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Over 80% of MSPs Fear Missing Out on Explosive Market Growth

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Over 80% of MSPs Fear Missing Out on Explosive Market Growth

New research reveals MSPs struggling to keep pace with changing market dynamics and customer preferences face significant hurdles in the race to capture market share and grow profitably.

London – A new report from ConnectWise highlights how rising demand for IT managed services means managed service providers (MSPs) face significant pressure to adapt fast to capitalise on new opportunities, or risk losing out to more nimble providers that have a greater grasp of what customers want and need.

As demand for managed services continues to surge, 87 percent of MSPs surveyed for the ConnectWise report Managed services: the winners and losers in 2018 admit their organisation is at risk of missing out to competitors should they fail to get their service portfolio right or deliver new services better and faster.

The research, conducted among decision-makers at MSP firms based in the UK and Australia, reveals that while over half (53 percent) had experienced increased customer demand for managed services in the past 12 months, over two-fifths (43 percent) say fast-paced growth is already proving too much for their organisation which, they concede, is having to take short cuts to keep up with the pace of demand.

“The race to the top of the MSP sector is already underway and MSPs will have to develop, innovate and adapt to ever changing technological and business conditions as fast as they can, if they want to keep up,” says Greg Lalle, VP, International Sales & Strategy ConnectWise.

“But in the rush to scale up service delivery, organisations must not lose sight of the fact that building a sustainable and profitable business is also dependent on identifying the right solution strategy and maintaining a strong customer focus.”

The report findings indicate how the current pace of growth is already putting a strain on the operations and customer-facing interfaces of many MSPs:

  • 92 percent plan to introduce additional services over the next year, with security services (57 percent), cloud services (45 percent) and/or cloud service monitoring services (45 percent) being the most popular solution areas that will be launched in response to customer demands
  • Over half (57 percent) are finding it harder to meet the needs of customers compared to 12 months ago, and say this is having a knock-on effect on customer satisfaction
  • Over four-in-ten (42 percent) admit to lacking the insights required to offer the right variety of solutions to customers

Other key findings include:

The changing landscape of delivery: top challenges for MSPs

Evolving security threats, maintaining margins in the face of service commoditisation and building market share all represent a constant challenge for providers of IT managed services:

  • the ever-changing threat landscape is proving a top challenge for 47 percent of MSPs
  • almost half (47 percent) say offering services at a competitive price, and/or offering a service that is cost-effective for their organisation (45 percent) is high on their list of priorities
  • over one-third (37 percent) are finding it difficult to develop new business and cultivate new customers
  • over one-third (35 percent) admit the pressure to deliver innovation in the face of fierce competition is proving difficult.

The service expansion conundrum: MSPs risk falling down a technology ‘rabbit hole’

With the pressure on to keep up with technology innovations and launch new services, many MSPs are struggling to keep their eye on the ball when it comes to improving customer interfaces and interactions:

  • seven-out-of-ten employees work in an IT/technology role; just one-in-ten employees work in a sales role, with one-in-ten of the workforce engaged in marketing
  • half (50 percent) don’t prioritise the use of customer experience to evaluate the success of their managed services; and one quarter (25 percent) don’t measure customer satisfaction at all
  • profitability (89 percent) and service reliability (86 percent) remain the primary measurements of success for the majority of MSPs.

The ConnectWise research also benchmarks the operational capabilities and readiness of MSPs against a select number of providers who are members of an MSP peer group, whose members collaborate to achieve business transformation.

The findings indicate that MSPs who are members of an industry peer group already appear better prepared to exploit the opportunities offered by a rapidly expanding managed services market:

  • just 23 percent anticipate that keeping up with customer demands will prove challenging
  • these high-growth providers are more likely to offer value add services such as on-site visits (97 percent), remote management (94 percent), consulting services (90 percent) and out-of-hours support (81 percent)
  • on average, these providers already deliver 14 different managed services to customers, compared to 5 of the primary survey group of MSPs

“In an increasingly competitive marketplace, differentiation derived from technological advantage will not in itself be enough,” comments Todd McQuilkin, Chief Executive Officer at MSP, Air-IT.

“MSPs looking to embrace new revenue streams and remain pertinent to their existing customer base will need to master the ability of expanding their service delivery options in line with customer expectations, while adopting a more strategic approach to enabling new levels of efficiency and profitability.”

The ConnectWise Managed services: the winners and losers in 2018 report is available for download here.

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Australia’s Macquarie raises guidance after U.S. winter freeze

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Australia's Macquarie raises guidance after U.S. winter freeze 1

By Paulina Duran and Jonathan Barrett

SYDNEY (Reuters) – Macquarie Group lifted its profit guidance on Monday, sending shares to 12-month highs, as its large North American energy business profits from the winter storms sweeping across Texas and other states.

Macquarie said it expects its fiscal 2021 profit to jump by as much as 10%, after warning just two weeks ago that earnings would be “slightly down”.

The energy business unit, designed to move large quantities of gas to meet unexpected demand, has single-handedly increased the overall profit forecast of the investment bank by about A$400 million, analysts said.

“Extreme winter weather conditions in North America have significantly increased short-term client demand for Macquarie’s capabilities in maintaining critical physical supply across the commodity complex,” the company said in a statement.

Macquarie is the second biggest gas marketer in North America, behind oil major BP. It purchases natural gas and moves it along pipelines and grids, typically from an area where usage is low to high-demand markets.

The deadly winter storm that crippled infrastructure and left millions of Texans without power meant electricity generators had to compete for natural gas supplies, pushing up prices sharply in the deregulated market.

The urgent supply situation has provided Macquarie with an unexpected windfall

“Macquarie appears to be capitalising well on volatility and financial market dislocation,” Bank of America Securities analysts said in a note, as it increased its earnings forecasts for the Sydney-headquartered company.

Macquarie’s performance hurt last year by the pandemic, with subdued deal-making and deteriorating economic conditions leading to a rise in impairment charges.

But a strong initial public offering of its majority-owned data analytics software business, Nuix, late last year and a fillip in the energy business have helped push its share price back to pre-pandemic levels.

The company, which also operates Australia’s largest asset manager and investment banking business, is set for extra boost from a rebound in local M&A activity this year.

Macquarie’s shares were 4.31% higher at A$148.39 early on Monday, the highest level in a year, outperforming a broader market that was flat. The share price eased slightly in afternoon trading.

Earlier this month, the Sydney-based financial conglomerate had forecast full-year earnings for the group to be “slightly” lower than in fiscal 2020.

Macquarie’s Commodities and Global Markets division contributes close to 40% of its group earnings. Analysts had previously raised concerns that the pandemic could erode profits from the division if high energy-use industries shuttered.

(Reporting by Paulina Duran and Jonathan Barrett; Additional reporting by Shriya Ramakrishnan; Editing by Peter Cooney, Jane Wardell & Shri Navaratnam)

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Baidu-Geely EV venture names Mobike co-founder as chief

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Baidu-Geely EV venture names Mobike co-founder as chief 2

BEIJING/SHANGHAI (Reuters) – China’s Baidu Inc and automaker Geely hired Mobike co-founder and former chief technology officer Xia Yiping as chief executive of their new electric vehicle venture, the search engine giant said on Monday.

Baidu last month had announced it would set up a company with Zhejiang Geely Holding Group to leverage its intelligent driving capabilities and Geely’s car manufacturing expertise.

“Xia has extensive management experience in the field of smart cars and mobility services,” Baidu said in a statement. “We welcome Xia Yiping to join Baidu’s auto company and look forward to his contribution to Baidu and the automobile industry.”

Reuters reported Xia’s appointment last week, citing people familiar with the matter.

Xia served as Mobike’s chief technology officer until the company was acquired by food delivery giant Meituan in 2018. Prior to Mobike, he worked at Ford Motor and Fiat Chrysler.

(Reporting by Yingzhi Yang, Yilei Sun and Brenda Goh, Editing by Sherry Jacob-Phillips)

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UK firms report strongest hiring intentions in a year – CIPD

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UK firms report strongest hiring intentions in a year - CIPD 3

LONDON (Reuters) – British businesses have the strongest hiring intentions in a year and fewer are planning to make redundancies as the economic outlook has brightened over the past three months, a human resources industry body said on Monday.

The Chartered Institute of Personnel and Development said 56% of businesses planned to increase staff numbers in the coming months, up from 53% in late 2020 but below the 66% planning to hire staff a year ago before the pandemic.

The proportion of firms planning redundancies dropped sharply to 20% from 30% in the last quarter.

However the CIPD said unemployment was likely to rise sharply if finance minister Rishi Sunak does not extend jobs support for businesses at his March 3 budget.

“It is far too soon to rule out further significant private sector redundancies later in the year if the government does not extend the furlough scheme to the end of June or if the economy suffers any additional unexpected shocks,” said Gerwyn Davies, a senior labour market advisor to the CIPD.

A costly furlough programme that is supporting around one in five private-sector employees during the current lockdown is due to end on April 30.

The British Chambers of Commerce warned last week that one in four of its members planned to make job cuts if the support ended while they were still feeling the impact of the pandemic.

The CIPD said hiring plans were strongest in healthcare, finance, education and IT, and weakest in the hospitality sector which is bearing the brunt of the current lockdown.

The survey, run jointly with recruiters Adecco, covered 2,000 employers between Jan. 5 and Jan. 30.

(Reporting by David Milliken; Editing by William Schomberg)

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