Datto Survey Sees MSPs Weathering COVID-19 Storm

Datto, a provider of white-label cloud services for managed service providers (MSPs), this week published a global survey of 1,800 MSPs that finds that while the COVID-19 pandemic has cut revenue growth for 2020 most MSPs continue to thrive.

Before the pandemic MSPs were projecting to grow by 17%, the survey finds. At the beginning of the pandemic, 40% of MSPs said they expect to reduce their growth projection by at least 10%, according to the survey.

Overall, nearly 40% of MSPs reported annual revenue of at least $2.5 million. Most MSPs have been able to continue to generate revenue during the pandemic because they were designated essential business services that enabled many organizations to quickly transition to working from home.

Less clear is to what degree increased reliance on MSPs during the pandemic will translate into multi-year services contracts. Prior to the pandemic somewhere between 15 to 20% of all IT consumed was delivered via a managed service. That percentage in the months and years ahead could rise to as much as 50%, says Rob Rae, senior vice president of business development at Datto.

“MSPs are still the fastest-growing segment of the channel,” says Rae.

The pandemic has also seen an increased dependency on cloud services among MSPs, notes Rae. The survey found that 57% of MSPs expect the use of on-premises servers for critical applications to decline over the next three years.

Less surprisingly, the Datto survey also finds cybersecurity is a top concern for 34% of the MSPs surveyed.

As IT environments become more complex, Rae says it’s become more cost-effective for MSPs to rely on cloud service providers even though some of those providers now offer managed services of their own. The difference is most end customers don’t want to negotiate contracts with five or more vendors providing managed services for a specific platform when a dedicated MSP will provide access under a single contract for all the services consumed, says Rae.

In addition, a traditional MSP is also going to provide more personalized support services, adds Rae.

In many ways, MSPs have always experienced countercyclical growth during a downturn. The challenge and opportunity for MSPs now is to make sure whatever growth is experienced in 2020 doesn’t prove fleeting in 2021 and beyond.