The Meriam-Webster dictionary defines opportunity as “a favorable juncture of circumstances.” It’s the perfect description for many managed services providers (MSPs) as 2018 comes to a close with an exciting list of new prospects awaiting them in the new year.
It’s an exhilarating time to be a part of the IT industry. From emerging technologies like artificial intelligence and the Internet of Things to advances in the recurring revenue model that drive healthier cash flows, the channel is alive with opportunity. Of course, an opportunity is meaningless unless you have a plan to take advantage of those prospects.
As Benjamin Franklin said many years ago, “an investment in knowledge pays the best dividends.” Business owners who study the future trends and figure out how to utilize the latest options find themselves in a better position than those who don’t look ahead. MSPs should always have a three to five-year strategy to ensure their business is as relevant in the future as it is today!
What’s involved in a long-term plan? MSPs build their business strategies with a variety of factors in mind, including the nature of the ownership team (conservative or aggressive-minded), available resources, market needs, and customer requirements. Those influences tend to change over time, forcing leaders to adjust their activities, plans, and timelines continually.
Many industry experts, including the CompTIA research team, suggest the next year will be no different when it comes to MSPs being asked to take on new challenges and shift their priorities. Many of those changes will be the result of customer requests, and as in past years, providers will have to figure out how all those “moving parts” fit into their business plans in the coming months. What investments are required to tackle those new opportunities and how will the changes affect their current priorities?
2019 Channel Trends
Which industry development should MSPs pay close attention to in the coming days, weeks, and years? Change is afoot on many fronts, and providers are required to deliver a growing list of services to meet the shifting needs of their small and mid-size customers.
Based on the experts’ predictions, providers should focus on these industry trends in 2019:
1. Explosive growth in cybersecurity
With the increasing commoditization of traditional managed services and the resulting pressure on profits, MSPs must put more emphasis on higher demand (and higher value) offerings. Cybersecurity sits at the top of that list with Gartner conservatively forecasting $170.4 billion in spending by 2022 with a five-year CAGR of 8.5%. Other researchers predicted growth between 10% and 15% per year or more as cybercriminals up their attacks and regulators increase compliance requirements and fines for companies disregarding industry standards and rules.
2. Emerging technologies/ help wanted
Complexity drives business opportunities for MSPs. When technology or a specific process is hard for SMB owners to understand and manage, it increases the value of third-parties who possess that knowledge and those support capabilities. The Internet of Things, with a projected market valuation of $520 billion by 2021 (double 2017 sales) according to Bain & Company research, is one of those high-impact options for MSPs. In the next few years, SMBs are also expected to begin adopting artificial intelligence and virtual reality solutions, as well as drones, blockchain, and whatever new technologies come along.
3. Consultation as a Service
Channel professionals are deriving more of their business revenue from advice and guidance than ever before, according to many industry experts. Some of the most valued areas for aiding the SMB in the future will include:
- New technologies
- Process/workflow improvements
- Technology training
- Policy development and implementation
- Long-term planning
- Emergency response and DR, IT (expansion, new tech, long-term infrastructure improvements), employee training, etc.
4. Increased M&A activity
With venture capital and market valuations at all-time highs, consolidation is expected to remain rather robust in 2019, according to many industry insiders. For those looking to retire or cash out, it’s the perfect time to build and refine exit strategies and enhance their operational efficiencies. Other value-improving options include:
- Strengthen the language and length of client contracts
- Review and refine internal processes
- Improve cash collection methodologies to speed payments
- Automate systems
- Eliminate needless expenses
The most critical part of the equation
Opportunity comes to those who prepare. A lot of legwork goes into building a successful business to take advantage of the latest prospects. Securing cash from new and existing prospects is necessary to fuel growth.
MSPs have to perfect every process, from completing preliminary assessments and signing initial contracts to collecting payment for all services delivered quickly and efficiently. A tight balance sheet, optimized systems, and a healthy cash reserve will allow your company to take advantage of new opportunities that come your way in 2019.
Make it a very successful year. Set realistic goals and focus on your top priorities. With a healthy amount of cash in hand, you’ll be able to invest and focus on the things that make your business better for years to come. If you’re looking to make 2019 the year your MSP tackles your cash flow issues, see the tool thousands of MSPs are using to transform how they bill clients.