Navigating a freeway when you’re unfamiliar with the area’s traffic patterns can be complex, even with GPS telling you where to turn. Navigating new and emerging tech like artificial intelligence poses similar challenges for small and medium businesses. That’s good news for MSPs, according to a new report from the nonprofit membership community Global Technology Industry Association. GTIA’s “State of the Channel 2025” reveals that technology’s growing complexity is the top factor contributing to a healthy channel—and that includes increasing AI opportunities for MSPs.
“Customers today have a very voracious appetite for technology,” Carolyn April, vice president of research and market intelligence at GTIA, tells MSP Success. “They know that it will help them grow their business.” But applying technology like AI or understanding all the implications of cybersecurity “is often out of their scope. So this is huge opportunity for the experts out there,” she says. “The channel firms in our study understand that complexity is their friend.”
AI Opportunities for MSPs
The report finds that demand for AI technology is up across the channel, notably in revenue-driving activities. In last year’s study, 32% of respondents indicated that they anticipated significant growth in AI services revenue. This year, that figure increased to 53%, reflecting a sharp uptick in optimism and confidence regarding the potential for AI-driven sales.
That number outpaced expected revenue growth from cybersecurity too, which April calls “a big change.”
Customers are now asking MSPs and IT service providers if AI Is applicable to their business and they’re worrying that they may be left behind if they don’t implement it, she explains.
“I think the channel is realizing that now [AI] can be used as both a wonderful business tool internally to help make your business be more streamlined and then also as a potential opportunity to drive revenue,” she notes.
Some AI opportunities for MSPs include helping customers determine how Copilot can fit into their business, since many MSPs are already managing Office 365, or providing consulting services around implementing an AI strategy. “The smarter MSPs are coupling the consulting work they do with actual product sales or services sales.”
AI Not a ‘Singular Lane’ of Revenue but a New Source of MRR
April also believes that AI services represent an opportunity for new monthly recurring revenue for MSPs rather than just project work or one-off consulting. “I don’t see why AI services can’t be just as much a part of the stack as everything else an MSP offers. And if you think about AI services, there are so many other adjacent technology components to it that a lot of MSPs already do.”
This includes cybersecurity and the emerging need for data services, she says. “Data services is another area where we are seeing a huge amount of growth among channel firms and MSPs. It’s becoming part of their portfolio, whereas data was not a big piece of the typical channel firm’s portfolio five years ago.” The report finds that 34% of respondents expect data services revenue to increase significantly over the next two years, and 46% expect to see some increase.
She concludes, “It isn’t just a singular lane of AI, but AI brings in a whole bunch of other disciplines that need to be taken care of at the same time.”
Related: AI as a Service: What It Is And Why You Need To Offer It
MSPs Expect Both Growth and Frustrations Around Cloud Services
In addition to AI opportunities for MSPs, respondents expect to see a significant increase in cloud services revenue, from 29% last year to 41% this year, equal to the expectations for cybersecurity. However, only 3 in 10 believe profitability from those cloud services will be as robust.
What’s behind this disconnect is the compensation structure between vendors and channel partners for SaaS subscriptions, according to the report.
“The SaaS model sort of broke the typical go-to-market of vendor to channel to customer way of doing things,” April notes. “Subscription services and recurring software services really changed a lot of the compensation models, and I don’t know that the channel was really ready for it.”
Some of the issues to be worked out, she says, include compensation for the initial sale of a subscription, compensation for renewals, and who owns the renewals. “All those things are really up in the air and differ [from] vendor to vendor, and I think that’s the frustration with many MSPs. So I think this is going to be something that the channel partners have to solve on their own.”
Strategies for Bundling Value
MSPs should focus on the value-add they can bring to customers, rather than getting “bogged down [about] what their margin points are going to be from the vendor on a SaaS sale.” Instead, April suggests, MSPs should view this an an opportunity to bundle services around that SaaS sale.
She suggests taking a similar approach with the rising competition from cloud marketplaces like AWS and Google Marketplace. Spend for SaaS has moved outside of the traditional IT budget to line of business managers. But rather than viewing cloud marketplaces as a threat, MSPs could help their customers winnow down the appropriate choices, she suggests, “and charge for that service. Then let the customer direct buy that from the online marketplace. Once the solution has been purchased, you go ahead and bring all those back-end services into play and help them integrate that application with their CRM product that they already have installed and you help them with whatever cybersecurity considerations there are, etc., etc.”
Optimism Ahead
While respondents do cite challenges such as workforce skills shortages, difficulties keeping up with the cybersecurity landscape, nontraditional competition, and external factors beyond their control, there is general optimism. As of the data collection period for the study, 30% of U.S. channel firms say they are ahead of pace for business goals and financial health for the year, and more than half (53%) say they are on target. In addition, 48% described the channel as “healthy and changing rapidly,” which the study say reflects “a perception of dynamic growth driven by new technologies and evolving customer needs.”
That gets back to the theme of complexity and the increasingly critical role MSPs play helping customers navigate digital transformation. Complexity, in the channel’s case, “is a positive attribute and it’s the number one driver for success and continued optimism for the channel,” April concludes.
