Untangle Announces MSP Benchmark Study Results

Untangle Announces MSP Benchmark Study Results Industry maintains servicing pricing levels despite growing number of entrants

SAN MATEO, Calif. – July 15, 2008 – Untangle today announced the results of the industry’s first Managed Services Provider (MSP) Benchmark Study. The goal of the study was to offer an objective set of business metrics to provide the MSP community with insight into the range of MSP business models and performance. Key focal points of the study included managed services pricing, scaling and business model evolution. Over 200 MSPs nationwide participated in the survey, conducted by Pacifica Group, an independent research and marketing consultancy for the high tech industry.

“This study offers an interesting glimpse into MSP trends,” said Joe Panettieri, editorial director of MSPmentor, the ultimate guide to managed services. “The MSP model is still emerging so it’s great for MSPs to see where they stand amongst their peers.”

Key findings from the survey include: The MSP model is growing more popular: While over two-thirds of the survey respondents reported having been in the technology reseller business for more than six years, nearly one-third began delivering managed services within the last year.  Further, respondents expressed a clear desire to move away from selling break/fix services and towards the MSP model over the next two years. Automation is the key to MSP growth/scaling: MSPs can scale by increasing employee headcount until they have around 25-50 customer contracts or approximately 500 devices managed.

Beyond this point, MSPs need to accelerate investments in automation (i.e. monitoring & management) and focus on process standardization to achieve the next level of growth. Nevertheless, new MSPs take 3 – 5 years to establish themselves and new entrants should not over invest in automation technology ahead of need. MSPs keep small businesses up-to-date with the latest IT trends: Nearly 40% of respondents already offer VoIP services today, with another 27% considering offering it within a year. 65% offer web content filtering and that number is expected to jump to 84% within a year. MSPs are continually enhancing and expanding their services offerings to better serve their small business customers.

Prices have held steady despite a growing number of MSPs serving small businesses: Although pricing models for each service area vary widely, newer MSPs are not leading with discounts, suggesting that prices are not commoditizing. “Our MSP partners told us that they struggle to define their initial pricing and service offerings,” said Bob Walters, CEO of Untangle. “We hope that the MSP Benchmark Study will help both established and aspiring MSPs refine their business models and grow their customer bases.”