MSP 3.0: Managed services enter a new era

Analysts and Managed Service Provider (MSP) leaders have warned that the industry must evolve beyond traditional support services if it is to remain competitive in the AI era.

Speaking at Kaseya Connect Europe in Prague, Omdia principal analyst Maxine Holt described a move from “MSP 2.0” to “MSP 3.0” – a model built around platforms, automation, compliance, and business outcomes rather than reactive IT support.

“MSP 3.0 isn’t just about doing what you’ve always done, but with better tools,” explained Holt.

Instead, she argued, MSPs need to rethink how they create value for customers, moving from technology operators to strategic advisors.

The end of the traditional MSP?

Jack Peploe, founder of MSP Veterinary IT Services, agrees with the need to overhaul the services offered to customers.

“The world of an MSP is dying. I genuinely believe that,” he told Channel Pro.

Peploe points to how the traditional MSP model built around monitoring, patching, and first-line support is becoming increasingly automated - and MSPs are being pushed higher up the value chain. His own company has already removed its traditional first-line support team.

“We haven’t lost anyone, we’ve upskilled them,” he told ChannelPro.

For Peploe, success increasingly depends on understanding customer industries, workflows, and business challenges rather than simply managing technology.

“What [customers] want is someone that really understands them, gets them, understands what they can do, understands their processes, their flows, the inefficiencies,” he said.

AI adoption remains slow

While AI dominated discussions at the event, there were warnings that adoption remains slower than many organisations would like.

Omdia research presented at the event found that fewer than one in five AI proof-of-concept projects ultimately make it into production, highlighting the gap between experimentation and deployment. The biggest barriers include integrating AI with existing infrastructure, a lack of in-house expertise, and difficulties defining clear business outcomes.

Kaseya CEO Rania Succar argued that partners have an important role to play in helping customers bridge the gap between experimentation and deployment.

“The adoption of agentic solutions to date has been too slow,” she told ChannelPro.

Similarly, Holt suggested that customers need practical guidance rather than more hype around AI.

“SMBs don’t need more AI hype,” she said. “They need practical guidance on how to actually implement AI in ways that integrate with existing systems, deliver measurable value, and don’t require them to become AI experts overnight.”

Platforms become the foundation

Underlying many of these changes is the growing importance of platform integration. As MSPs adopt more automation and AI capabilities, fragmented toolsets are becoming increasingly difficult to manage.

“It’s not about the best tool for each of the areas operating independently,” said Holt, who said MSP 3.0 will be built on “fewer platforms with much better integration”.

She added, “MSP 3.0 providers don’t just respond to problems, they anticipate them. They don’t just implement solutions; they recommend strategies. And they don’t just manage technology; they enable business outcomes.”