2020 IT Trends and Opportunities for Microsoft-focused MSPs

Microsoft officially launched Office 365 on June 26, 2011, as the successor to “BPOS,” the Internet-based Business Productivity and Office Suite. At the time, Microsoft’s stated direction to its partner ecosystem was “Cloud everything! – if you don’t have a cloud business, you don’t have a Microsoft business.” Microsoft’s push to move its installed base of Exchange and Active Directory users to Office 365 has been relentless–and successful. And for those partners that heeded Microsoft’s warning, a virtual gold rush of business has fallen on them over the ensuing nine and a half years.

Fast forward to 2020: We are seeing shrinking CSP margins, and most of the lucrative Office 365 migration projects are slowing. Furthermore, there is evidence that customer IT investments will turn to projects and activities that serve to optimize customers’ newly transformed cloud environments so that the promise of lower IT costs, less risk and greater innovation can be fully realized.

So, what are the trends for Microsoft-focused MSPs, and what should they consider to best take advantage of opportunities in the years to come? According to the Ernst & Young October 2019 Global Capital Confidence Barometer, the greatest impact of the digital transformation phenomenon on companies is the reduced barrier to competitive entry followed by the change in customer expectations and behaviors brought on by digital transformation. The competition is coming, and the customer is in control. It’s our belief that the projects and services MSPs should be focusing on are those that help customers fully utilize their investments in Azure and Office 365.

Now, let’s take a look at some of these changes in customer expectations and behaviors that will have a big impact on how MSP’s shape their holistic strategies for the year.

1. Digital Transformation Initiatives and Cloud-based Systems

Organizations of all sizes will continue to migrate their data and operations to the cloud, but IT investments will shift from pure data migration projects to those projects focused on fully enabling the customer’s cloud environment. The shift in IT spending will be driven by the need for companies to fully realize the ROI offered by cloud-based computing. According to the IDC, by 2020 60% of all enterprises will have fully articulated an organization-wide digital transformation platform strategy and will be in the process of implementing that strategy; bny 2021, enterprise spending on cloud services and cloud-enabling IT will more than double to over $530 billion. MSPs that deliver services across the full spectrum of the customer’s digital journey–from on-prem migrations to a fully implemented and well-managed cloud environment–will be best positioned for future growth. For the full-service MSP this means offering an array of services and supporting tools and IP from ISVs to deliver data migration services, expertise in reporting and data analytics, security planning, cloud performance monitoring, workload adoption and training, change management, tiered support and workload management offerings.

2. Automation

In 2020 companies will continue to invest in implementing new processes and systems to automate manual tasks. There is no debate that the automation of repetitive manual tasks reduces the time and effort required to execute manual workloads. These customer investments will be in the areas of AI and automation of application development, as well as automation of repetitive manual tasks related to managing and supporting the customer’s cloud infrastructure and cloud service workloads. MSPs that offer managed IT support services will look for ways to employ automation tools to improve their own profitability and increase both employee and customer satisfaction. For MSPs, automation offers the chance to provide better and more consistent service delivery levels and a predictable way to manage growth. Automating management tasks improves efficiencies and profitability, and increases employee and customer satisfaction. In the words of Mark Driver, Gartner research vice president, “Work becomes less routine and more about solving unique challenges, which is more rewarding for most people.” This, in turn,  makes automation a morale booster. A true win-win-win!

3. Mergers, Acquisitions and Divestitures

Ernst & Young predicts a healthy global M&A forecast in 2020 as diversity in mergers and acquisitions is expected to continue. They attribute this forecast to a variety of factors—namely, that merger and acquisition intentions are still above long-term average, with the current M&A upcycle lasting longer than initially predicted. For MSPs that provide professional services, the M&A market represents another unique opportunity to provide consulting and project services centered on planning and executing M&A projects end to end. MSPs that can offer a full-service approach and also possess the proper skills, knowledge and IP tools to handle the intricacies of migrating and merging large amounts of data–as well as orchestrating the corresponding change management–will have the competitive advantage.

4. Security

Demand for security solutions will continue to increase as cybercriminals become more sophisticated and more organized. The latest report from IBM Security indicates that the average cost of a data breach has risen 12% over the past five years and now costs $3.92 million, with U.S. breaches costing double that, at $8.19 million.

With hacking attempts occurring every 39 seconds, the focus on securing access to data is prioritized before