Break-fix is back, Datto MSP report claims

“The traditional break-fix model is evolving, and it represents a gateway for MSPs to secure new business,” Kaseya CEO Fred Voccola says

The break-fix model on which many MSPs cut their teeth "is back", Datto has declared, after its annual MSP survey found the revenue respondents generate from break-fix is rising.

Some 35 per cent of revenues generated by those questioned for Kaseya's Datto Global State of the MSP Report were generated by break-fix and project-based services, up from 24 per cent a year earlier.

Break-fix not broken

With many MSPs starting life as break-fix IT support providers before evolving towards to more of an ‘all-you-can-eat' managed services model, Datto flagged the increase in break-fix revenue as the report's "most surprising finding".

Break-fix has typically reflected MSPs having flexibility built into their contracts to charge extra for projects that fall outside of their normal responsibilities, while others use it for legacy clients that have not been converted over to managed services, Datto said. The increase in break-fix could also be attributable to a shift to new business opportunities, it added.

"Break-fix is back. It has re-emerged as co-managed services, which enables MSPs to get a foot in the door with larger business by focusing on a specific IT challenge," Datto stated.

"This scenario validates something we're hearing directly from customers on a daily basis. The traditional break-fix model is evolving, and it represents a gateway for MSPs to secure new business," Kaseya CEO Fred Voccola (pictured) added.

Talking to CRN, Christopher McKie, director, product marketing, Datto, a Kaseya Company, expanded on this point, saying that the need for break-fix services is growing for "various reasons".

"There are more connected devices in use today because of the digital transformation, and this continues to grow," he explained.

"Today, IT must deal with more inter-connected applications, resources, and services, which creates dependencies that can be fragile if not maintained, or have a domino effect where one goes down, business grinds to a halt. Tool sprawl and increased complexity are real issues that drive more break-fix demands.

"We also have tools that monitor tools, and new solutions that must be in place for IT operations to run successfully. Additionally, the IT environment has evolved to support hybrid workers. The perimeter has evaporated with more tools and systems being managed remotely, further increasing the chances of something going wrong."

Mapping the MSP market

Less than 20 per cent of the 1,800 MSPs surveyed were Datto partners. Some 36 per cent reported revenues of between $1m and $5m, 32 per cent turned over less than $1m.

Cloud-based infrastructure design and management was the top product or service offered (83 per cent), followed by office productivity software (83 per cent), BCDR (79 per cent), networking (79 per cent) and technical support/helpdesk (77 per cent).

Collaboration software was seen by those questioned as the biggest growth hotspot (26 per cent anticipated growth), followed by storage design and implementation (25 per cent), incident response and forensics (24 per cent), BI or analytics software (23 per cent) and endpoint threat detection and response (22 per cent).

The MSPs survey ranked competition as their biggest challenge (with 29 per cent picking it out), with revenue growth and profitability tied in second place (on 28 per cent).

"For the second year in a row, the Datto Global State of the MSP Report shows that our partners are worried about the competition," Voccola said.

"This comes as no surprise. The pandemic led to an increase in need for IT services and produced savvy customers who like to shop around. MSPs have had to evolve to keep pace with the competition."