Growth Despite Turbulent Surroundings

2022 was a tough year, and economic forecasts show uncertainty about what will happen in 2023. Complex global geopolitical conditions see constant announcements of budget cuts, layoffs, and tech execs’ priorities being reshuffled. Service providers are expecting growth in 2023, however, with a new focus on partnerships, delivering co-innovation, and building long-lasting client relationships.

Spend On MSPs Holds Up

Technology managed service providers (MSPs) offer critical support to customers, helping them not only in delivering IT services but also in innovating for the future. In 2023, end user organizations and MSPs will take heart from early comments from the International Monetary Fund and European Central Bank indicating that some cautious optimism is returning. IT projects will keep moving, although with a different focus, switching now from fostering creativity to building resilience. New practices will play a pivotal role in aligning providers and internal teams to outcome-based goals. This will influence pricing practices, as well. The days of time-and-materials or fixed-price engagements are slowly coming to an end. Modifications to contracts making automatic pricing adjustments for inflation and cost of living will be challenged in negotiations between MSPs and procurement teams. Tech executives will work more closely with the sourcing teams in this direction.

More Alliances, Alignment, And Coordination

Cloud and cloud platforms are driving new and stronger alliances between MSPs and vendors. Tech executives will buy cloud services and platforms alongside the managed services they source. RFP selection processes will take new variables into account and new evaluation metrics for new MSP contracts, besides traditional ones. These headwinds are forcing MSPs to rearchitect their organizations to better address present and emerging customer needs. End user organizations are looking for applications providers with whom they can co-create, as technology and applications are more and more key to building their unique value propositions in regard to employees and end customers. Service providers are on the hunt for talent and are adapting to new ways of working and expectations that dominate in the post-pandemic world. Better talent management will mean a significant advantage for tech executives at end user organizations in terms of team stability and reliability.

Sovereignty As A Game-Changer

Competition in the cloud space is getting more focused on vertical solutions and offerings and sees now a strong opposition between local cloud vendors and the hyperscalers. While the former are leveraging their unique position to respond to sovereignty requirements, the latter use their size to foster an unparalleled level of investments that place them into an irreplaceable role for cloud migrations and services. Tech executives will have to strike the right balance between functionalities, price, scale, services, support, and sovereignty requirements, seeking more and more for ecosystems of cloud and MSP partners rather than one-on-one MSP and vendor relationships.

To learn more about service provider trends for 2023 and their meaning for tech executives, read our report here: The Top Service Provider Trends 2023 And What They Mean For Technology Executives.