The highest performing managed services providers (MSPs) are increasing cloud adoption and addressing security concerns, in order to find high-margin avenues to deliver infrastructure, according to Kaseya’s annual MSP Benchmark Survey released on Thursday. The eighth annual survey analyzes the strategies MSPs use to stay ahead of the game.

SEE: Vendor comparison: Microsoft Azure, Amazon AWS, and Google Cloud (Tech Pro Research)

Current IT industry trends pose many challenges for MSPs; these trends include the management of hybrid and multi-cloud environments, increased security, and the demand for data backup and protection, the report said. Top MSPs hold an average annual monthly recurring revenue growth of more than 20%, by focusing on the cloud and security.

MSPs are scaling up cloud services to better protect infrastructures. Using real-time intrusion detection, two- or multi-factor authentication, third-party application updates, and more, 85% of successful MSPs said more than one backup provider is necessary to supporting consumer needs, the report found.

“This year’s survey shows that business demands are now more intense and less predictable,” said Jim Lippie, senior vice president of channel development at Kaseya, in a press release. “This sets up an evolving MSP landscape in which the winners boost revenue through a broad menu of profitable new services and more efficiently run their own operations through increased automation and modern pricing structures.”

MSPs are focusing less on cost and more on the value of services, the report found. Some 22% of MSPs earn more than half of their revenue from value-priced modeling, while only 16% said they earned as much from a cost-based model.

More than a third of the highest performing MSPs have fewer than 10 employees, indicating more people doesn’t necessarily mean more success, the report said. Instead of hiring more people, MSPs should instead leverage artificial intelligence (AI) to automate time-consuming, manual tasks, leaving technicians with more time to deliver services to customers the report added.

To learn more about successful multi-cloud strategies, check out this TechRepublic article.

The big takeaways for tech leaders:

  • Managed service providers (MSPs) are focusing attention on cloud adoption and security concerns. — Kaseya, 2019
  • MSPs that focus on a value-based model are more successful than those focusing on a cost-based model. — Kaseya, 2019