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Why 2020 may have changed the MSP industry forever

Managed service providers will come to view 2020 as the year their industry finally received the recognition and legitimacy they have long sought.

When we look back, we'll remember 2020 as the year of the COVID-19 pandemic. But in the IT services world, 2020 may also have been the year that changed the MSP industry forever.

Here are several reasons 2020 was transformative for the managed services profession, and may have changed how MSPs operate for years to come.

MSP industry forced to adapt to pandemic

It is not enough to say the pandemic has changed the MSP industry. Many industries have been affected by COVID-19, not just MSPs.

While MSPs entered 2020 with significant growth expectations and tailwinds, they had to adapt to the pandemic like so many other businesses did to survive. In fairness, however, MSPs have performed far better than many other industries during the crisis.

Supporting the remote workforce

2020 pushed the MSP industry into the spotlight like never before. As organizations rapidly moved their office-based workers to work-from-home environments, MSPs played a critical role in that transition. Organizations not only needed MSPs to provision work laptops, phones and applications, but to secure remote workers and data.

Remote workforces have become the norm for many companies worldwide, and that trend may continue after the pandemic ends.

MSPs and reactive IT

For reactive IT providers, 2020 was challenging, while MSPs with steady monthly recurring revenue generally had a different experience. It may have been the year that separated proactive MSPs from all forms of reactive IT management.

Early on in the pandemic, we saw the widespread termination or delay of most discretionary IT projects. Organizations replaced those projects with the urgent deployment of remote workforces. Thousands of MSPs helped organizations prepare, outfit and manage work-from-home staff, many of whom had never worked remotely before. Service providers unused to delivering scalable and repeatable IT services had to either adapt or face the reality that their reactive services were less in demand than in previous years.

Cybersecurity attacks continued

Twenty years ago, MSPs desperately wished for recognition and legitimacy. Both outcomes came to pass in 2020.

The pandemic did not slow down cyber attackers, many of whom remained on the offense and took advantage of the crisis. This kept MSPs busy.
We did, however, receive some interesting guidance from the U.S. Treasury Department regarding ransomware payments. The Office of Foreign Asset Control issued a bulletin regarding the liability of making ransomware payments, specifically to certain geographic regions, people and groups. Perhaps this guidance will slow down ransomware attacks on MSPs and end users.

The introduction of MSP regulation

The very first MSP regulation law was enacted in 2020. Passed by a bipartisan state legislature in Louisiana, the law requires MSPs who service state agencies to register with the Secretary of State.

While the law doesn't go into effect until February 2021, its impact will be far-reaching, as other states and regulators seek ways to improve cybersecurity standards of behavior.

Validation of the managed services business model

Perhaps one of the most significant outcomes of 2020 was the nearly universal legitimization of the managed services business model. In the same year, a pandemic drove customers toward MSPs, while legislators passed laws regulating those same providers.

Twenty years ago, MSPs desperately wished for recognition and legitimacy. Both outcomes came to pass in 2020. We can be thankful for at least a few things that happened last year.

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