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New Survey Reveals Most MSPs Feel Greatest Competition from Google, Other Cloud Vendors

Sonian, the leading provider of cloud-based email archiving and insights, today unveiled new survey findings that reveal that 79 percent of managed service providers (MSPs) today feel their greatest competitive threat is cloud providers, as opposed to other MSPs. This represents a significant leap from five years ago, when only 54 percent of MSPs viewed cloud providers as their greatest competition. MSPs of all sizes agreed they lost more deals to Google than any other cloud provider, including Amazon, Hewlett Packard, IBM and Microsoft - and expect Google to be the cloud market leader by 2021.

These findings were detailed in a new report released today, "A New World Order: How MSPs are Trying to Survive and Thrive in a Cloud-first World," based on a Berg Research survey of more than 300 MSPs commissioned by Sonian.

The MSP Market in an Increasingly Cloud-First World
Not even ten years ago, MSPs served as critical, trusted IT advisors to companies of all sizes, offering unmatched insight into organizations' data center environments, service portfolios, applications requirements and service and compliance levels, along with the technology to act on these insights. In the past few years, however, MSPs' position has been threatened by cloud providers, who increasingly sell directly to end users. With cloud vendors now routinely bypassing the channel, MSPs are forced to innovate in order to maintain market share.

The MSP Challenge
The survey validated that mounting competition from cloud vendors is real, showing that:

  • Small businesses (organizations with 100 - 500 employees) have most drastically changed their perception of cloud providers, with 82 percent saying cloud vendors are their greatest competition today versus just 50 percent in 2011.
  • Though MSPs cited Microsoft as their second largest competitor today, the majority of respondents said that they expect Amazon to become a more formidable force than Microsoft in the next five years.
  • Competition from cloud vendors has forced 50 percent of surveyed MSPs to moderately reduce their costs to acquire new customers, and 18 percent to substantially reduce their costs to acquire new customers.

The MSP Opportunity: Security and Analytics
To reclaim market value, 55 percent of MSPs believe introducing new services is critical:

  • 67 percent of respondents plan to launch or expand security offerings
  • 65 percent plan to launch or expand pure cloud hosting services
  • 58 percent plan to launch or expand storage offerings

Moreover, 51 percent expect that data analytics and business intelligence will increasingly play a key role in delivering value, with 45 percent of respondents noting that business intelligence has served as a large business driver in the past 12 months.

"Expanding their service offerings will be critical for MSPs in today's market to remain competitive," said Jeff Lippincott, vice president of business development at Sonian. "The new survey findings confirm what we already have seen play out in the industry: that cloud vendors are having a real impact on MSPs' bottom lines by interfacing directly with end users. To not only cope with this threat but thrive in the market, MSPs must take advantage of the opportunity to invest in new services such as secure data storage, business intelligence applications and hosted email applications. By doing so, they will be able to offer services their customers regard as indispensable."

Tim McKinnon, CEO of Sonian, added: "Sonian's business model is built off our relationship with MSP partners. As the market evolves and presents greater opportunity for them to offer data storage and business intelligence, our core offerings, we anticipate that our partnerships will only become stronger and stronger." 

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Published Tuesday, February 07, 2017 10:36 AM by David Marshall
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