Growing turnover and size: Italian MSPs are in good health

I Managed service Provider (MSP) italiani, while remaining certainly not large in size, they are growing and in good health, so much so that they have increased their turnover and margins. This is the main indication that comes from the MSP 2023 Report, a special research conducted on about 300 MSPs by one of the main distributors active in this IT market niche since Ahab, which was presented on the occasion of the very recent MSP Day in Riccione. The distributor, as he said Andrea Veca, Managing Director of Ahab, it has been active in the MSP world since 2006, i.e. when this model had just taken off in the USA. “Back then this acronym was considered almost esoteric. The idea was to change the way IT services are managed, looking not only at the operating system, but also at security, data management and backup. This is a band that usually tends to be overlooked, because usually most of the turnover in IT is related to the sale of applications. The latter, however, must always run extremely effectively. The activity of the MSPs is concentrated precisely on this point”.

Small but more structured realities

Returning to the research, the first evidence is that Italian MSPs remain medium-small businesses: in fact, 65% have fewer than 10 employees. On the other hand, however, there are signs that denote a certain tendency towards greater structuring of these realities than in the past: 43% of respondents had a turnover of at least 1 million euros. There is also a constant increase in the number of MSPs that manage over 100 customers; moreover, over 55% of the sample has to manage a fleet of more than 500 endpoints, a number which according to Ahab marks the transition from artisanal management to a decidedly more organized one. There is also 30% of the sample who manage over 1000 endpoints. More generally, the Ahab report highlights the strengthening of the evolution process that has already been underway in the MSPs for some years, that is, that of abandoning the old reactive, or break fix, business model (17% of survey respondents work in this mode) , in favor of a model according to which the provision of services in a managed manner is the master against the payment of a recurring fee (72% of MSPs work by offering outsourced IT services). Not only that: on-site interventions with customers are now residual, in favor of remote control systems and RMM platforms, now indispensable tools for the work of MSOs. The number of suppliers using PSA (Professional Software Automation) and ticketing tools for help desk management is also growing (70%) while 50% of respondents to the survey state that they use professional IT documentation tools.

The limits on marketing

However, there is one front on which Italian MSPs still seem to be struggling a lot, perhaps victims of a business approach that is highly oriented towards the technical side, or in marketing. In this context, MSPs should take advantage of marketing actions to generate leads, but in reality still few of them are really structured in this sense, so much so that word of mouth remains the main activity for acquiring new contacts. Furthermore, over 40% allocate zero or at most 1% of their turnover to marketing, i.e. microscopic and residual percentages. Among the difficulties instead reported by the sample, there is the classic difficulty in finding suitable technicians, but also technical problems with the vendors, due to response times that often become too long. In general, however, the majority of MSPs are convinced that one theme is to make their company more efficient. In this sense, the research also seems to reveal a certain predisposition to merging & acquisition processes, increasingly common in the IT world, in the awareness that it becomes difficult for companies that are too small to do their job well. As many as 52% of the interviewees think of joining forces with some other reality: of these, 14% are already working in this direction.

Good growth prospects for 2023

In this context, 2022 was a good year for national MSPs: pFor 63% of respondents, turnover has increased and 42% have increased it by 15% or more. Similar dynamics affect margins and, above all, also 2023: as many as 73% expect to increase their turnover. As Veca explains, “The MSP market is alive and well and it probably couldn’t not be. Their customers, ie the SMEs, have to face many technological and regulatory challenges and the big vendors don’t have the strength to intercept them, therefore they can only serve them through the channel and in the MSPs”. Regarding the evolution of MSPs towards a model focused exclusively on security (the so-called MSSP), on the part of the distributor there is a little prudence: “The choice to become an MSSP can only be excellent if it is done well. Because, for example, you need to embark on 24-hour support, which is a very complicated thing for a typical Italian MSP. In short, due investments are needed. On the other hand, MSPs are small entrepreneurs, some aspects of managerial culture could be improved, particularly on the marketing side, many still have an exclusively technical approach. However, in this way it is difficult to make one’s customers perceive the value of one’s service”.