LAST JANUARY, forecasting the year ahead in IT seemed like a fool’s errand. With a pandemic still raging, vaccines just arriving, and deep economic uncertainty persisting, all anyone could say for sure about 2021 was that it was bound to be better than 2020.
Twelve months later things are different. COVID-19 remains an issue and no one knows quite when inflation and supply chain bottlenecks will ease, but the future looks significantly more predictable than it did the last time ChannelPro gazed into its tech industry crystal ball.
In fact, the future looks so predictable these days that in fields ranging from cloud computing and security to storage and PCs, our go-to panel of industry experts advised us to expect a lot of what you might predict yourself, with a few new wrinkles mixed in.
Despite—or perhaps because—of the pandemic, 2020 and 2021 were good years for managed services. Gary Pica, president of MSP advisory firm TruMethods, believes 2022 will be even better.
“We’re at a point now where almost anyone with less than 250 employees is going to outsource some or all of their services, because they have so much more technology,” he says. “There’s no going back at this point in the digital revolution.”
That bounty isn’t flowing equally to everyone, however. MSPs with fine-tuned business processes and proven competitive strategies in the sector’s top 25%, Pica reports, are outperforming peers in the bottom 50% by a wider margin than ever before.
“They’re adding a bunch of recurring revenue. They’ve matured their security posture. They’re getting $160 to $250 a seat,” he says, adding that less advanced peers will have a hard time keeping up this year.
“I’m not suggesting that those small or less mature MSPs are going to go away,” Pica says, “but they’re going to have to decide more specifically, what is my niche?”
This is especially true because 2022 will be a year of continued M&A activity funded in part by the $2.3 trillion worth of uninvested capital currently held by private equity investors, according to S&P Global Market Intelligence. “Being run by businesspeople, they have dedicated sales and marketing focus,” Pica notes of PE firms, which means the big MSPs they’re building will be directly targeting customers of smaller MSPs this year.
In case that’s not pressure enough, MSPs of every size will continue to face tight hiring conditions in 2022, according to Pica. Finding good people was difficult before the pandemic, he notes, but in the work-from-home era technicians can potentially sign on with any MSP anywhere.
“Now you’ve got to compete with the whole world basically, and definitely the whole country,” Pica says.