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PricewaterhouseCoopers International Limited (PwC)

PricewaterhouseCoopers International Limited (PwC) has published a report based on a survey of more than 2,000 business leaders that finds the top 20 percent of high-performing organizations in terms of profit margin, and revenue growth are 4.2 times more likely to employ managed services providers (MSPs) to their strategic advantage.

Companies that use MSPs for strategic advantage are 1.6 times and 2.4 times more likely to be faster to market as well as more innovative than those focused solely on cost savings, according to the report.

Managed services partnerships have evolved

The report adds that they have evolved in a way that blurs the lines between managed services, management consulting, technology solutions, and other types of services.  It notes services that used to be primarily provided through labor are now being “productized” using a combination of labor and technology. This is usually at a lower price.

Advanced MSPs: Leveraging managed services for strategic growth and a competitive edge

Organizations utilizing managed services at a mature level use them to respond more adroitly to changing conditions and potential threats. They also use them for at least one of the following strategic purposes:

  • Improve customer experience
  • Keep pace with changes in technology.

Savvy MSPs generally know that selling services based solely on a labor arbitrage model is a losing proposition. There will always be an MSP willing to undercut the price of any service as the methods for delivery become more automated.

With artificial intelligence (AI) about to be broadly applied the pace at the race to zero margins occurs when delivering almost any IT service is only going to accelerate. MSPs are going to need to find a way to add additional business value if they hope to stay relevant.

The PwC report makes it clear: there is an appetite for higher-value services. Most business and IT leaders recognize the pace of innovation is occurring faster than their internal IT teams can absorb. There is always going to be some type of skills shortage. Those skill shortages are ones that MSPs are in the best position to fill. With the rise of automation, the skills gap will shift. It will go from managing IT to applying it strategically for sustainable business advantage and staying competitive.  One thing that should be apparent: from a business perspective, investments in IT are essentially now an ongoing arms race.

The thing MSPs need to remember is that while every organization may be armed with the same IT technologies. It doesn’t always mean they know how to use them effectively.

Photo: Lightspring / Shutterstock

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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.

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