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Technical debt, robotic processes, and the state of Managed Services

Nearly eight in 10 companies took on more technical debt in the last year, while only 6% have taken on less, according to a recent survey.   For 56% of companies, the additional technical debt was necessary to adapt to changing times. Another 48% said taking on technical debt was a deliberate act to capitalize on a new opportunity quickly.  

Consultant Deloitte and tech company Workday surveyed 600 executives globally and found that just 8% of CIOs strongly agree that the role of the IT department is increasingly strategic, that incremental technological improvements are crucial to long-term success, and that their organization possesses high levels of data savviness.

Many IT teams remain held back by stodgy processes: almost half (45%) of CIOs say they need to innovate quicker and 43% are under pressure to create greater enterprise agility.  

Forrester has data pointing to the flattening of the robotic process automation space is leveling — predicting the RPA software market will reach $6.5 billion by 2025, but with the caveat that growth will start to flatten as soon as next year as companies shift to more AI-fueled automation solutions.

According to the 2021/22 Xero State of Small Business report, quoted by iWeb, 65% of small business decision-makers feel technology has become more critical to their businesses since the start of the pandemic.

CompTIA has released their Trends in Managed Services report – quoting the data.

Many MSPs also capitalized on the mass move to remote work, outfitting and managing customer technology networks that were relocated from centralized office cubicles to home offices. Eight in 10 MSPs said their changes in the past two years had had a positive effect. Thus, 53% of MSPs are optimistic or very optimistic about their prospects over the next 12 months.

But not all MSPs had that experience, and their concerns about the future are also reflected in the CompTIA survey results. Between 11% and 14% of respondents said they were either pessimistic or very pessimistic about the state of the managed services market and their own business over the next year. That compares to just 4% of a similar group of respondents who expressed unease about their future in a survey fielded last October.

And, on cybersecurity, A net 93% of MSPs said that the sophistication of cybersecurity is driving change in their business models or will within the next 24 months.

I’ll couple that with highlights from Channelnomics Channel Forecast 2022, citing revenue expectations falling short in 2021.   61% of channel partners polled said they plan to reinvest revenue this year to build new sales capacity. In addition, 45% said they’ll make new investments to improve their marketing expertise.  These are significantly above other growth drivers, such as increasing portfolio offerings (24%) and expanding geographic reach (12%).

Why do we care?

They call it debt for a reason – you do have to pay it back eventually.    There is distinctly room for much more business-linked IT delivery.   On Monday, I outlined a Good / Better / Best approach.   

In Good, actions are tied to SG&A spending.   Better is to focus on reducing costs specifically, connecting IT spend to things in Cost of Goods Sold, bringing operational costs down.  Best is when the tech consulting can tie directly to the revenue numbers and drive growth.

The data here clearly points to that leap – there’s a gap.    Robotic process automation, for example, isn’t useful without that net leap of WHY.      It’s not enough to be good – business leaders will be looking for better or more.  

I’ll note that the “managed services market is amazing” hype isn’t supported by data – there’s an increase in pessimism, not a decrease.   The gap that I focus on is that the difference between the haves and the have nots is widening.