In August 2019, CloudHealth by VMware commissioned Forrester Consulting to evaluate the challenges, obstacles, and opportunities facing Managed Service Providers (MSPs) today—and how multicloud will impact their business strategies moving forward. The result? An in-depth study that revealed the top challenges MSPs are facing in the market, including what they can do to secure a successful future.
The study found that MSPs are beginning to enter Phase 2 of their multicloud journey, and they expect their cloud offerings to drive a 40% revenue increase over the next two years. However, while MSPs are aware of the needs of the modern tech buyer, they still face customer retention and skill gap challenges that prevent them from delivering solutions at their fullest value; nearly 80% of MSPs report that challenges with multicloud management are impacting their ability to provide services to clients.
MSPs face these two main challenges for multicloud success
- Finding and retaining customers. As the cloud market grows increasingly saturated with vendors, it’s becoming more difficult for MSPs to achieve a large share of the market. 74% of MSPs cite obtaining new customers and 79% of MSPs say retaining customers as two top business challenges at their organization, a result of both an uneducated marketplace (where businesses remain unaware of available service offerings) and a sales organization struggling to understand new types of business and technical buyer(s).
- Maintaining talent and skills. Staffing the right kinds of skills to support a multicloud environment in-house is challenging—in fact, 80% of MSPs lack of technical skills impacts their ability to offer specific cloud services. As the cloud continues to grow and expand, businesses will rely on MSPs more and more for cloud guidance, meaning business success is dependent on how well this is prioritized by MSPs.
One of Forrester Consulting’s many recommendations for MSPs focuses on embracing Phase 2 of multicloud. In order for MSPs to win customers and retain internal talent, they must tackle multicloud head-on, and avoid running in the other direction. This requires MSPs to adjust, and in some cases rewire, a lot of processes already built into their operational DNA.
The study also emphasizes the important role MSPs play in educating the market on the full breadth of benefits and opportunities multicloud provides—even saying that success in its fullest potential can’t be reached unless the market is aware that those opportunities in fact exist (and that MSPs can offer accompanying services and support).
Where do MSPs go from here?
The MSP community no-doubt faces numerous challenges on the horizon: the emergence of new tech buyers, the struggle to find (and retain) talented and agile teams, and the difficulty of creating an incredible experience for customers throughout their lifecycle. But for MSPs who are willing to embrace change, and who can see these challenges not as obstacles but as opportunities for growth, market leadership and success is ripe for the taking.
Forrester’s in-depth study yielded several important recommendations for MSPs, a few of which are previewed below:
Specialize in new areas that drive value. The new buyer is focused on business outcomes and will push an MSP to understand their specific circumstances. Technology discussions will be centered around the buyers’ department, sub-industry, geography, size of firm, and the layers of the tech stack that are involved in driving the right outcome. MSPs will need to deliver on the cloud, security, and data initiatives surrounding these buyers’ needs.
Take a comprehensive approach to cloud solutions. New buyers are increasingly looking for multicloud solutions that drive ease of use, flexibility, business continuity, insights, and more. MSPs need to provide these solutions (and more) if they expect to solve their customers’ ever-growing list of challenges—and if they want any chance of retaining their business in the long run.
Invest in partnerships as a strategic differentiator. There’s a lot to tackle in the multicloud universe… it’s vast, constantly changing, and most certainly requires the assistance of others to reach success. MSPs shouldn’t shy away from partnerships with vendors and industry professional services firms to help deliver multicloud services to customers. Today’s buyers are demanding increasing levels of specialization, something MSPs should seek to embrace with the help of strategic partners rather than attempt to go at it alone. MSPs looking to succeed must prioritize partnerships as a competitive advantage, building and nurturing relationships with adjacent, non-competitive firms.
Tackling customer retention, talent acquisition, and innovation in the new era of multicloud will require MSPs to adapt. In some cases they’ll even need to scrap the business and operational processes they’ve relied on in the past to be successful since they will no longer suffice.
As one Director at a large technology company stated, “If you stop innovating and searching for new solutions, you will most definitely fail.”
For the comprehensive list of recommendations for MSP success, download the full study.