IT Glue finds that cybersecurity, second wave of shutdowns key issues for industry
The coronavirus outbreak, which has hit the global and U.S. economies hard over the past couple of months, did not spare MSPs, which have seen revenue fall amid pandemic-related shutdowns as a growing number of clients are unable to pay for services, according to a new survey.
The Lowdown: In addition, MSP concerns have sharply shifted, with key issues now being cybersecurity, customer churn, price pressures, and a second lockdown, the survey by IT Glue – a Kaseya company – found.
The Details: IT Glue in May surveyed more than 500 MSP professionals, following up a survey of 1,500 professionals in February, just before the COVID-19 crisis took hold in the United States. The responses touched on everything from technology to head count to operations and found that while the pandemic is impacting their businesses, MSPs also have opportunities to bring value to customers as businesses reopen in the second half of the year.
Some of the key findings from the survey released Monday include:
> Bottom lines: About 51% of MSPs said monthly revenue has decreased due to the shutdowns and 29% said their accounts receivables have increased, indicating that more clients are unable to meet contractual deadlines for payment.
> Second wave: Almost three-quarters of MSPs (74%) are concerned about a second quarantine in the fall if there’s a spike in coronavirus cases.
> Changing concerns: The top issues cited by MSPs in the February survey were inadequate time for completing work (54%), the inability to find good technical employees (53%), changing technologies (32%), and a lack of information sharing (27%). Since the start of the pandemic, the concern over security jumped from 27% to 50% in the May survey, driven by a significant increase in cyberattacks.
> M&A: Interest among MSPs in mergers and acquisitions already was on the decline before 2020, though 52% in February said they were at least somewhat interested in buying or merging with another MSP, a drop from 62% in 2018. In May, only 37% of MSPs said they were interested in M&A activity, which means that while consolidation will continue, the pace is uncertain.
The full report can be found here.
The Impact: There were some encouraging signs and warnings for MSPs in the coming months, according to IT Glue’s report. The economy will remain unpredictable during the pandemic, but MSPs traditionally have had a lower turnover rate (14% in the February survey) than other sectors of the IT industry (42.2% pre-COVID-19, according to the Bureau of Labor Statistics), which bodes well for their ability to retain talent.
In addition, 36% of respondents in May said customer churn is a high concern, driving the need for MSPs to expand their service offerings to demonstrate value to clients. The survey also showed the need for MSPs to diversify and rely less on specialization. Though specialists in 2020 reported slightly higher revenue than generalists, in a volatile moment like this, relying on a single industry can be dicey. For example, MSPs specializing in retail and hospitality have been hit particularly hard during the pandemic.
The Buzz: “While no business is fully recession-proof, MSPs are uniquely positioned to drive value to customers and thrive during economic downturns,” said Nadir Merchant, general manager of IT Glue. “This year’s survey shows that the shift in priorities to a now greater concern for cybersecurity, compliance, and customer retention means MSPs have an opportunity to serve as a guide to their small-business customers. They are the epicenter for delivering critical IT services that not only help to maintain the viability of many companies during times of uncertainty and volatility, but will enable businesses to emerge stronger from these trying times.”