Not too long ago, it would have been safe for managed service providers to assume most small-to-medium business (SMBs) would be considered laggards in adopting new and emerging technologies. But a survey of 650 SMBs conducted by CompTIA, an IT industry association, finds over two-thirds of SMBs consider technology to be a primary factor in pursuing their business objectives. That percentage rises to 73 percent of companies that have 99 to 249 employees.

More than half (56 percent) cite technology as a primary factor in achieving objectives. For 41 percent of survey respondents, the top business priority identified is to implement new systems or work processes in the next 12 months. The two highest priorities for technology spending fall under providing a better customer experience (23 percent), followed by increasing worker productivity at 16 percent. More than half (53 percent) of SMBs identified emerging technologies as a positive opportunity to innovate, generate profit, and improve productivity. The top two obstacles to adopting emerging technologies are cost (46 percent), need for technical training (44 percent), and identifying the best vendors to engage (40 percent).

The top three areas where SMBs specifically need the most IT help is identified as integration (38 percent), cybersecurity (35 percent) and managing data (35 percent), according to the survey.

The survey also finds that over half of respondents (53 percent) rely on a managed service provider to some degree, and another 34 percent have at least considered that option.

The challenges and opportunities

That’s all good news for MSPs. The challenge is the ambitions of many SMBs appear to exceed their IT budgets.  Nearly four in 10 respondents characterized their firm’s allocation of budget to technology spending as “too low.” The survey shows the typical range of annual tech spending falls somewhere between about $5,000 and $249,000. On average, CompTIA estimates the sweet spot for SMB customers is somewhere between $10,000 and $49,000 of spend per year.

Competition for those dollars is becoming increasingly fierce. The CompTIA survey notes that 52 percent of the professional services firms that participated in the survey are now offering some technology services to their customers. Nearly half of the respondents (45 percent) said revenue from tech-related activities and services is growing faster than the rest of the business, while another 43 percent said the pace is about the same comparatively. Firms that specialize in providing accounting services are expanding their offering to include services like technology compliance audits (55 percent), cybersecurity assessments (51 percent), and mobile and web site application development (50 percent). On one level, professional services firms may represent an opportunity for MSPs to partner with. One way or another, those firms are targeting some of the most lucrative IT services. 

Subscribe to SmarterMSP.com

Finally, the CompTIA survey confirms that the role partners play in driving technology purchasing decisions tends to be more in the realm of influencing the decision making, versus exercising control over the actual transaction. More than half of the survey respondents (58 percent) buy technology directly from the vendor or manufacturer. The CompTIA survey reveals that IT spending is allocated across local retailers (26 percent), online-focused retailers (26 percent), direct from vendors (28 percent), and resellers or technology partners (20 percent). Overall, half of SMBs said they have worked with a third-party reseller/solution provider somewhat frequently/regularly in the past year, while another 31 percent said they do so occasionally.

Many MSPs might want to exercise a lot influence over the products and technologies they will be asked to support. However, the fact is that many of them don’t necessarily find the margins they might make on product transactions to be worth the time and effort. If the end customer is pre-disposed to buying IT products direct, the average MSP is still happy to manage those products, no matter how they may arrive.

Put it altogether and it’s clearly the best and worst of times for MSPs. SMBs need the expertise of MSPs more than ever. When an MSP doesn’t have control over the product transactions, competing for SMB customers can be a lot more challenging, especially at a time when the number and types of organizations offering managed services continues to increase. Savvy MSPs will stay as close to the products and technologies as possible. After all, products and technologies are always going to be the indispensable means to a much more profitable services end.

TruMethods MSP Improvement Plan

Photo:  stockcreations / Shutterstock

Mike Vizard

Posted by Mike Vizard

Mike Vizard has covered IT for more than 25 years, and has edited or contributed to a number of tech publications including InfoWorld, eWeek, CRN, Baseline, ComputerWorld, TMCNet, and Digital Review. He currently blogs for IT Business Edge and contributes to CIOinsight, The Channel Insider, Programmableweb and Slashdot. Mike blogs about emerging cloud technology for Smarter MSP.

Leave a reply

Your email address will not be published. Required fields are marked *