The Massive Channel Opportunity with Microsoft 365

Already a dominant player in the office suite market, Microsoft peaked during the COVID-19 pandemic of 2020. MSPs experienced this firsthand, with a rash of clients that needed to quickly transition to remote work and chose Microsoft 365 as their primary tool. But as many MSPs have learned, simply reselling Microsoft 365 is not a path to higher margins. The real opportunity lies in managed services, and cybersecurity offers the most potential.

Microsoft growth created new challenges and opportunities

Microsoft experienced remarkable growth in the early stages of the pandemic. At the end of 2019, Microsoft 365 boasted 200 million active users; by the end of Q2 2020, users grew to 258 million. Microsoft Teams grew at an even more remarkable rate. In November 2019, Microsoft reported 20 million active Teams users. By April 2020, that number grew to 75 million. Today, that number stands at 145 million.

The transition to Microsoft 365, although a windfall for many MSPs, presented a huge challenge. Microsoft’s dominance makes it a top target for cyberattacks. In fact, Microsoft has been the most impersonated brand in phishing attacks in four of the last six quarters.

While businesses and employees were just getting their bearings in the early stages of global lockdowns, cybercriminals got to work. Cyberattacks increased globally, with COVID-19 as the primary weapon for convincing users to take the bait. Responsible for their clients’ cybersecurity, MSPs were under enormous pressure to get their clients remote-work ready while ensuring their systems were safe from attack.

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Securing Microsoft 365 while creating new revenue streams

From brute force to social engineering, there is no shortage of ways to breach Microsoft 365. In 2020, 64 percent of MSPs reported ransomware attacks against Microsoft 365, and 54 percent said ransomware originated from a phishing email. For MSPs, the prospect of a successful attack against a Microsoft 365 account is a risk not worth taking.

They fortified Microsoft 365 with additional security tools, but adding more tools can create more complexity and drives up costs. While some MSPs experienced low margins as a result of reselling Microsoft 365, others saw an opportunity and expanded on their Microsoft 365 offerings with managed security services.

According to a survey by Altaro, it was cybersecurity that made the difference for MSPs in 2020. Security-as-a-service, according to Altaro, is one of the top three revenue-generating opportunities for MSPs, just behind cloud computing and remote working. Additionally, 65 percent of MSPs reported that security services revenue increased in 2020, and 38 percent reported that cybersecurity is the top driver of business growth.

MSPs who took advantage of the opportunity by offering managed Microsoft 365 security services saw increased revenue as a result. Two-thirds of MSPs said they implemented email security solutions to generate more Microsoft 365 revenue; 84 percent of those also offer backup and recovery—a popular pairing offered in many bundled services.

Creating managed security services

Creating new managed services is not without its challenges. Creating new services often means adding more tools and vendors. If not selected carefully, this can create complexity, require additional staff, and lead to an unwieldy—and expensive—security tech stack.

By consolidating their stack, MSPs can save money and increase efficiency. Tool selection comes down to the services you want to offer and where you plan to go in the future. Do you have one tool that can do the job of three? Do you have one tool that does only one thing well? How can you slim down your stack without forsaking security? These are some of the key questions you should ask.

Finally, the fewer vendors the better. Select vendors who provide multiple tools that you can use in your managed security offering. Reducing the amount of vendors you need to pay and manage not only helps you save time and money, but also helps to build stronger vendor-partner relationships.

To learn more about capitalizing on the channel opportunities with Microsoft 365, download our eBook.