4 takeaways from Kaseya's 2024 MSP Benchmark report

Amidst rising competition, MSPs focus on cybersecurity, integration, and automation to drive efficiency, study found

The managed services industry is experiencing heightened competition and customer demands, leading to challenges in acquiring and retaining clients, a new survey by Kaseya found.

The 2024 Kaseya MSP Benchmark Survey gathered answers from 984 respondents from 35 countries around the world.

Of these, a majority (65 per cent) identified themselves as MSPs, about 12 per cent as MSSPs, nine per cent as network- and datacentre-focused, and three per cent as break-fix shops.

It found that while M&A activity is subdued, MSPs are focusing on organic growth strategies, such as offering new services and improving sales and marketing efforts.

Cybersecurity remains a top priority, with most respondents reporting successful management of cyber threats.

"This is driven by two factors: the escalating threat landscape, and the persistent challenge proving high quality security services across all of their clients," explained Mike Puglia, GM of security products at Kaseya.

"This year, we've witnessed a heightened sense of urgency compared to previous years. Even those MSPs who demonstrate proficiency in cybersecurity wrestle with the strategic dilemma of resource allocation. Our research underscores the imperative to bolster efforts to meet the rapidly growing market demands."

However, inefficiencies arising from lack of software integration and automation are prevalent, prompting companies to prioritise solutions that streamline operations and enhance productivity.

Kaseya's report highlights the industry's evolution, emphasising the importance of adapting to changing market dynamics and leveraging technology to drive growth and customer satisfaction.

CRN has combed through the figures and highlighted the key findings from the research.

Increased competition and hiring

The survey found that the MSP industry is increasingly saturated with providers, which is heightening competition.

Customers are demanding better services and solutions making competition for customer acquisition and retention tougher.

Providing the right products and services and developing targeted marketing strategies is becoming more important than ever.

More than a third (36 per cent) of respondents said that acquiring more customers is the top challenge for MSPs in 2024. They said increased competition and a lack of dedicated sales reps are the biggest barriers to acquiring new customers.

A tepid year for M&A

Kaseya reports that amongst the respondents more than half (55 per cent) said they do not have a plan to acquire or sell, while only 11 per cent identified it as their primary growth strategy.

The survey found that rather than focusing on M&A, service providers are placing a strong emphasis on organic business growth.

The majority of respondents (61 per cent) said they intend to drive growth by providing new services to both new and existing clients.

Just over half of participants (53 per cent) indicated that their focus is on increasing sales and expanding their roster of clients, reflecting a strategic effort to increase revenue and expand market share.

MSPs are also recognising the importance of sales and marketing in driving their business expansion strategy. About 49 per cent of MSPs are considering starting or improving their marketing efforts.

Revenue generating machine: Cybersecurity

78 per cent of respondents said they consider cybersecurity a top IT challenge, highlighting the importance of investing in this area for growth.

And with clients adopting AI and machine learning, implementing these technologies will undoubtedly be challenging, according to 37 per cent of MSPs.

As more businesses decide to switch their legacy systems to cloud and SaaS solutions that are faster and more flexible, about 32 per cent of companies surveyed are witnessing a rise in these activities.

And 73 per cent also said that revenue in this category went up.

While cybersecurity continues to be an important area of focus, some data also paints a positive picture of how MSPs have successfully responded to cyberthreats and established a strong cybersecurity posture for their clients.

In fact, 62 per cent of respondents said that less than 10 per cent of their clients experienced a cyberattack this year.

Integrating and automating for the future

Another predominant challenge affecting the workload of MSPs was found to be the inability to fully utilise their software solutions.

Respondents expressed frustration with the time spent switching between applications. This lack of efficiency costs time and money, leading to decreased productivity and customer satisfaction.

MSPs reported problems arising from poor integration among their solutions and found that investing in IT management solutions with built-in automation and integration capabilities would be a priority going forward.

About 85 per cent of those surveyed unequivocally assert that automation is a must-have for them.

Automation was found in the report to be the key to unlocking the next stage of growth - the road to higher efficiency, productivity, improved workflows, streamlined operations and more.

In today's hybrid and diverse work setting, the ability to consistently deliver quality services, even to remote clients, can be a game changer, setting MSPs apart from the competition.

Timely and effortless patching is also crucial, not just for enhancing security but also for optimising the functional efficiency of their IT infrastructure.

The positive sentiments are evident when it comes to integration as well. Both automation and integration must work hand in hand to deliver results. While automation increases efficiency, integration helps to create a unified system.

Both work together to create a more streamlined and efficient workflow.

Almost 67 per cent of the executives and 58 per cent of technicians agree that integration between core MSP applications is very important for their work.