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Managed Services Growth Ahead, but Education Still Needed

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All the talk about the cloud over the past couple of years has obscured managed services to some extent. However, the managed services market remains in high-growth mode, and MSPs looking to increase revenues should be working hard to recruit new customers. But you're going to need to do some education along the way.

According to Insight Research Corp., the U.S. managed services market will grow in double digits through the next four years, to $47 billion in 2015 from $29 billion in 2010. That’s a 12 percent growth rate, which at a time when the economy appears headed into another recession, is very respectable.

So clearly there is still a lot of opportunity out there for MSPs. Even if your strategic focus has shifted to the cloud model, these numbers should be telling you that managed services must remain an important piece of your business. If you do it right, you can use your cloud pitch to help you sell managed services.

The potential for double-digit managed services growth may surprise some, considering how much effort the IT channel has put into selling the model. But when you take into account that vast numbers of end users still don’t know enough about the model, the market projections make sense.

A possible conclusion is that some growth potential has gone unfulfilled because end-user education efforts have fallen short to some extent. Granted, managed services providers and vendors have made great strides to educate clients, but clearly we haven’t reached everyone yet.

Confusion Among SMBs

A newly published study by CIT Group Inc. found that 49 percent of participating MSPs believe SMBs have passed on managed services because they don’t understand the model. Furthermore, 62 percent of more than 100 study participants said SMBs don’t fully understand the benefits of managed services.

In other words, despite all the managed services buzz of recent years, a majority of SMBs still haven’t grasped the value of handing over IT responsibilities to providers who can remotely manage and monitor their networks to keep them trouble-free. They still don’t grasp the benefits of unburdening themselves of day-to-day IT tasks and of decreases in headcount and overall IT costs.

The most successful MSPs are those who articulate the value of the model, quantifying the benefits for clients. Zenith Infotech and our partners have invested a lot in educating customers through events and written materials that explain the managed services model and its benefits.

Going forward, MSPs must step up their education efforts if they are to take advantage of the market’s growth opportunities. Evaluate what has worked in getting existing clients to embrace the model and parlay that into new customer wins. And don’t forget the cloud’s role. In pitching cloud offerings to new customers, it makes a lot of sense to include managed services as a fundamental piece of your offerings.

Maurice Saluan is senior VP of sales for Zenith Infotech as well as seasoned sales veteran in the managed service arena. Monthly guest blogs such as this one are part of MSPmentor's Platinum sponsorship. Find all of Saluan’s blog entries here.

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