New study finds managed IT security services as growth catalyst for MSPs

Recurring revenues, especially those tied to managed IT security services, are the primary catalyst for market relativity, business viability, and growth according to a recent study from Intronis MSP Solutions by Barracuda and The 2112 Group.

The State of North America Managed Services research, conducted in May 2017, found the average channel partner earns up to 30 percent of its revenue and as much as 20 percent of its profit from managed services. Furthermore, managed services are identified as the greatest growth driver for any channel company, outpacing even professional and value-add services in growth contributions.

Key Findings

  • 64 percent of the channel organizations surveyed cite managed services as their best growth drivers
  • More than half of the respondents say managed services prices and profits are increasing
  • Security services are the biggest driver of managed services adoption
  • Only 15 percent currently offer security services, but 62 percent are planning to add those services in the next 12 months

Security: A Growing Service Opportunity

The State of North America Managed Services report identified managed security services as one of the most promising growth areas for channel firms. End-users — from SMBs to enterprises — face a myriad of digital threats. If not managed, these threats could disrupt their operations, cost untold amounts to remediate, cause damage to their reputations, and in extreme cases drive them out of business. For example, the recent NotPetya ransomware attack hit FedEx and Nuance Communications, and both organizations are still dealing with fallout, such potentially permanent damage to some systems and a negative impact on profits.

Although the opportunity for channel companies to fill this void is undeniable, only 15 percent of the channel companies surveyed offer some form of security services today. Furthermore, few are offering comprehensive suites of security technologies, instead providing point solutions that are tangential to their core offering including firewall and perimeter security, security help desk, data loss prevention (DLP), backup services, and security antivirus. According to the study, more sophisticated services, such as security policy management, incident response and remediation, security information and event management (SIEM), and cloud services are offered by less than 10 percent of service providers.

Data Recovery Services Remains Largely Underpenetrated

While cloud-based and managed on-premises backup services get attention given the transition away from tape libraries and local hard drives for better data recovery and business continuity, backup — the mainstay in the managed services repertoire — remains largely focused on getting a backup done instead of being able to recover the data. As part of the study, we found that only 30 percent of MSPs offer data recovery services, demonstrating that backup services, especially with the extension of security, still have headroom for growth.

The North America Managed Services report was conducted via an aided-response survey that took place in the first half of 2017. The study sampled 201 qualified providers of managed services in the United States and Canada.

Visit to download a free copy of the full report.

Executive Takeaways

“It’s important to note that 62 percent of those we surveyed are either planning to add security services or expand into security within the next 12 months. And, of those who already offer security services, many are expanding the breadth of their data protection portfolios, considering multiple technologies to combat complex threats and meet the data protection requirements of their clients.”

— Lawrence M. Walsh, CEO and Chief Analyst, The 2112 Group

 “Managed services is the norm now, but many IT providers are still just dabbling with it. They need to do more than that if they want to see the real benefits of recurring revenue, but they don’t need to make the change all at once.  Barracuda’s goal is to make this transition easier given our reseller heritage and dedicated MSP group. We’re living in a hybrid world now, and service providers need partners that can help them thrive in it.”

— Brian Babineau, senior vice president and general manager, Intronis MSP Solutions by Barracuda

“This survey reinforces my daily conversations with trusted partners — they want to work with a solutions provider that embraces changes in the IT landscape. Whether it’s cloud computing, managed services, or new offerings available for resale, a smart channel organization recognizes changing market conditions and adapts accordingly, and organizations that aren’t doing this risk being left behind.”

— Michael Hughes, senior vice president, worldwide sales, Barracuda

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