IT Glue, an industry-leading IT documentation company, conducted its annual survey of trends impacting the IT industry and managed service provider (MSP) markets in February. This year, after the COVID-19 pandemic spread around the globe, IT Glue decided to conduct a second survey in May, with the purpose of understanding the pandemic’s impact on the market.
Among respondents in the second survey, which polled 1,500 MSP businesses across more than 32 countries, 51 percent saw a decrease in monthly revenue, and nearly a third (29 percent) saw an increase in accounts receivable – due to more clients unable to meet due dates for payments. However, nearly a quarter (23 percent) saw a decrease in receivables.
Automation Tools Remain a Priority
In the first survey, IT Glue asked MSPs if they intended to switch their professional service automation (PSA) or remote monitoring and management (RMM) tools, and about a third expressed interest. This is a decrease from previous surveys that revealed about 40 percent of MSPs were interested in using new PSA or RMM solutions.
In the second survey, about one-fourth still indicated that they were open to switching, suggesting that MSPs still recognize the importance of these tools, even in tough economic times
MSPs Remain Small Businesses
Although IT spend is increasing, MSPs continue primarily continue to be small businesses. The average MSP business has 20 employees, including about 12 techs. An indication that MSPs are growing, however, is that the percentage of non-tech workers is increasing. More MSPs responding to this year’s survey had workplaces where techs constituted 40% or fewer of their total employees.
MSP Businesses’ Biggest Challenges
One major shift in responses to IT Glue’s surveys before and after the pandemic is in their perception of the biggest challenges they face. In February, 54 percent of MSPs cited lack of time, and 53 percent said difficulty in finding good techs were most significant. Both of these concerns dropped drastically after the pandemic hit; only 20 percent remained concerned with hiring difficulties and even less than that with lack of time. Concerns over cybersecurity threats and customer churn, however, spiked. Additionally, 74 percent of MSPs registered concern over a fall lockdown because of COVID-19, fueled by fears of additional loss of revenue on top of losses experienced during the first shutdown.
Another impact of the pandemic is how MSPs are planning mergers and acquisitions. A combined 52 percent of respondents in February were either actively interested in, or open to the opportunity of, making an acquisition or merger; this number dropped to only 37 percent in May. Likewise, when asked if they were open to being acquired by another MSP, 73 percent of respondents answered no in February, but by May, that number jumped up to 85 percent.
Overall, the economic outlook remained relatively unchanged between the two surveys. Slightly different wording in the question – asked in February about their sentiment on the general economic outlook, and in May about their sentiment on the market’s ability to recover from the pandemic – yielded almost identical results. This seems to suggest that MSP businesses believe their industry view the pandemic as a temporary economic hurdle, rather than a long-term difficulty.
For more insights, download IT Glue’s 2020 Global MSP Benchmark Report: A Pre and Post COVID Analysis.