More Evidence Recurring Revenue Drives MSP, VAR Profits

Managed services are driving growth and profitability in the channel more so than other products and services, according to new research from the The 2112 Group for Intronis MSP Solutions by Barracuda.

Nearly two-thirds (64 percent) of channel partners surveyed for the first State of North America Managed Services study said recurring revenue from managed services was the top contributor to their growth in 2016. Only professional services were also cited by a majority of channel partners (58 percent) as a growth driver. Thirty-two percent cited software as a growth driver, 27 percent named hardware, and just 15 percent said cloud computing.

“Recurring revenue is the catalyst for market relevance, business viability and growth,” said the report. “Companies that don’t have solid recurring revenue models will find themselves at a competitive disadvantage, playing catch-up with everyone else – at best.”

The study also found that the average channel partner earns up to 30 percent of its revenue from recurring revenue. Only 6 percent of respondents reported no managed services revenue.

by Ashley Smith

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