Results of a new survey released last week contained both positive and encouraging news for channel partners who focus on managed services or will soon do so.
The global study, commissioned by Cisco Systems Inc. and conducted by research firm Canalys, indicates that despite global economic uncertainties, the projected outlook for managed service providers (MSPs) indicates a 12.7 per cent increase in growth this year, reaching a total value of US$472 billion.
It also found that upwards of 56 per cent of channel partners are expecting revenues from cybersecurity managed services to grow in 2023.
Alexandra Zagury, vice president of partner managed services and as-a-service sales at Cisco, said, “customers are integrating more technology into their operations, and they expect their IT partners to provide agility, value and flexible consumption models to efficiently manage their growing and complex technology needs.
“The evolving ecosystem of IT partners selling managed services is adapting to meet customer needs and challenges by finding ways to modularize and package what once were customized solutions. We anticipate more innovation and specialization from channel partners through managed services that offer distinct business outcomes and exceptional experiences.”
Robin Ody, senior analyst at Canalys, said, “managed services are the force driving the global IT industry’s adaptability and growth. Our research underscores the substantial potential for companies selling managed services, opening up diverse avenues for them to thrive in a post-pandemic era.”
The study reveals that that in June, 35 per cent of channel partners said they expect growth of “at least 20 per cent in their managed services business this year. This represents a significant increase compared to the 27 per cent reported in 2022 and points to a rapid update of managed services by organizations of all sizes.”
There is, it notes, a pressing need for cybersecurity as “organizations across the globe contend with a rapidly evolving threat landscape. This challenging landscape, in addition to a global shortage of cybersecurity and IT talent, has prompted many organizations to turn to partners in managed services for their technology expertise and support.”
A key focal point for Cisco in Canada and elsewhere is the small-to-medium-sized business (SMB) market, an area that was the subject of a recent media and analyst briefing that focused on the company’s go-to-market strategy in this specific sector.
The company defines as an SMB as any organization that purchases up to US$200,000 worth of Cisco services or equipment during a three-year period, or up to US$50,000 a year.
Among the speakers was Andrew Sage, vice president of global distribution sales at Cisco, who said that the company intends to invest heavily in it because “we think there is something very special happening.”
That something special, he said, is that SMBs, instead of “hanging on as best as they can” when it comes to technology investments that involve the purchase of servers, the buying of licenses, and custom programming that was complex and difficult, can now turn to an MSP.
“With cloud and SaaS, that is no longer the case, they’ve got access to applications to automate every part of their business and to differentiate against their competitors, whether it’s basic things like ERP, or CRM, or whether it’s more advanced applications of technology, like a custom AI or analytics application that’s written in one of the web scalars clouds, this is easier for them to do now than ever before.”
It is, said Gage, entirely partner led and one of the fastest growing segments in terms of revenue, so much so, “that we think there is almost a US$30 billion opportunity for us and that is focused on those customers we know are transitioning to the cloud and SaaS and using technology to transform their business.”
The SMB space, he said, “is a very big business for us. It is growing in double digits, and is one of the consistently fastest growing segments at the company, contributing a lot to Cisco’s growth.”
As for what is happening in this nation specifically, Erin Gertner, vice president, Canada partner organization and SMB sales at Cisco Canada, said that MSPs play an “incredible role in the SMB market.
“The study reinforced why we’re investing in this space. We have seen a huge uptick in our partners making investments in managed services. If you look at the study, findings show that the managed services market is significantly outpacing the traditional IT industry.
“The Canadian market is unique in that it is so SMB-dominant. Our partners recognize that opportunity, and recognize the opportunity to step in and bridge that skills gap for SMBs.”