MSPs are expecting record sales for 2023 with security products and services leading the way to robust growth despite macroeconomic headwinds, said MSPs attending XChange 2023.
Security sales are the fastest-growing part of the business for Huntington Technology, a 22-year-old Bingham Farms, Mich.-based MSP, which expects sales to grow 20 percent this year to a record $3.7 million, said Huntington Technology Vice President William Bluford.
“I thought with all the economic uncertainty that there would be more clients looking to cut back spending on projects,” said Bluford. “So far we haven’t seen that. Everything is going strong. SMBs are finally starting to realize the value of technology, especially cybersecurity. A couple of years ago our clients didn’t really care about security and didn’t think they would get hit by a breach. Now everybody is concerned about it. Security is the No. 1 driver for us.”
Among the security products being used by Huntington Technology are Webroot by OpenText and managed threat detection services by Huntress, said Bluford.
“The MSP market has never been better,” said Bluford. “It’s a great market right now. SMBs know they need technology and are relying on MSPs as trusted advisers.”
Security is also the fastest-growing part of the business for Enitech, a Raleigh, N.C.-based MSP that expects to grow sales about 20 percent this year to $3 million, driven by increased security sales and services, said Enitech founder and President Antwine Jackson.
“There is more attention and awareness from our clients on the necessity for security,” said Jackson. “Compliance as a service is also a big driver for us. And the third driver is leveraging insurance companies to help us introduce new tools into the security stack.”
Three years ago, security was a tough sell to SMB customers, but today it is top of mind, said Jackson. “Three years ago, security was the hardest discussion to have,” he said. “Now it is the easiest discussion to have. Customers are more informed and the media coverage of data breaches has really helped that. Also insurance companies used to have a check-the-box mentality. Now insurance companies are holding MSPs and clients accountable and asking for supporting evidence of security protection. That has really tipped the scales in our direction.”
Before the pandemic, security sales accounted for just 15 percent of Enitech’s business. Today, it has doubled to about 30 percent of the total business, said Jackson.“Before the pandemic, security was blended with network responsibility. Now because of all the data breaches, security is a separate component,” he said.
Jackson said there are issues with the economy and that the MSPs that lean into security will “weather” the economic storm. “As the economy and the economics of the MSP model continue to change, MSPs have to get out of the traditional MSP mindset,” he said. “MSPs need to diversify their stack and even the clients they work with.”
Besides security, Jackson sees AI as the same kind of paradigm shift as cloud computing. “AI is the next big thing,” he said. “You need to implement AI not only into your MSP workflow, but also into solutions that can help your clients have better efficiencies. AI is the next big driver in the MSP market.”
NorthEast Computer Services, a a 20-year-old Haverhill, Mass.-based MSP, expects to grow sales by as much as 25 percent this year with security as a new growth segment for the company, said President and CEO Eric LaFleur.
“There is a larger awareness of the need for security,” said LaFleur. “We are trying to grow that business slow and smart. We are using ThreatLocker. It has been a big game-changer.”
The COVID-19 pandemic sparked an MSP renaissance with more SMB customers relying on MSPs for technology products and services, said LaFleur.
“When I started in this business, SMB customers couldn’t spell MSP,” he said. “Now SMB customers are more tech-savvy and know what an MSP is. COVID put a light on the need for small businesses to invest in technology. IT was a low-level item on the P&L before COVID.”
SMB customers have moved from spending about 5 percent of their overall budget on IT to 15 percent and some even more, said LaFleur.
“COVID was an unfortunate blessing—there was a push for a remote workforce and we were chartered with securing that remote workforce,” he said. “The MSP model is more important to SMB customers than ever before. Customers want someone looking out for their best interests when it comes to technology. They don’t want to worry about IT. They know MSPs can handle that for them and keep them in business.”