AI technology and business

New Barracuda Report Finds The Pressure Is On For MSPs To Offer AI Services

Many MSPs are actively embracing AI to expediate processes and better serve customers, but acknowledge they are not keeping up with customer demand for AI, according to findings in The Evolving Landscape of the MSP Business 2024, an annual report from Barracuda Networks. Barracuda’s study, conducted with Vanson Bourne, surveyed 700 MSPs internationally to take their pulse on trending technology like AI, as well as top revenue drivers.

A Need For Continued Education On AI

In an effort to keep up with the rapidly developing industry, maintain healthy margins, and boost productivity, many MSPs have started using AI in some capacity. Of the MSPs surveyed, 58% are currently using AI services and 37% are planning to onboard them over the next year.

That said, almost 9 in 10 of the MSPs surveyed (87%) say they need either significant or notable improvements in knowledge and the application of AI products/services. In addition, 30% of respondents report that enhancing their in-depth understanding and use of AI is a top challenge in 2024.

Customers are adding to the urgency, with many of them wanting to incorporate AI tools to expedite their own business processes. The report finds that 77% of MSPs are feeling the pressure to offer their customers insight, guidance, and options for AI tools.

Of the MSPs who are using AI, many are using it to enhance their security posture and to better protect and support their clients. Currently, 57% of them are incorporating predictive analytics and proactive solutions into their security offering, 55% are utilizing AI-driven customer support tools, and 54% are enhancing their cybersecurity defenses with AI.

These findings are in line with the many AI-integrated products being launched by vendors, such as ConnectWise’s new AI security tools and CyberArk’s CORA AI. It’s looking like MSPs will soon be forced to either get on board with AI or get left in the dust.

What’s Driving Revenue?

Businesses want managed services. According to 92% of respondents, businesses are scaling back their in-house IT and relying more on MSPs. Further, the MSPs surveyed expect 44% of their revenue to come from recurring services, an increase from 34% in 2023. This trend indicates that MSPs and MSSPs are on the right track, and break-fix providers need to get with the program.

Continued focus on security. The top three solutions MSPs are offering today are security operations centers (42%), security awareness training (38%), and network security (36%). At the same time, 98% of MSPs are concerned about their own internal security posture. With how quickly cybersecurity must develop to stay ahead of cyberthreats’ rapid evolution, this isn’t surprising. Over the last few years, the report has tracked a sharp increase in the percentage of respondents who feel the need to “significantly improve how they keep up with security trends and capabilities”; the statistic has jumped from 36% in 2022, to 37% in 2023, to 47% in 2024.

Simplified operations. Ninety-two percent of MSPs surveyed said that cloud marketplaces are a crucial tool for their business, both for transacting and driving new revenue. While 47% of MSPs are already using cloud marketplaces, another 50% are considering them. One concern that 55% of MSPs have is that customers may choose to bypass them and buy directly from a cloud marketplace.

Top-Of-Mind Challenges For MSPs

The following challenges were listed as those most anticipated for the upcoming year and can offer some insight into what MSPs should be braced for.

Increased Competition. Forty-eight percent of respondents listed increased competition as one of their top challenges, an increase from 44% the previous year. In part, this is due to customers being reluctant to invest in IT because of budget constraints or the current global economic state.

Compliance concerns. As breaches become more common and cybersecurity becomes more of a concern to the general public, global government regulations regarding technology are becoming more stringent. Among the respondents, 82% expressed concern regarding lack of ability to help clients comply with government regulations.

“In 2024, MSPs are strategic partners to their clients, helping them to address technology complexities and manage the security challenges of digital transformation,” said Richard Tubb, MSP growth consultant at Barracuda, in a press statement. “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.”

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ABOUT THE AUTHOR
Sarah Jordan is a staff writer at MSP Success. When she’s not reporting on trends and issues pertinent to the MSP community, you can usually find her working on her novel’s manuscript.

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