87 Percent of MSPs Need to Know More About AI to Meet Customer Needs

Barracuda report shows providers are embracing marketplaces but continue to worry about competition

Highlights: 

• Barracuda’s new global MSP report shows that IT service providers expect 44% of revenue to come from recurring managed services in 2024, up from 34% in 2023.

• Most are planning to introduce around 6 new services on average, and their most successful products are security related.

• 77% of MSPs feel under pressure to offer customers AI insight and tools.

• 92% say cloud marketplaces will be crucial for their organization.

Barracuda Networks, a trusted partner and leading provider of cloud-first security solutions, published The Evolving Landscape of the MSP Business 2024 report, which shows how managed service providers (MSPs) around the world are embracing marketplaces and artificial intelligence (AI) to better meet customer needs, but worry about their lack of knowledge about AI and its applications.

Also Read: Understanding the Role and Mechanism of Encryption in Data Security

Barracuda’s seventh annual MSP report, undertaken together with Vanson Bourne, features the findings of an international survey of 700 MSP organizations. The report is being released alongside Barracuda’s Global MSP Day, which includes virtual and live events for MSP partners in North America, Europe, and Asia Pacific.

The findings show that MSPs continue to shift from project-based customer support to a recurring services model. This year, MSPs expect just under half (44%) of their revenue to come from such recurring services, up from 34% in 2023.  According to 92% of respondents, businesses are scaling back their in-house IT and relying more on MSPs, and this is likely to be a key driver for the rise in recurring services.

Customer demand is greatest for security products and services. According to the survey, the top three solutions MSPs offer and support are security operations centers (42%), security awareness training (38%), and network security (36%). MSPs expect to expand their portfolio with an average of six new services overall during 2024.

Also Read: Security Operations Center (SOC) Best Practices and Steps in Building Process

Other key findings include:

• MSPs believe that cloud marketplaces will simplify operations: 92% of respondents identified cloud marketplaces as a crucial tool for their organization. In addition, 47% of MSPs are using cloud marketplaces already, and 50% of the remaining respondents are exploring the option.
• Appetite for AI knowledge: Almost 9 in 10 of the MSPs surveyed (87%) say they need either significant or notable improvements in their knowledge and application of AI products and services. In addition, 77% of MSPs feel under pressure to offer customers AI insight and tools.
• MSPs have concerns about their own security: 98% of MSPs believe they need to improve their internal security posture.
• MSPs are realistic while being optimistic: While growth is expected in 2024, MSPs cited their top challenges as increased competition in the MSP market (48%), up from 44% in 2023; and lack of ability to help customers comply with government regulations (82%).

“Like all organizations, MSPs face continuous change,” said Patrick O’Donnell, Senior Vice President, Worldwide Sales, Barracuda. “Competition is increasing and routes to market are evolving, while emerging technologies and digital transformation are expanding the potential attack surface for cyberthreats.

That’s a lot to keep on top of, and the survey shows that more than half of MSPs are looking for extra support. Good partner/vendor relationships that deliver specialist experience in the field of security and AI-integration can help MSPs address some of the challenges and thrive in the competitive landscape of 2024 and beyond.”

“In 2024, MSPs are strategic partners to their clients, helping them to address technology complexities and manage the security challenges of digital transformation,” said Richard Tubb, MSP growth consultant and MSP Day speaker. “The research shows that many MSPs are responding to shifting client needs by actively embracing new opportunities that will benefit clients as well as their own operations and business growth.”

Also Read: Importance of Data Protection in Cybersecurity

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