This past year will be remembered as a time when many managed service providers (MSPs) moved beyond simply being trusted advisors to their clients to become full-fledged strategic partners.
Many organizations in the immediate aftermath of the COVID-19 pandemic either launched multiple new digital business transformation initiatives or attempted to accelerate ones they already had underway to keep revenue flowing. The challenge just about all of them ran into is they lacked many of the critical IT skills required to execute those plans. MSPs that had made the right investments in talent were asked to fill that gap. As we begin 2022, many of those MSPs rather than simply being viewed as a less expensive provider of commodity IT services, are now recognized as a provider of mission-critical IT services that an organization counts on to provide their end customer with a digital experience that drives revenue.
Expanding your managed services offering can improve the digital experience
The opportunity MSPs have before them now is to expand the range of managed services being provided as organizations leverage a range of emerging technologies to provide increasingly better digital customer experiences. Everything from advanced analytics and artificial intelligence (AI) platforms to edge computing platforms connected over 5G wireless networks will be required. Going forward just about every one of those IT platforms will either be directly deployed on a cloud or managed via a cloud service.
The challenge MSPs will face is prioritizing their own efforts based on the level of commitment a customer is making to IT. Organizations that are committed to driving digital business transformation initiatives are clearly investing in their future. The trouble is a recent report published by Boston Consulting Group (BCG) involving a global study of more than 850 companies finds only 35 percent achieved their digital transformation objectives. While just about every organization these days is talking a good digital business transformation game, roughly two-thirds of them are unable to execute. Savvy MSPs at the start of 2022 need to realistically assess which of their customers are likely to thrive in the coming year versus those that are more likely to be left behind as more nimble rivals gain market share at their expense.
Beware of disruption caused by industry consolidation and talent shortages
MSPs, of course, shouldn’t abandon those customers altogether. There is still plenty of revenue to be generated delivering managed services to just about any organization. However, MSPs should assume that they will wake up one morning to discover that many of those organizations have been either acquired or could simply no longer compete. There is arguably nothing more disruptive to an MSP than discovering that a major client they had been counting on to drive recurring revenue is no longer going to be making a meaningful contribution to accounts receivable.
This new year promises to be challenging for organizations large and small alike. The Conference Board, a 501 non-profit business membership and research group, predicts the global economy will grow 3.9% in 2022. Many organizations, however, may struggle to meet the demand for their goods and services because they either simply don’t have enough people, or the cost of raw materials has increased due to supply chain issues. MSPs should expect customer churn in 2022 will reach a record high. In fact, MSPs would be well advised to take a hard look at which of their customers are likely to succumb in 2022 to forces beyond their control, no matter how brave a face they may have at the start of a year that already promises nothing less than a major economic reckoning for all concerned.
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