Australian MSPs leverage AI & marketplaces amid new demands

Managed service providers (MSPs) in Australia are increasingly integrating marketplaces and artificial intelligence (AI) to meet evolving customer demands, as highlighted in a recent report by Barracuda Networks. The report, titled "The Evolving Landscape of the MSP Business 2024," sheds light on how MSPs are navigating the complex technological landscape. However, many MSPs have also expressed concerns about their insufficient AI knowledge and the resultant impact on their ability to serve clients effectively.

The report, which features insights from an international survey involving 700 MSP organisations, reveals several key trends. Among Australian MSPs, a significant 94% acknowledged the need for substantial improvement in their comprehension and deployment of AI products and services. Additionally, 80% of these MSPs reported feeling pressured to provide AI-driven insights and tools to their customers.

Another notable trend in the MSP sector is the shift towards recurring managed services. Australian providers expect 39% of their revenue in 2024 to stem from these recurring services. The move is largely driven by businesses reducing their in-house IT staff and relying more on external MSPs, a view supported by 96% of Australian respondents.

Paul Crighton, Regional Sales Director at Barracuda, commented on the shifting dynamics within the MSP industry: "MSPs must navigate constant change as they contend with rising competition and evolving market strategies. Managing all of this can be very challenging, and the research underscores the importance of strong vendor partnerships, which will help MSPs overcome hurdles and succeed in the competitive environment of 2024 and beyond." Crighton added that 66% of Australian MSPs are seeking additional support from vendors, particularly in AI expertise and guidance.

Security remains a top priority for MSPs, with demand for security products and services outpacing other solutions. The report indicates that the most commonly offered and supported solutions among Australian MSPs are network security (51%), security awareness training (50%), and the operation of security centres (49%). However, 90% of the MSPs also believe there is significant room for improvement in their internal security posture.

Cloud marketplaces are also gaining prominence among MSPs. The survey found that 94% of Australian respondents consider these marketplaces crucial for their operations. Currently, 46% are already utilising cloud marketplaces, with a further 53% exploring the option. These marketplaces are seen as tools that can simplify operations and streamline service provisioning.

Despite these advancements, Australian MSPs face notable challenges, particularly in the areas of market competition and regulatory compliance. The report reveals that 43% of the respondents cited increasing competition within the MSP market as a significant challenge, a slight decrease from 44% in 2023. Additionally, 77% identified difficulties in helping customers comply with government regulations as another major issue.

Richard Tubb, MSP growth consultant and speaker at the Global MSP Day event emphasised the adaptability of MSPs: "In 2024, MSPs are strategic partners to their clients, helping them address technology complexities and manage the security challenges of digital transformation. The research shows that many MSPs are responding to shifting client needs by actively embracing new opportunities that will benefit clients as well as their own operations and business growth."