Technology Reseller - v13 2018

technolog y reseller.co.uk 27 ANALYSIS Recurring revenue the way forward for MSPs sales and marketing support.  While selling backup and disaster recovery (BDR) solutions was the second biggest challenge for MSPs in 2017, that same pain point has dropped from 18% to just 8% this year. Thanks to ransomware and cyber security issues over the past year, BDR is no longer such a hard sell for MSPs, as businesses get smarter about the need to backup and mitigate against issues before they arise. Specialise to differentiate MSPs that specialise stand more chance of monetising as they differentiate themselves in an often overcrowded market. While offering a generic service may seem like the sensible way to attract a wider pool of potential customers, focusing business efforts for a specific vertical, or verticals, is far more likely to make MSPs stand out. The majority of MSPs already recognise this. While in 2017, professional services was the top vertical targeted by MSPs, followed by manufacturing and construction and healthcare, in this year’s report manufacturing topped the list, with 55% of MSPs offering specialised services for manufacturing companies, followed by financial (49%), legal (42%), non-profit (37%), education (34%) and healthcare (33%). The channel is synonymous with long-term relationships and MSPs are becoming more social, with 90% using social networks, notably Facebook (65%), LinkedIn (56%) and Twitter (29%), on a daily basis – the same order of preference as 2017’s report. Only 10% of MSPs do not use any form of social media. When it comes to socialising with industry peers, Reddit is the go-to forum of choice for the channel, just as it was in 2017. A Datto ebook containing findings from the latest European State of the MSP Report can be downloaded from https://tinyurl.com/y7t9kkm8 Dattos’s European State of the MSP Report provides insight into the challenges and opportunities facing managed service providers. Here, Mark Banfield, SVP International at Datto Inc., picks out key findings from this year’s survey of 400 European MSPs. The European managed service provider (MSP) channel is continuing its strong upward climb, as shown by our report’s findings. It’s clear that recurring revenue is the way forward with half of MSPs servicing more than 100 clients on annual contacts. This is up 23% on last year’s report findings, and as a result of this strong growth, MSPs are seeing significant revenue returns with 37% turning over $1 to $5 million on an annual basis and 12% reporting revenues of $5 million or more every year. Despite market growth, MSPs are still facing an enormous challenge with their marketing and sales efforts, with 47% citing this as their biggest struggle – a 21% jump on the same pain point in 2017’s report, putting it above staffing/training (37%) and ransomware/cyber security (33%). MSPs looking to continue to improve their business growth will need to dedicate time to recruit the right staff to run their sales and marketing efforts, so that they can concentrate on their customers. Marketing pain points include lead generation, followed by hiring sales talent, cold calling and market differentiation. To mitigate this, MSPs should partner with a vendor who understands their need for It’s clear that recurring revenue is the way forward with half of MSPs servicing more than 100 clients on annual contacts 1 | datto.com REPORT Datto’s European State of the MSP Report FollowusonTwitter:@DattoEMEA Subscribe toourblog:www.datto.com/uk/blog product range (36%) are key factors for UK resellers when choosing vendors to add to their portfolio. In the UK, marketing programmes were a smaller motivator (24%), but this was still significantly higher than the four other major economies (France, Spain, Italy, Germany) where this factor only weighed in at 15%. Value-added support and training were also important and figure more strongly as reasons for adopting a brand than for dropping one. Hence the importance of working on the value-added side to differentiate yourself as a brand in order to be adopted in the first instance by a reseller. The cloud dilemma While UK resellers have shown their enthusiasm for digital transformation, embracing the smart home, IoT and other technology categories, the cloud remains an issue for some. In the UK, 55% responded that they had not sold any cloud services in the past six months. This is more than in 2017 and representative of a trend across much of Europe. Overall, ‘as a service offerings’ were thought to provide fewer opportunities for growth than traditional core strengths in ‘proximity’. Both maintenance and support (49%) and installation/technical assistance (39%) scored more highly than SaaS (23%), DaaS (20%) and WaaS (27%) in this regard. So why are resellers still afraid of dipping their toes into the cloud? Security remains the biggest barrier (32%), followed by legal restrictions (28%) and a lack of knowledge or understanding about the product’s advantages (23%). It’s important for distributors and vendors to remember that these barriers aren’t insurmountable. By reaching out as trusted partners they can educate the market and show the true value of cloud services. In addition, as SaaS becomes more and more commoditised, with thin margins, the revenue opportunity for resellers increasingly lies in the add-on services, support and cross-selling that accompany cloud solutions, especially hybrid cloud solutions that are often the most appropriate approach for businesses. If resellers are to survive digital transformation they will need to get good at providing the value-add and capitalising on the often complex hardware and service needs of hybrid cloud solutions. Mark Banfield