A global survey of over 1,240 business leaders from organizations with more than $100 million in revenue suggests that enterprises are increasingly relying on managed service providers (MSPs) to assume responsibility of entire business processes.
Conducted by KPMG and HFS Research, the survey finds that 70 percent now use at least one managed service to outsource a business function, such as accounting or human resources. Nearly a third of respondents rely on MSPs for half of their business processes, and nearly half plan to increase this reliance over the next two years.
SaaS is enabling MSPs to drive faster innovation
A key enabler of the transition has been the rise of software-as-service (SaaS) applications, making it easier for MSPs to offer services beyond IT and cybersecurity. This shift allows organizations to accelerate the time-to-market for their products and services. Additionally, 81 percent of respondents said they expect managed services to have a more strategic drive impact on business outcomes, with 73 percent looking to MSPs to help transform their business models.
The challenge now is determining how much of those services are bundled into business process management. The top areas where organizations rely on managed services include cybersecurity, regulatory compliance, IT infrastructure, and application management. A quarter of respondents said they plan to increase spending on managed security services by 21 percent or more over the next two years.
Beyond IT support managed services
In general, more than three quarters of respondents (76 percent) also noted they expect MSPs to drive technology innovation, which is more critical than ever in the age of artificial intelligence (AI).
Larger enterprises are seeking MSPs that can manage business processes. They also want these providers to offer the technology that enables those processes. In total, a full 89 percent of respondents said they are looking for different value propositions from their MSPs.
It’s unclear to what extent small-to-medium businesses (SMBs) will follow the same trend. MSPs offering only technology services may be at a disadvantage, as those with more comprehensive offerings could sideline them. The providers of outsourced business services may not have the necessary expertise. As a result, they might need to partner with MSPs that specialize in areas like cybersecurity. Many of them may also decide that the path of least resistance to gaining that expertise may simply be to acquire an MSP that already has it.
Evolution must start now
The way organizations consume managed services is evolving. Each MSP will need to determine how best to respond to the shift but end customers are at least signaling to rationalize services whenever possible, especially during turbulent economic times. The challenge and the opportunity this transition might present to MSPs are naturally going to be profound, but as more alliances are made between them they may soon rediscover the fact that, as always, there is strength in numbers.
Photo: gorodenkoff / Shutterstock
This post originally appeared on Smarter MSP.