New research from SolarWinds MSP shows that the managed services model is strong with the average European channel partner getting 24 percent of their gross revenue through managed services.
For businesses that identify primarily as managed service providers (MSPs) (rather than being IT consultants or value-added resellers), the average percentage of gross revenue derived from managed services was 38 percent.
However, the report, 2018 Trends in Managed Services, reveals customer churn among MSPs is currently very high—on average, every month an MSP gains five customers but loses four.
“Competition is fierce among managed services providers. To develop—or keep—an edge, it helps to compare yourself against the competition,” says John Pagliuca, SVP, SolarWinds MSP.
“Our research shows how the managed services model is performing in the market and how IT providers compare with the industry at large—helping them to start thinking about what strategic changes they should consider making when it comes to their managed services portfolio.”
Elsewhere, service providers are reinvesting just 11.9 percent of their net revenue back into their business to bolster their managed service capabilities and capacity. The average profit margin on a typical managed service contract in Europe is just under 23 percent.
Endpoint management (76 percent) and network management (72 percent) remain the most common services offered by providers.
But the report also notes that many providers (46 percent) are already moving in the direction of higher-value services, particularly around managed security. However, even though there is a growing market demand for detection- and remediation-focused security and cyberthreats continue to rise, few are yet to specialise in offering advanced security, like security information and event management (SIEM), security assessments, or security operations centre (SOC) services. While 81 percent of MSPs provide network security and 79 percent provide endpoint security, just five percent provide a SOC.