This guest blog entry was written by Larry Walsh of Channelnomics.
The U.S. managed services market is more established and mature than our cousins in the UK. However, the British channel is taking a more balanced approach to the evolution of managed services, according to a new study.
“The State of Managed Services” study conducted by The 2112 Group and CRN UK finds solution providers in the British Isles are about two to three years behind their U.S. counterparts in the adoption and implementation of the managed services model.
In the U.S., 62 percent of solution providers have offered managed services for five years or more. Comparatively, 53 percent of solution providers have offered managed services more five years or longer.
However, time in managed services doesn’t tell the maturity story. Fifty-eight percent of U.S. solution providers earn greater than one-half of their revenue through managed services. Twenty-two percent of solution providers in the U.S. earn 75 to 90 percent of their revenue through managed services.
By comparison, 67 percent of U.K. solution providers earn one-half or less of their revenue though managed services. The majority of U.K. companies – 35 percent – earn less than 20 percent of their revenue through managed services.
Consistent on both sides of the Atlantic is the expectation for growth. U.S. and UK solution providers expect to grow their managed services revenue by at least 10 percent year over year, with many expecting revenue to climb by 25 percent or higher.
The difference between MSPs in the two markets is how they’re approaching managed services development. U.S. MSPs focus on individual technologies, such as backup, security and email, to drive their growth. U.S. MSPs saturate the sales of these services before moving on to another.
UK solution providers, on the other hand, spread their services capacities around, drawing growth from applications, infrastructure, platforms and security. Rather than placing all of their growth on one service, they’re building holistic practices to offer customers more complete solutions.
The two markets may be petri dishes in the evolution of channel services. In the U.S., solution providers are told to focus their investment and resources on technologies in which they can focus and dominate. In the U.K., solution providers are truly thinking about total solutions that provide end-users with one-stop shops.
In terms of performance and return on investment, U.S. solution providers have the edge, as their rate of projected growth is slightly higher than UK MSPs. Time will tell whether the U.S. model is sustainable, or if the UK approach to holistic solutions that incorporate managed and cloud services will win the day.
