6 challenges managed service providers need a plan for in 2023


Heads up! It's crunch time.

Some say 2023 could be the most favorable year for MSPs. Companies still weathering the macroeconomic storm will want to double down on tech investments. What better way to keep the workforce empowered, clients happy, and efficiency up high other than technology that helps rather than harms? 

But to find your footing in a wavering market, you need to know what you’re up against. Mapping out potential challenges matter. Here’s our take.

Cyber resilience

In 2023, we anticipate that the increase in digital risks will be one of the top challenges that MSPs will face. The ever-growing number of cyber threats means that businesses need robust security measures to protect themselves. Recession or not, cybersecurity has always been the top focus for managed service providers. But this year, companies will focus more on providers who can help them improve their cyber resilience posture.

They do so to prepare themselves not just to face adversity but to get back on their feet as quickly as possible when they face one. It helps if you’re well-positioned to offer these services.

Not being future-ready

You and your clients know that in the next few years, artificial intelligence will be increasingly important, but do you know how to make the best use of these rapidly developing technologies? Delivering greater value through automation and AI can help you better manage costs, reduce errors, and respond to changes quickly.

At the same time, you need to find ways to leverage technology while still providing a human touch. That's why it has become increasingly important for MSPs to invest in automation tools that integrate various processes into a cohesive system—so that clients can continue to get personalized service.

This means investing in AI-driven alerting and analytics solutions that can detect issues early or even preempt them so that they can be addressed proactively. It also means finding ways to automate manual tasks like incident ticketing, remediation, and monitoring networks—all of which can save time and money.

The key is to find the right balance between automation tools and customer support—delivering greater value through both technology and human interactions.

Staying relevant

As emerging technologies become more essential for businesses to remain competitive, the demand for providers to stay up-to-date on the latest products and services will increase. Companies will increasingly start using such technologies for greater efficiency and better outcomes and will expect their IT partners to have a plan that includes using and managing them. 

The best way for MSPs to keep up with the ever-evolving IT landscape is to research current market trends and stay informed about platforms, tools, and services that could help them deliver better services or optimize their resources. Additionally, MSPs should invest in training programs that offer comprehensive education around emerging solutions. The good news is that many organizations that are at the forefront of these new technologies have their own training programs that MSPs can leverage. 

Profitability in uncertain times

For MSPs, profitability should be a key area of focus in any year. Particularly so now, considering the steady increase of inflation over the past year, and the impact it can have on your ability to stay viable. If you don’t keep up with the rising costs, you could find yourself struggling to maintain your profits.

This means you need to be aware of different strategies that can help you remain competitive while still increasing profits, such as raising prices or reducing costs.  Attempting to improve MRR, bring down costs, streamline ops, and better customer retention are all great strategies. Don't forget to leverage technologies that can help you save time and money, such as automation. This can help you save on overhead costs while still providing top-notch services for clients.  

Competitive market

It’s important to acknowledge that competition from larger players is one of the challenges MSPs and IT service providers may face in 2023. We’re already seeing larger players driving consolidation in the MSP industry, while other technology players are beginning to offer services that tread on MSP's toes.

For example, some tech giants offer cloud-based services that are directly competing with smaller MSPs. This means MSPs will have to find a way to differentiate themselves from those offerings or offer more value than what larger players can provide.

Moreover, larger MSPs are starting to invest in technologies that help them differentiate their services from competitors and provide clients with more comprehensive solutions. This could force smaller MSPs to invest heavily in technology as well or risk losing business.

To stay competitive, MSPs need to be able to quickly deploy technologies, offer ongoing maintenance and improvement services, and support legacy systems in order to remain competitive against larger players in the coming years.

On efficiency vs cost-cutting

There’s no denying that cost-cutting is a useful strategy, but if you’re relying solely on it, you could miss out on ways to improve your business.

By looking at your processes through the lens of efficiency, you can identify areas where automation or outsourcing can help reduce manual intervention—all while making sure that quality isn’t compromised. Additionally, ensuring that your team has the right skill set and experience to handle problems can also help optimize your business operations and make them more efficient.

Overall, taking a long-term approach when assessing cost-cutting is key here; short-term savings don’t always add up to long-term success unless you focus on working smart.

Despite everything, we believe 2023 can be the greatest year for MSP growth, provided you know the waters and stay the course. Keeping an eye on the above challenges can be a good starting point. 

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