I may go long today, as next week is full of interviews, and I didn’t want to miss some good stories.
At the Canalys Forum North America, data about the MSP market was shared, including the total value of managed services in North America in 2022, at 190.6 billion dollars, with 81,655 partners delivering managed services in North America. Rapid fire data on high-performing MSPs:
- Pricing of $150 to $200 per user per month
- 40%-plus service gross margin
- Incentives on renewals versus new customer acquisitions
- 30 minutes maximum per support ticket
The opening keynote discussed the changes in the world over the past three years and warned about private equity potentially being the next big bust. It was also noted that U.S. channel growth is expected to return in April 2024. Additionally, megatrends and predictions for generative AI in the channel by 2026 were highlighted: Generative AI, Sustainability, Cybersecurity, and Optimization.
According to a survey by software marketplace Capterra, nearly 3 in 5 companies regretted at least one of their software purchases from the last 12 to 18 months. Buyer’s remorse can be costly, with over half of respondents experiencing a significant financial hit. Misalignment between vendor sales and implementation teams, higher-than-expected costs, and difficulties with onboarding and training were among the pain points cited. Despite the risks, businesses continue to invest in software, with software spending expected to grow 8% in 2024. Hidden costs and the shift to usage-based fee structures contribute to buyer remorse.
A recent study by McKinsey reveals that 50% of CEOs prioritize the creation of new revenue streams through new products, services, or businesses for strategic growth. The report highlights the increasing importance of establishing new businesses that require developing new capabilities. The study also identifies emerging trends in new business creation, such as the focus on data, analytics, and AI platforms, physical products, ‘everything as a service’ businesses, and connected products associated with the Internet of Things. CEOs are venturing into unexplored territory to drive resilient growth, and businesses that introduced multiple new companies experienced significant growth in new revenues.
Accumulating technical debt and allowing cowboy IT practices can lead to increased cybersecurity vulnerabilities and hinder innovation, according to a survey by CompTIA. Technical debt is a challenge for 74% of organizations, while 78% are negatively impacted by cowboy IT and shadow IT. Failure to address technical debt can result in serious problems such as ransomware attacks and data loss. Organizations are prioritizing improving technology processes to reduce technical debt and cowboy IT, focusing on better business-technology connection, customer experience, cybersecurity posture, and compliance with external regulations.
Why do we care?
The last three surveys point right at the value of improving technology processes to address these challenges, prioritizing cybersecurity, compliance, and enhanced customer experiences. The core value of IT services companies. And businesses are still willing to invest heavily in software, albeit with increased caution. Good advice remains highly valued.
I know listeners will be interested in the first data sets for a baseline on their businesses.