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As COVID-19 expanded the office perimeter, IT teams at small and midsized organizations charged with keeping remote workers secure have increasingly turned to managed services providers. Cybersecurity is becoming more and more critical to SMBs–77% of MSPs reported that their clients were hit with a cyberattack, according to Kaseya’s newly-released 2021 MSP Benchmark Survey. A majority of MSPs said clients are now looking to the MSP to advise them on how to protect themselves.

A whopping 65% of MSPs increased their revenue from delivering cybersecurity services–even in the face of a global economic recession, the Kaseya survey found.

With more MSPs recognizing that they have a bullseye on their back (approximately one in four MSPs feel their business is less secure today), service providers are feeling the “security heat” from all directions, the firm said.

In terms of challenges, respondents reported acquiring new customers as their primary challenge this year. Among other top challenges, nearly one-fifth of MSPs cited dealing with advanced and sophisticated security threats, followed by shrinking IT budgets as a result of the pandemic.

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As in past years, an overwhelming majority (73%) of MSPs identified platform integration as critically important to their business to become more efficient and profitable, the report noted. Additionally, only 20% of MSPs said they sought support for sales and marketing from their vendors, signifying a huge gap where vendors can go beyond technology to aid their MSP partners, Kaseya observed.

“In our current work-from-anywhere environment, MSPs have their hands full enabling and maintaining business operations for their customers. Despite the pandemic, a sweeping majority (91%) of these MSPs recognize the importance of adding new offerings to their business to increase profits and revenue,” said Mike Puglia, chief strategy officer at Kaseya, in a statement.

MSPs and their customers faced significant challenges when it came to remote workforce management, IT security and backup and disaster recovery, Puglia added.

“Even so, these three areas present the biggest opportunities for growth as we move into the post-pandemic era.”

Other key findings

The need for compliance services grows

Between the new cybersecurity maturity model certification (CMMC) defense contractor requirements and Virginia’s latest addition to increasingly common state-driven data privacy laws, a majority (approximately 70%) of MSPs agreed that their clients struggle to meet compliance requirements. However, only about half of MSPs surveyed provide compliance services currently.

As industry dependence on cloud-based software and other connected technologies grows, regulators will continue to enact data privacy and security laws. MSPs have an opportunity to develop and leverage niche expertise in this space to help their clients comply with an increasingly complex set of regulations, the report said.

Disaster events highlighted a need for consistent data backup and cloud management support

Beyond the challenges brought on by the pandemic, wildfires and winter storms have impacted business continuity in new ways. Despite these challenges for on-premises backup, the majority of the MSPs surveyed (75%) use a combination of local and cloud backup for their data. Less than a quarter (19%) rely on cloud backup alone.

Another outcome of the pandemic is a huge jump in the number of MSPs backing up their clients’ public cloud SaaS applications–like Microsoft Office 365, G Suite and Salesforce–with nearly 70% of MSPs now providing this service compared to only half in 2019. As a result, 54% of MSPs reported an increase in cloud management revenue last year.

These findings serve as an important reminder to MSPs to regularly test their backup and disaster recovery strategies, Kaseya said. That being said, fewer MSPs are testing their disaster recovery programs weekly and monthly while more are relying on annual testing when compared to the previous year–30% in 2020 versus 17% in 2019. This trend demonstrates that the onus of frequent testing can be more than what most MSPs can handle, and therefore amplifies the need for greater testing automation, Kaseya said.

MSPs want more integrated tools for remote support

With ongoing remote work, MSPs have found themselves spread thin between disjointed tools to manage their varied responsibilities. Unsurprisingly, security and cloud management services both saw particularly rapid growth through the ongoing pandemic as more businesses sought support from MSPs to secure their cloud-based collaboration tools for their decentralized workforces.

A majority of MSPs said they feel that the integration of core MSP applications, like RMM and PSA tools, can help their organization drive better bottom-line profits. Of these tools, RMM was found to be the most important application, with 65% of MSPs prioritizing this platform.

“Based on the insights, there is tremendous opportunity for service providers to diversify their offerings and tackle any IT issue with a single platform that produces greater efficiency, lowers costs and drives higher profitability,” Puglia said.

The 10th annual survey was conducted in December 2020 and asked 1,000 owners and technicians of MSP firms in over 50 countries about their learnings from the past year and how business priorities have evolved for the year ahead, Kaseya said.