MSPs: 5 Trends to Track in 2023


By Florian Malecki, Executive Vice President, Marketing, Arcserve

As we move further into the year, many managed service providers (MSPs) are developing strategic plans for the coming year. These plans will need to take into account significant current and future trends. With that in mind, here are the five most important factors expected to shape the market this year.

1. Consolidation Will Be a Priority

In recent years, a trend toward consolidation has accelerated in the MSP market. Indeed, the most important players have started buying their competitors to accelerate their growth. This consolidation trend will continue in 2023 as MSPs move away from organic growth and focus on acquisition as a way to expand their business. The shortage of IT talent will also fuel these changes. As MSPs struggle to attract and retain employees, mergers and acquisitions offer a fast way to acquire new teams.

It isn’t easy to adapt to every client’s specific needs and offer every service they demand. As a result, specialization will become more typical for MSPs in 2023. For example, a generalist MSP may not be able to offer effective cybersecurity services because of the complexities involved and the high level of expertise required to address them. MSPs can provide higher-quality services that attract customers by specializing in one area.

2. Inflation Will Transform Data Center Business Models

Inflation adds challenges for MSPs in meeting earnings targets. This means they need to reassess every aspect of their business, including if their business model is working and how they can grow in an environment where IT spending is unpredictable. One area that hits home is the ever-increasing cost of data centers, especially public cloud data storage.

Rising energy prices are forcing large data centers to significantly raise their prices, challenging the conventional wisdom that moving to the cloud is cheap. According to research firm Canalys, public cloud prices are expected to increase by more than 30 percent in Europe in 2023 due to soaring energy prices.

That’s why MSPs will be more likely to move away from public clouds and seek more cost-effective and high-performance storage solutions closer to home. Rising energy prices could also encourage some SMBs to completely rethink their strategy, leading them to repatriate their data on-premises. This trend will offer MSPs a new opportunity to provide these customers with their on-premises storage and backup solutions.

3. Data Recovery and Restoration Will Be More Important Than Ever

Every company can back up its data. The real test comes when companies discover if they can restore their data after a cyberattack or other incident. Too many MSPs—and their customers—think disaster preparedness begins and ends with data being backed up without recognizing that isn’t enough. In 2023, companies will put more effort into ensuring they can quickly restore their data if disaster strikes. For MSPs, that offers the opportunity to help advise clients as they develop an effective disaster recovery and data restoration plan.

Stored data can be like a puzzle. Trying to restore data without a good plan is like putting a puzzle together without having a picture of the finished result as a reference. It takes too long. If a data disaster strikes an MSP’s customer, systems need to be recovered immediately, not in days or weeks. With a disaster recovery plan that’s regularly tested, MSPs and their customers will have all the pieces of the puzzle in place to ensure fast recovery when needed.

4. CRaaS Will Become a Big Opportunity

Cyber recovery as a service (CRaaS) is a significant developing market for MSPs. IDC says CRaaS is a service whose time has come, especially as ransomware attacks continue to rise. IDC believes CRaaS offers MSPs a high-growth opportunity with strong margins—for those with the know-how to attract customers for these services.

Companies find CRaaS attractive because it relieves them of the arduous task of backing up data. More importantly, it provides customers with the capability to make immutable, unalterable copies of their data by taking snapshots every 90 seconds. Snapshots make it possible to return to a precise point in time before an attack and recover entire file systems in minutes. Even if a ransomware attack is successful and a cyber attacker overwrites the current data, customers can quickly and easily restore their recent data.

5. Data Prioritization Will Be Paramount

With rising energy costs, businesses must rethink how they store their data. But all data isn’t equal. So, if the goal is to reduce costs, some data doesn’t need to be saved and stored. There is a lot of redundant data that doesn’t need to be kept in long-term storage, like duplicate images and file versions. This is especially true for unnecessary personal data generated by remote workers (who tend to mix their personal and work data). There’s no reason a business should waste money storing all data equally.

MSPs can gain a significant competitive advantage by providing storage solutions with data tiering capabilities. This lets their customers move files used less frequently to lower-cost storage tiers while ensuring critical data is protected and backed up. Energy efficiency is another benefit of data tiering, as customers spend less computing power on storage. Data tiering will be crucial in 2023 as storage costs continue to climb.

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