SolarWinds Study: MSPs Crucial to Businesses During Pandemic

A new SolarWinds study shows the COVID-19 pandemic has reinforced the value MSPs bring to businesses.

SolarWinds MSP surveyed 500 MSPs across Europe, North America, Australia and New Zealand. The SolarWinds study provides insight into how MSPs are successfully navigating the impact of COVID-19. It also gauged their views on the next 12 months in the market.

Key findings include:

• Fifty-nine percent have applied for government financial relief programs. And 74% of those received the help they needed.
• More than four in five have continued operating at their pre-pandemic staffing levels.
• The majority of MSPs have adapted their security services for work-from-home clients, with 59% of managed-services-centric businesses offering more security bundles than any other business model..

MSPs Helping Businesses Survive

Colin Knox is vice president of community for SolarWinds MSP.

SolarWinds MSP’s Colin Knox

“While not necessarily surprising, it was truly heartening to see the overwhelming majority of MSPs retain their staff during a time period characterized by uncertainty,” Knox said. “Without MSPs as an extension of their customers’ teams – focused on risk mitigation and business continuity – many businesses would have been lost, and wouldn’t have been able to support remote working on such a vast, immediate scale. MSPs have truly become essential.”

More than two-thirds of MSPs have reported “going the extra mile” to support their customers during this time, the SolarWinds study said. MSPs have continued to accommodate customer needs in the following ways during the pandemic:

• Sixty-five percent do not anticipate making any pricing changes to their managed services package in the long term.
• Twenty-four percent have offered delayed payments.
• Twenty-three percent have offered temporary discounts.
• Nineteen percent have reduced their services to fit shrinking customer budgets.
• Thirteen percent intend to increase their prices following the pandemic.

Biggest Challenges Ahead

Customers that hadn’t worked from home before put the most strain on MSPs, Knox said.

“But of course, many customers were savvy to remote working and understood some of the challenges it would bring, from additional security vulnerabilities, network constraints and lack of work-from-home hardware, he said.

In terms of challenges, MSPs say the biggest barriers they will face over the next year are:

• Securing new customers.
• Social distancing requirements in the office and at customer sites.
• Lower IT budgets and spending due to recession.
• Adapting to having staff and clients work-from-home.

“In order for MSPs to continue to grow and meet the market’s demands for increased security services, they will need to invest in their businesses, which in some cases will mean price increases to help support with the increasing cybersecurity demands,” Knox said. “With that said, while pricing increases may be warranted to accommodate the heightened expectations some clients may now have as a result of the pandemic, MSPs need to ensure they communicate the value and listen closely to the market to see if it will bear the increased price in general.”

Strong Outlook for MSPs

The market outlook for MSPs is strong, with a 9-12% CAGR expected over the next three years, Knox said.

“Like many businesses, COVID-19 may have had a temporary impact on such things as staffing, but we believe MSPs – with the right business model – are poised to thrive as we move forward throughout the rest of the year and into 2021,” he said. “Their services have never been in higher demand as we’ve shifted to global work-from-home as the standard modus operandi and as businesses who never considered outsourcing IT are now looking to do so to help mitigate operational gaps.”

In the next 12 months, the SolarWinds study found:

• MSPs will continue to see security services as a crucial growth factor for advancement along with cloud services. For instance, 51% will increase their security services and 47% will increase cloud services sales.
• Forty-two percent say growth will come from additional project work. And 39% expect an increase in managed services contracts.
• For other potential growth opportunities, 40% of large MSPs also anticipate they will engage in M&A to support expansion.
• Nearly one half estimate more than 20% of their clients will implement work-from-home policies post-pandemic.
• Companies operating in a managed services business model show more confidence and expect stronger revenue growth than those with a break-fix business model.

SolarWinds last week floated the idea of spinning off its MSP business. It’s a move the company says could enhance operations of both its MSP and core IT management businesses. So stay tuned.