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Where Does the Managed Services Market Stand Today?

Posted November 6, 2018by Joseph Tavano

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In the last quarter of 2018, it should come as a surprise to no one that the managed services market is changing, and the catalyst for that change is cyber security. This year, market dynamics and emerging trends came to a head to cause meaningful disruption in the managed services in the industry. So, where does the managed services market stand today? To understand that, it’s important to see how we got here.

Why Cyber Security, Now?

Over the past decade, the threat of cyber attacks has grown at an alarming rate, crossing into areas of the public and private sector never seen before. Everyone from the biggest global corporations and governments, down to main street small businesses and grandmas checking email have had to contend with cyber threats. Gone are the days of simple viruses and worms; today’s threats are sophisticated, targeted and far more than just a nuisance. Cyber attacks have impacted energy infrastructure, shut down hospitals and much more. And, they’ve never been more profitable, producing massive sums in anonymous, encrypted Bitcoin ransom.

Clearly, the threat landscape has changed, and will continue to change as more devices are introduced, more processes are automated and more infrastructure is connected. There are more attack vectors to exploit than ever before, and opportunists are seizing this moment to attack them. With the increased threat activity, increased attack vectors to strike and increased sophistication of attacks, it’s clear that cyber security can no longer be considered a “bolt-on” solution in a technology stack. Cyber security is now a full category of services and technology that comprise many functions and features, and span the scope of an entire IT environment—and in the past year, these advanced solutions have quickly become an integral part of every managed services offering.

How Cyber Security is Impacting the Managed Services Industry

Unlike previous shifts in managed services—where new innovations, capabilities and technology drove a change in the marketplace—this shift has been dictated by immediate market forces, moving upwards in the channel and forcing MSPs to react quickly.

An immediate threat requires an immediate response. The need for managed security services is real, and the demand is high—and with a widening skills gap in IT, MSPs large and small are simply unable to go at it alone and build infrastructure to adequately support market demand. Rather, this new landscape has made vendor partnerships lucrative propositions, in that they provide not only advanced, integrated security technology, but the expertise needed to protect their customers in the form of Security Operations Centers, or SOCs.

Further, these solution partnerships allow MSPs to move with the speed needed to go to market fast, which is a significant factor many in the space have never had to consider with previous solutions. The immediacy of cyber security has forced the entire industry to pivot at a rapid pace, and MSPs must do the same, otherwise the consequences can be dire. To wait or ignore this dynamic shift in the managed services market risks losing customers in two ways: either from a security incident at some point in the future or in the coming months to swiftly-adapting competitors who are already offering robust security services.

How Cyber Security is Affecting MSPs

However, market disruption such as the one cyber security represents is far from negative. An immediate threat also creates an immediate demand, and for MSPs, the opportunity for new business, renewed business and upsell business is immense. Right now, an “IT gold rush” of sorts is on, and many are seeking to capture as much of the security market share as possible. This dynamic, combined with infrastructure costs and skills gap deficiencies, is creating three major trends. Many MSPs and solution providers are:

  • Merging, for greater breadth and depth of solutions
  • Acquiring competition, for greater market share and go-to-market strength
  • Acquiring technology providers, to create differentiated consumer offerings with unique feature sets so they stand out in a space that will become crowded fast

Under these shifting sands, the potential for successful MSPs of every size exists, but these businesses will look very different in a very short amount of time. Success lies on two paths; large MSPs will thrive at scale, and cornering larger portions of the market, and small and midsize MSPs will succeed through vertical alignment and niche specialization.

It’s Time to Go-To-Market—What’s Your Plan?

These changes cannot be ignored. Security is here to stay, and it’s essential to stay ahead of the pack at this critical moment. No matter if your business is five years old or 25 years old, the market is continuing to move forward, and the only way to set it up for success is to embrace change, embrace cyber security, and to remember that in this channel, future change and disruption are a guarantee.

 

Discover which forces are driving the security space today:

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Joseph Tavano is Senior Content Marketing Manager at Continuum, with more than 14 years of experience in content creation, content marketing, event marketing, marketing communications, demand generation and editorial across a range of industries. He is the author of several eBooks, blog posts, thought-leadership articles and other marketing and product collateral that enable Continuum partners and IT service providers in the channel to make their businesses stronger and grow their profits. In 2016, he launched the Continuum Podcast Network, which publishes multiple shows every week and reaches tens of thousands of IT professionals every year. A native of Boston, he holds bachelors in English and History from Suffolk University and resides in Salem, Massachusetts.

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