A new report from Gartner forecasts that not only will IT spending increase 2.7 percent in 2017, there will be a 4.2 percent increase in spending on IT services worldwide.
The downside from a managed services provider perspective is that Gartner is also forecasting that sales of devices will remain flat in 2017 at $589 billion, which suggests the number of endpoints that need to be managed may not be growing. Most MSPs have maniacally focused on the total number of endpoints they can manage. But the Gartner forecasts strongly suggests that the time for MSPs to look beyond the endpoint has arrived.
Gartner credits everything from investments in digital business and the cloud to emerging technologies such as blockchain and artificial intelligence applications for the increase in IT spending even though spending on devices is flat.
Where to find more MSP opportunity
One thing that is certain is there’s more IT activity than ever. The real issue for MSPs is figuring out where to tap into that opportunity. Organizations perceive the management of anything to do with servers on premise or software in the cloud as providing more business value than the devices used to access them. In fact, many organizations increasingly think of the endpoint as being almost disposable. It doesn’t make sense to those customers to spend more money managing those devices than it did to acquire them, especially when a local IT administrator is readily available.
In contrast, most organizations find themselves short-handed when it comes to, for example, virtualization expertise in the data center or remotely managing software deployed on a public cloud. There’s more of a natural inclination to contract for a service to manage something most organizations don’t understand all that well in the first place.
Of course, there are still plenty of organizations willing to outsource the management of endpoints. They just aren't willing to pay nearly as much for that as they are for help managing aspects of IT they haven’t fully mastered.
A more profitable approach
None of this means MSPs should give up managing endpoints tomorrow. But there’s no need to obsess over how many of endpoints there might be or the rate at which they are growing. It’s more important to focus on the managed services that provide the greatest levels of profitability.
Naturally, some customers will want an MSP that can manage both endpoints and the rest of the IT environment. Increasingly that means MSPs need to come up with terms of service that make up for the lack of profitability in endpoint management by boosting margins on the other services they provide. The good news is that it’s harder to discern the true cost of supporting a server or cloud environment than it is for an endpoint. Better still, the rate of technological change inside IT environments has never been greater.
There may come a day when putting a price on supporting an endpoint is more trouble than its worth. Instead, MSPs should focus on a price for supporting the entire IT environment in a way that makes the cost of managing the endpoints part of a larger bundle. After all, as a wise man once said wherever there’s mystery there’s profit.