When it comes to being a managed services provider (MSP) size might not matter as most channel partners might think. A survey of 800 MSPs published by Kaseya, a provider of a platform for managing the delivery of IT services, finds that more than one-third of the fastest growing MSPs have fewer than ten employees.
That may not come as a surprise given how much easier it is to grow off a small base. But the Kaseya survey notes that among the so-called “Bionic MSPs” that are growing monthly revenue at a rate of 20 percent or more, well over half (54%) are managing over 1,000 endpoints.
Only 16 percent of the MSPs surveyed by Kaseya qualified to be deemed bionic. Another 32 percent of the survey respondents report month revenue growth between 11 to 20 percent. The Kaseya survey reveals the average monthly managed services contract size for one-third of the Bionic MSPs identified is $5,000 or more, compared to 21 percent of all respondents.
Other notable attributes of Bionic MSPs surfaced in the survey include:
Twenty-nine percent of Bionic MSPs charge between $51 and $100 per device per month for ongoing server support and maintenance, compared to 19 percent of all respondents.
Seventy-five percent of Bionic MSPs charge $100-200 as their standard hourly rate, compared to 64 percent of all respondents.
Among all respondents, the most commonly provided services are audit and discovery (62%), client assessment (60%), cloud services (52%), intrusion detection and prevention (46%) and identity and access management (45%).
Although the number of Bionic MSP is relatively small, it’s clear MSPs that invest in automation to reduce the cost of labor while specializing in certain disciplines such as cybersecurity have a clear financial advantage, says Jim Lippie, senior vice president of channel development at Kaseya.
Those MSPs will ultimately be in a better position as a wave of consolidation continues to gain momentum across the MSP sector, notes Lippie. MSPs will ultimately need to decide soon, however, whether they will be the entities doing the acquiring or will be rolled up by a larger MSPs, adds Lippie.
“MSPs need to decide if they are going to be a buyer or a seller,” says Lippie.
In addition, Lippie says MSPs would be well-advised to carefully monitor in which direction IT vendors will be adding managed services to their portfolios that potentially compete with services traditionally provided by MSPs.
Regardless of the strategy employed the one thing that is certain is that the MSPs that will thrive in the years ahead will be noted a lot more for their agility than actual physical size.
Thank you Jim, Your point that “it’s clear MSPs that invest in automation to reduce the cost of labor have a clear financial advantage” is very important when you consider the size of most MSPs is relatively small. You may try and scale, but getting from one level to another level involves the “Death Valley” syndrome (Explained in Scaling Up) where you have to add a layer of management and grow fast enough to support the management layer. It’s a challenge and automation and business operations efficiency is the key. “Death Valley” for MSPs this size is between $1 million and $4 million in revenue. You really need to leverage the powerful automation in Kaseya VSA to make it from the $1 to the $4.