AMI News

Managed Service Providers (MSPs) On Path to Deliver $1 Trillion in IT Value

Technology Managed Services

October 18, 2017 – New York, NY
AMI-Partners’ 2017 annual worldwide tracking study of the global MSP market indicates MSPs are aggressively gaining share of small and medium businesses (SMBs) and large enterprise IT budgets by providing an ever-expanding portfolio of technology and business-related managed services.

This exceptionally comprehensive study – conducted with 950 MSPs across Americas, Europe and Asia Pacific – details how MSPs are transforming, managing, and growing their businesses, while delivering increasing value to their customers by partnering with a broad array of hardware, software, tools and services vendors. As a result, by 2021 MSPs are expected to deliver 25% of the $4 Trillion that SMBs and large enterprises will spend on IT products and services globally.

img

Expanding Solutions and Vertical Industry Coverage

“MSPs have quickly evolved their offerings from simple storage, security, and computing power to higher margin and premium managed services that include e-discovery, business continuity, cybersecurity, applications management, analytics, IoT, big data, and artificial intelligence, among others,” said Deepinder Sahni, SVP AMI-Partners.

“Those MSPs winning and gaining share are more in tune with their customers’ business challenges, especially vertical industry-specific issues,” said Andy Bose, CEO AMI-Partners. “This is paramount, for highly regulated industries, such as Healthcare and Finance, where customers demand customized security, disaster recovery and compliance controls,” Bose continued.

Partnerships with Technology and Tool Vendors Key to Success

Despite rapid growth, MSPs operate a complex business model – one that relies on multiple IT solutions, platforms, and service delivery and management tools from a myriad of technology partners. This model requires constant new learning to stay abreast of the technology evolution. The typical MSP uses over 11 different tools to monitor and deliver managed services, and may partner with upwards of 15 individual technology and platform vendors to architect tailored solutions for their customers.

As a result, MSPs are highly selective and prefer working with technology and tool vendors that can meet their selection criteria. This includes a mix of product capabilities and marketing programs that can drive differentiation, business agility, and enhanced customer experiences.

Additional insights provided by AMI’s 2017 WW MSP Study highlight the VAR-to-MSP business transformation currently underway. Small and mid-sized VARs are in the midst of transforming their businesses into the MSP model. The study indicates that upon planning and launching managed services, it takes around 12 to 14 months on average to attain profitability.

MSPs and their technology partners can leverage the rich insights from this study to better position themselves for success in this quickly changing technology landscape. Key steps VARs need to systematically execute, along with various KPIs they need to watch in this business transformation, are highlighted in AMI playbooks based on insights from this study.

Moreover, AMI’s 2017 Worldwide MSP Study provides global, regional, and country-specific insights and analysis, including market sizing for a comprehensive set of managed services, broken out by vertical industry and employee size segments.A preview of this study, various deliverables and methodology can be downloaded here.

For more information about AMI, or our global SMB coverage, or to arrange a complimentary webinar call 212 944 5100 or e-mail ask_ami@ami-partners.com.

BREXIT puts $7billion in UK SMB ICT spending at risk

Technology Security BREXIT

July 20, 2016 – New York, NY
According to AMI’s Global Market Model (GM), based on extensive annual tracking of UK’s small and medium sized businesses (SMBs), these businesses were projected to spend $61 billion on ICT products and services by 2020, up from $45 billion in 2015, a 6% CAGR. As these businesses navigate Brexit, our initial analysis suggests up to $7 billion (or 5%) of total ICT spending slated to occur during the 2015-20 time-span could be wiped out. Security-related spending - $1.8 billion in 2015 and $2.0 billion in 2016 – is expected to hold steady as businesses ensure – with help from their channel partners – that all data assets are fully secure and compliant during this transition.

2016 and 2017 will see close to flat year-over-year growth in SMB ICT spending, which will pick up later half of 2018 as businesses work through the full cycle of this event.

img

Datacenter Infrastructure Market in the Bull’s Eye

Brexit will cause disruption across a broad spectrum of ICT categories as UK SMBs take pause, but the following will be key areas of impact:

1.Datacenter-related spending will likely slow down as the financial services sector – the biggest customer for UK data centers – undergoes geographic reorganization. A fair amount of financial services businesses will likely relocate to mainland Europe. Per AMI’s GM, there are close to 50,000 SMBs in the financial services sector, and account for $3.5 billion in annual ICT spending. Further, EU businesses in other vertical industries will now move their data to local datacenters, further impacting the UK based infrastructure market.

2.Any hiring freezes will negatively impact cloud-related spending, as businesses wait to subscribe to more SaaS/IaaS seats. AMI’s 2015 SMB survey showed over 45% planned to hire in the next 12 months, but we now expected no more than 15-20% to follow through on their intentions. Over 0.5 million UK SMBs are presently using cloud based e-mail, another 165,000+ using productivity, and almost 200,000 firms using CRM, for example. Total SMB cloud related spending stood at $8.3 billion in 2015, and was projected to more than double by 2020. Post-Brexit, we may expect total cloud spending within reaching distance of $15 billion by 2020.

3.The automotive sector could see a significant slow down – the UK exports over $45 billion of autos to the EU and imports about the same amount from the EU annually. Auto and parts dealerships will likely experience job losses while tariffs and related rules and regulations are worked out. Consumer could delay purchasing new cars as questions regarding parts and service availability bubble to the top, not to mention skilled auto mechanics that are not UK citizens will likely need to relocate as well.

Yet some sectors and ICT categories will continue to hold up in the midst of this storm, said Deepinder Sahni, Sr. VP at AMI-Partners.

Professional and ICT-Related Services and Security Solutions Stay Resilient

“SMBs in the business of helping clients navigate and transition through the Brexit uncertainty will do well – professional and personal business services, including law and tax firms, real estate, ICT services, and IT security/compliance vendors”, said Mr. Sahni. Businesses across the board will need a wide range of services – from relocating offices to checking the validity of their trademarks and contractual terms across borders. There are over 600,000 SMBs in the UK services sector and collectively account for over $20 billion in annual ICT spending. We expect these businesses to hold up even as they have to navigate the larger macro effects of Brexit.

IT services in high demand will be tied to establishing compliance around data residency, securing IT equipment and data assets in a fluid environment, ensuring cloud service provider datacenters are legally compliant, software licensing terms are valid in the country the software is being used, among others. ERP software vendors will need to ensure cross-border documentation and rules are modified and communicated out to their UK/EU SMB customers. Clearly, this is a high cost for businesses to pay, but channel partners providing such services will be extremely busy over the entire duration of this transition. IT service and support consumed by UK SMBs in 2015 amounted to $11.5 billion, growing at a CAGR of 5% to 2020.

ICT Vendors Can Leverage This “Moment of Truth”

It is imperative IT vendors quickly develop their playbooks and put them into action via their channel partners. SMBs will be looking for answers on the ICT front and calling their channel partners for advice. According to Mr. Sahni, “Channel partners will need clear guidance from vendors on communicating and executing transition roadmaps for their customers. While nettlesome, Brexit provides a “moment of truth” in the customer journey – an opportunity for ICT brands to show their customers that they care and are up to the challenge.”

AMI is updating the Global Market Model (GM) to break out the impact of Brexit across 100+ individual ICT categories. This impact will be further delineated across individual EU countries, 19 vertical industries and 8 employee size bands encompassing all small and medium sized businesses. AMI Trackers will further actionable go-to-market insights.

For more information about AMI, or our global SMB research, call 212 944 5100 or e-mail ask_ami@ami-partners.com.