Will Your MSP Business Weather 5G Winds of Change?
Decision-makers in the MSP sector would be wise to brace for disruption. The 5G network and other innovations are expected to change the industry substantially.
The digital trade winds appear to be blowing at the sails of Managed Service Providers (MSPs), and industry insiders seem uncertain about the journey ahead.
The MSP sector has reportedly enjoyed an encouraging growth rate of 12.5 percent for more than five consecutive years. Unfortunately, fast-evolving market changes have prompted industry leaders to pivot and rethink their business and sales strategies. In some ways, growth-driven disruption remains a functional problem for any organization. But the rollout of 5G and other advancements are likely to create new paradigms and opportunities for businesses to claim more significant market share.
One of the critical factors for MSPs to expand their profit bandwidth will be secure and determined managed IT services. At 360 Smart Network, our experienced team of professionals delivers innovative solutions to companies in Atlanta, Charlotte, and across the Southeast. These are potential tech industry influencers that could reinvent MSPs going forward.
Increased MSP Consolidation Expected
Perhaps the most significant change to the MSP sector will continue a prominent 2019 trend. Last year, the industry saw substantial consolidation, and reports indicate the equity firms anticipate increased transactions by the end of 2020.
“In Deloitte’s seventh M&A Trends report, we asked 1,000 executives at corporations and private equity investor (PEI) firms for their insight on current deal activity and expectations for the next 12 months,” the report states. “Survey results reveal some moderation in expectations that transaction activity will increase; 63 percent of respondents say that transaction activity will increase somewhat or significantly, down from 79 percent a year earlier.”
In terms of how this may impact the MSP sector, insiders anticipate that small businesses will be swallowed up by larger corporations looking to increase their footprint. These large providers are also expected to cull more services together to offer diverse packages and enticing verticals for enterprise-level clients.
5G Opens Door Expanded Customer Base
It’s difficult to say at any given time that we are in the midst of a technology revolution. That’s mainly because digital technology has been rapidly advancing for upwards of 25 years. It wasn’t long ago that business computers had to be plugged into a sluggish landline connection. These days, examples include businesses opting to shift from onsite systems to Cloud-based connectivity.
And with companies embracing the cost-effective benefits of the Cloud, 5G ranks among the tech industry’s watershed events. Its impact on IoT and others creates a tremendous opportunity for revenue growth. Naturally, that depends on how quickly and decisively MSPs can change course. It may prove critical to shy away from outdated IT services models and replace them with Cloud-based ones that allow providers to bundle more of the things your customer-base values. The 5G rollout, like other Earth-shaking changes in tech, presents a challenge for optimistic outfits to keep pace with more substantial companies or surpass those who fail to integrate 5G capabilities fully.
Automation Augments Workforces
In many ways, shifting to the Cloud and the 5G uptick are leveling the playing field for MSPs. Upstarts can cost-effectively leverage as much Cloud space as they desire, and 5G connectivity may vastly increase market reach. But small and mid-sized organizations may require process maturity to gain maximum leverage. That’s why decision-makers who want to compete for subscribers in the MSP industry have an eye on automation.
“There are a number of taxonomies for depicting the information technology space. Using the conventional approach, the industry market can be categorized into five top-level buckets. The traditional categories of hardware, software, and services account for 56 percent of the global total. The other core category, telecom services, accounts for 26 percent,” according to an IT Industry Outlook 2020 report by CompTIA. “ The remaining 17 percent covers various emerging technologies that either don’t fit into one of the traditional buckets or span multiple categories, which is the case for many emerging ‘as-a-service’ solutions that include elements of hardware, software, and service, such as IoT, drones, and many automating technologies.”
It’s no secret that even saying the word “automation” in staff meetings sends a shiver down the collective spines of workforces. But automation does not necessarily mean that valued employees will be handed pink slips. Automation strategies are expected to augment the existing sales team, and sometimes streamline overburdened customer requests. Automation may also be engaged in billing departments to measure usage-based packages, among others.
There’s little doubt that the strong winds of change will impact the MSP sector due to 5G and other advancements. But shifting business strategies and leveraging innovation are the new normal. Keeping pace or getting ahead requires high-level managed IT, and that is precisely what 360 Smart Networks delivers.