the cloud. While only 9% currently earn 75% or more of their revenues through various cloud computing products and services, 39% fall into the range of 25% to 74% of their revenues deriving from managed cloud services. More telling is the fact that 40% see their share of cloud revenue growing in 2023. Only 3% said they expect their revenue from cloud services will decrease.
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About the Author
Samuel Greengard, a business and technology writer in West Linn, Ore., is the author of The Internet of Things (MIT Press, 2015) and Virtual Reality (MIT Press, 2019).
