Managed services is best growth model says channel study

Three-quarters of European channel partners in a recent study are saying that the managed services model is their best chance of growth in the coming period. There are still a lot of questions and some confusion especially about GDPR and compliance says Jason Howells, EMEA Director at Barracuda MSP which commissioned the survey.

Barracuda MSP which rebranded last month from Intronis, has invested heavily in new tools and creating assets for the channel, he says. “The aim is to simplify it as much as possible,” even as more products are added to the portfolio.

For the channel, he says, it is all about going on a journey, not just ticking boxes as some vendors try to do. While the MSP is in a stronger position, it needs help and education, particularly as the sale is not just about IT, but also involves legal, compliance and business processes.

Barracuda MSP was one of the sponsors of the Managed Services and Hosting Summit in London last week and reported good conversations at the event, very much echoing the findings in this study, he says.

Barracuda MSP has had success, particularly in the UK and working with distributor CMS; he now looks to extend this model across Europe in the next 6-12 months. “We have exceeded expectation here and have the focus, so will replicate the model in other territories.”

“It’s logical that mounting security threats, increased European Union security regulations, and the on-going skills shortage will alert businesses to turn to managed service providers to close the gap in their IT needs. By some estimates, the GDPR alone will cause pan-Europe security spending to increase by as much as €2.8bn annually.”

Although channel partners are split (50%) on whether Managed Services margins are increasing, according to the findings, channel companies that identify as MSPs exhibit the best recurring revenue and profitability performance. The majority (60%) of partners also agreed managed service prices are increasing.

Nearly all (91%) channel partners in this particular survey are taking advantage of the market conditions, offering some form of managed services and earning at least 10% of their revenue from recurring revenue engagements.

He added, “With security and cloud services as the underlining catalysts, this study is further evidence that the recurring revenue model will eventually permeate all aspects of the European channel. Whilst the market is rife with opportunity, solutions providers that don’t soon have solid recurring revenue models in place will find themselves at a competitive disadvantage.”

Report available here