The channel expert shared what he sees coming for MSPs over the next decade, 18 months, and everything in between.
Jay McBain is always an enticing addition to any conference, and his keynote on NerdioCon 2022 is no exception. In a rapt audience, the Forrester analyst shared his thoughts on a variety of topics. This includes where the market is going, shifting business models and how MSPs can take advantage of the latest industry trends.
McBain began the session by discussing what’s on the horizon for MSPs over the next 10 years, over the next 18 months, and everything in between.
The Economic Opportunity
“In terms of numbers, if we look at the global economy, every cent spent per country is approximately $ 86 trillion,” McBain said. “The technology industry in terms of what businesses and governments spent last year was 4 trillion, representing just over 5%. We’re the only industry that’s doubling in size, later in this decade. It’s the fastest growing industry, and that’s why we do what we do. ”
McBain said it is very easy for anyone to call themselves an MSP. By his standards, stores need to run somewhere around 30% of their repeat business. They need to use some professional tools. In other words, providers need to have some structure around their businesses.
“We know there’s a long tail here,” McBain said. “If you want to approach listings like MSP 501, we’re talking about $ 10 million in revenue. By our end, we expect 212 million once all pennies are counted, and 11.6% growth. This industry is now 22 years old. When the pandemic hit, for the first time we called the growth rate less than double digits. We walked into 2020 at almost 90.4. The pandemic essentially identified us as vital workers, because managed services embraced everything and the future of work. So this growth rate, we expect to go to double digits – at least for the foreseeable future. “
It all rolled into a couple of major trends. McBain breaks them down in several different ways that he thinks will be triple digit growth opportunities for managed services over the next two years.
Moving Business Models
More than three in four (76%) CEOs think that their current business model will not be recognized for five years. “Ecosystems” is the number one reason why.
“If you sell pharmaceuticals, cars, manufacturing products, it doesn’t matter,” McBain said. “You can’t do it alone in this ‘decade of this ecosystem.’ So here’s what’s going on behind the scenes. If you’re a fast growing company right now, and you have anything that is supported by venture or private equity people, that’s what drives this model forward. You don’t need direct sales, you don’t need direct marketing, you don’t need a channel; let your product do all the work. We’ve all seen Zoom explode during the pandemic, and we’ve seen Slack acquired by Salesforce for $ 27.7 billion. Many companies are now raising those software companies millions of dollars – they are product -dominated profiles. We see direct-to-consumers starting to play a bigger role. ”
Partner/vendor relationships are an important element of this. The better the partners work with vendors and the industry as a whole, the more instrumental they become. Not just in the sense of technology, but in driving their business and other parts inside.
Groceries
McBain predicts that, by the end of the day, one-third of the industry will pass through the markets. That rose from zero a few years ago. Consumer habit is coming into space fast.
“Markets are broken in a lot of ways,” McBain said. “But the fact of the matter is, now 64% of our industry doesn’t go directly. And that’s where we’ll start looking at marketplaces and double clicking. I think 20 marketplaces will be responsible for almost 80% of all activity in the marketplace.This is a huge number.By the way, a third of the $ 7 trillion business-multi-trillion dollars-will flow to Azure and AWS and Google.On the SaaS side, they will flow to Salesforce, ServiceNow, NetSuite and others. On the traditional side, it will flow to IBM and SAP, using Oracles. There aren’t hundreds of markets, but I think it’s going to be fine. “
Hyperscalers and Automation
More than ever, partners need to know what makes up their ecosystem, and how they can grow within it. They must understand at a very specific level where they can grow their business, skills, additional packages and skills.
“If we don’t develop the skills to chase these multipliers, we’re going to have a problem,” McBain said. “Why? Because those multipliers have bigger margins, and a lot of companies are coming in now that have successfully cashed in. Take automation, for example. It’s the No. 1 fastest growing sub industry. You’ve seen the hyperscalers that grew to over 50 – it grew to 73. You start to see some examples of robotic process automation.This is something that MSPs know how to do.I worked at Autotask years ago, and I’ve always been fascinated with scripting, workflows, processes and business logic – not to mention all the great things PSA and RMM bring in. Your customers are looking for this level of automation within their own businesses . ”