A research report by Datto sheds light on the state of managed service providers (MSPs). Security services, cloud migrations and competition are on the rise.

Datto based the study on a survey of more than 1,800 MSPs worldwide. The organization questioned respondents on challenges, opportunities and the current landscape. Datto conducts the survey annually.

Competition

Competition was the most frequently mentioned challenge for the second year in a row (29 percent). Datto suggests that more and more SMBs are engaging with MSPs. As customers gain experience, MSPs are more likely to be compared.

The market was smaller ten years ago. At the time, some customers had never worked with an MSP before. It’s difficult to evaluate a service provider without a frame of reference. Competition increases as the market grows.

Managed services

In terms of services, the average offering is diverse. Most MSPs cover a broad range of solutions. The most frequently mentioned services were infrastructure management and design (83 percent), productivity software (83 percent), business continuity and disaster recovery (79 percent), networking (79 percent) and IT support (77 percent).

Interestingly enough, 97 percent of the respondents provide one or more managed security services. The security market is growing and most MSPs want a piece of the pie. Preventive security services are the most common, including email security, auditing, two-factor authentication, firewalls and VPNs. Reactive security services such as advanced endpoint protection are rarer.

Despite its popularity, the provision of managed security services is everything but easy. MSPs regularly struggle to find qualified staff (42 percent). The complexity of cybersecurity products often poses a problem (41 percent). In addition, training employees is a widespread challenge (33 percent).

Cloud migrations

Furthermore, Datto indicates that cloud migrations remain on the rise. 76 percent of MSPs currently run more than half of all their workloads in the cloud, up from 50 percent last year. MSPs predict that three-quarters of customer workloads will move to the cloud in the next three years, an increase of 25 percent year-over-year.

The public clouds of AWS and Microsoft are the most popular at this time. Many respondents expect the adoption of Google Cloud to increase in the coming years.

Tip: As business booms, MSPs need to become more efficient