An IT managed services business provides organisations access to technology and support for managing and monitoring their IT infrastructure and networks. Outsourcing IT is a cost-effective way to stay up to date on technology, access specialist skills, improve efficiency and reduce risk. It is an operational rather than capital expense, providing flexibility and meaning minimal resources are tied up.
Managed services is a significant portion of overall IT spend, and is predicted to grow considerably in the coming years. According to a report by Research Dive, the global market size in 2019 was more than £136 billion and predicted to grow at a CAGR of 11.1% until 2027. A report by Statista estimated the market in the UK to be worth around £34 billion in 2017, growing to £39 billion in 2021.
Beyond the usual need to update outdated infrastructure, there are several key interconnected trends behind that anticipated growth, all of which have been accelerated by the COVID-19 pandemic, with organisations having to rapidly change their operations and pivot to remote working practices to ensure business continuity.
Research published by Spiceworks Ziff Davis (SWZD) found 64% of businesses surveyed across Europe and North America enabled a remote workforce in 2020, and more than half of all companies planned to retain flexible work policies even after the pandemic ends. A survey conducted by O2, ICM and YouGov revealed almost half of workers expect to work more flexibly in a post-COVID world – a third of respondents expected to work from home at least three days a week, and 80% expected to work remotely at least one day a week.
The extension of the workplace beyond the physical premises is a trend set to endure. Such wholesale and sustained changes to working practices require substantial additional technology (hardware, software and services) and expertise that is often beyond the budgetary constraints of organisations, with more and more turning to managed services providers for assistance.
The key findings of the SWZD research shed light on the direction of travel:
Hardware-based on-premise solutions continue to make up the majority of IT spend but market research indicates they are declining as a proportion while cloud is growing rapidly thanks to its cost-effectiveness, scalability, flexibility, low maintenance and large storage capacity.
The trend pre-dates COVID, but the widespread move to remote working it triggered has had a significant impact on the rate of adoption. According to the SWZD report, at the time the survey was conducted in the summer of 2020, 35% of organisations had either already migrated or planned to accelerate migration of workloads to the cloud due to the pandemic.
According to Research Dive’s forecasts, the global cloud market is expected to rise with a CAGR of 12.5% to 2027, overtaking on-premise by market size in 2026.
Cyber security has been propelled to the top of board agendas in recent years as the world becomes more digitised, perpetrators become more sophisticated in their approaches and high-profile attacks make headline news. As organisations move more of their information assets online, the incentive for criminals to access them increases, as does the financial and reputational cost of a breach. The reported £60 million cost of the 2015 cyber-attack on and subsequent share price fall of TalkTalk is a poignant example of the potential consequences of insufficient protection.
The acceleration of the shift to remote working following the outbreak of COVID-19 has exponentially increased the cyber threat faced by organisations. Devices and data have been moved outside of the relative safety of organisation’s networks, making them more vulnerable to unauthorised access and theft. To counter this new threat environment, there will be an uptick in the adoption of new and innovative security solutions.
According to forecasts by TechSci Research, endpoint security is expected to dominate the market through to 2025, with network security, application security, cloud security also important considerations.
Reporting strong top line growth in its Q3 results in April 2020, Microsoft CEO Satya Nadella said the pandemic had driven “two years’ worth of digital transformation in two months”. The monthly userbase of the US tech giant’s Teams collaboration platform exploded in response to the COVID-19 pandemic and for many organisations has become a critical part of day-to-day business. With remote working set to ensure for the foreseeable future, there is a significant opportunity for managed services providers to lead the way in rolling out and supporting organisations in their use of cloud-based communications software.