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Market sentiment is high while analysts worry of recession

So, let’s make sense of some more market data, and I’ll start with the sentiment-based surveys.

Wingman Marketing, sponsored by Zomentum, released their 2022 MSP Growth Survey.    For 2022, the percentage of MSPs expecting revenue growth to come primarily from net-new business jumped to 62%.   Seventy-seven percent of MSPs said their current workload is at or over capacity.   Forty-five percent of MSPs said their sales pipelines would sustain the company for six months or longer. However, more than half said their pipelines would support them for less than six months. 

In a study by Hornetsecurity, 93% of IT professionals said their organization is adopting a hybrid of cloud and on-premises solutions or migrating fully to the cloud within five years.

One-half of respondents (51%) said they would be “mostly in the cloud” in five years, with one or two workloads remaining on-premises. Twenty-eight percent said they would remain “mostly on-premises,” with a workload or two in the cloud.

Approximately 29% of respondents said they use hybrid cloud solutions as a steppingstone to a full cloud environment. However, two in three (67%) see hybrid as a final destination for their infrastructure due to workloads that must remain on-premises.

Of course, it’s not easy.  Enterprise Strategy Group’s survey found that 71 percent of organizations now rely on three or more cloud infrastructure providers. A full 84 percent of survey respondents also noted that tracking costs and cloud cost allocation are burdensome and time-consuming, with 61 percent admitting they lack sufficient visibility into which teams own cloud resources. 

Overall, nearly two-thirds of respondents report that the adoption of public clouds has made it more challenging to achieve observability, with almost half of all respondents saying they now consider providing real-time insights into application/infrastructure environments to be a top priority.  

IDC says AI spending will double by 2025.     Gartner, meanwhile, says edge technologies will grow 75% in 2022.      This after 5G was the largest investment in 2021, followed by IoT and Edge technologies.     And that same study says more than half of companies say their board of directors is now among key decision-makers guiding investments in emerging technology, a 

In a forward-looking indicator, the yield gap on 2-year and 10-year Treasury bonds are in danger of slipping below yields on short-term bonds, a relatively rare occurrence known as an “inversion.”  inverted yield curves can reflect a rising risk of economic recession. Analysts and investors closely watch for this early warning sign.   The yield on the 10-year note is now only about a quarter percentage point higher than the two-year note, with many analysts expecting to see the 10-year fall below the two-year sometime soon, which is the inversion. 

Why do we care?

Surveys are helpful to get something of a feeling of “just recently.”      So, just recently, MSPs are overworked, and most have less than six months of the sales pipeline.    IT Pros think the cloud is within five years, but it’s hard to track costs around the cloud and observe behavior. 

And the analysts predict edge technologies – which makes sense linking to what was built, in both cloud and 5G.

This is why I then couple all of that with the indicator of a possible recession, as I want to be realistic about the conditions.   There’s opportunity for sure, particularly those leaning into services around cloud and enabling workers.     Short sales pipe and a possible upcoming recession are worrisome, so be cautious of any who claim the market is fantastic and instead practice smart fundamentals.