Managed service providers are pivoting from IT support to AI-driven business advisory roles as they confront a wave of new revenue opportunities and operational risks. Speaking at N-able's Empower on the Move event in Melbourne, executives and MSP leaders described an industry where artificial intelligence is reshaping services, compressing margins, and pushing data governance to the forefront of customer conversations.
N-able chief technology and product officer Mike Adler said the rapid rise of AI, increasing cyber threats, and growing IT complexity mean partners can no longer afford to focus solely on technology management. "The businesses that you're talking to, the businesses that you support, care about their outcomes," Adler said. "Our mission is to keep employees productive, help businesses use technology to drive their businesses forward, and do so in a way that not only drives productivity but drives compliance, security, and frankly, preservation of their business and their data."
Adler described resilience as a continuous process of preparation, protection, and recovery. N-able is positioning its platform around endpoint management, security operations, and data protection, supported by AI-driven automation.
AI adoption accelerates across the channel
N-able CEO John Pagliuca, speaking via video message, identified AI, cybersecurity, and industry consolidation as the three dominant forces shaping the MSP sector. He said AI adoption has jumped sharply. "About a year ago, only about 2 per cent of MSPs were using AI or AI-native tools in their tech stack. That's closer to 20 per cent in less than a year," Pagliuca said. "We're seeing about five to ten per cent of MSPs now beginning to roll out an AI managed service into the market."
Pagliuca encouraged partners to move AI beyond internal productivity and into customer-facing services. "Are you doing AI projects? Are you standing up a Copilot environment? Are you helping them with shadow AI?" he asked. Adler added that more than 90 per cent of threats detected by N-able's security operations are now remediated by AI at what he called "AI speed."
From tickets to business outcomes
N-able chief marketing officer Vikram Ramesh said the industry is shifting away from traditional support-focused services. "We've gone away from the folks who are just doing the automation or fixing devices and patching them to driving more outcomes," he said. "The constant conversation is: How do I evolve from what I'm doing, and how do I drive a differentiated value for my customers?"
Both Ramesh and Adler pointed to efficiency gains as a primary driver. "The biggest cost to most MSPs is their human capital," Adler said. "If they can become more efficient internally and using some of our technologies to make themselves more efficient, it means that they can grow because they can add the next three, five, 20 customers without having to grow their technical staff." Ramesh also highlighted emerging opportunities in AI governance and risk management, noting that MSPs are moving from identifying shadow AI toward establishing compliance and governance frameworks.
This evolution mirrors broader shifts in AI for Executives & Strategy, where organisations are rethinking how technology investments translate into measurable business results rather than just operational fixes.
Margin pressure and the data opportunity
Omdia chief analyst APAC channel Mark Iles told attendees that AI is creating one of the largest channel opportunities in decades but warned it could compress traditional managed services margins. "The threat here, I think, for core managed services is the pricing on that is only going in one direction," Iles said. "If you can deliver it more cheaply, which you can, customers know that, and they want to take that budget and they want to reallocate it."
Iles said consulting, AI readiness, and data services represent untapped opportunities. He cautioned that many MSPs are leaning into AI while neglecting data management. "The one area at the moment where I think, as a broad MSP channel in this region, we're undercooked. We're leaning into AI and we've left data behind." Despite these challenges, Iles said he remains optimistic. "As technology gets more complicated and becomes more business specific, customers need channel more than they've ever needed."
Monetising AI: the practitioner view
A panel featuring Comwire IT director Lee Shrimpton, Kenstra director Jackson Christie, and ADITS general manager Chris Grasso provided a ground-level look at how MSPs are turning AI experimentation into billable services. All three said AI represents both a revenue opportunity and a risk.
"We doubled down on cyber over the last kind of three to four years and made a significant investment," Shrimpton said. "We started with managing that risk, the governance of AI adoption, but now starting to get into that whole opportunity of actually monetising and consulting." Comwire has expanded into software development, building AI-powered solutions for customers. "If our customers aren't buying from us, they're buying it from someone else," Shrimpton said.
Grasso said ADITS had created a dedicated governance, risk, and compliance practice around AI. Christie added that concerns around AI misuse and data exposure are generating new customer engagements. "We're getting businesses actually come to us saying, 'I have my information end up in this particular frontier model'," he said.
The panel also addressed shadow AI - employees adopting AI tools regardless of organisational approval. Christie said businesses need to accept this reality. "It might be a bit sometimes unfair for a business to go, 'Oh, my staff just shouldn't put stuff into AI'. That's not realistic. I think it's a business's obligation to help staff realise what they can use." Grasso added that technical controls alone will not solve the problem. "I think we're kidding ourselves if we think that we're going to be able to prevent it with just technology measures."
All three reported growing demand for AI-led consulting and custom application development rather than traditional product resale. Grasso said these engagements are fundamentally different. "It's all very much bespoke consulting engagements. It's not something that is being repeatable like a lot of what we've done in the industry previously." The shift toward bespoke AI solutions and integrated security operations places these services squarely in the domain of AI for IT & Development, where technical teams are building custom applications that embed directly into client workflows.
The panellists also flagged data governance as an emerging challenge. Shrimpton said many mid-market organisations are still at the beginning of their data governance journey. "It'd just be a great success to have customers start to understand the importance of DLP and data classification."
On hiring, panellists said they are training existing teams and recruiting staff with both technical and business expertise rather than hiring dedicated AI specialists. Grasso said the best hires in the AI space have been "devs that have a bit of commercial acumen." Christie noted that younger employees entering the workforce are often already comfortable with AI tools. The panellists said conversations are increasingly moving beyond IT teams and into boardrooms as organisations wrestle with governance obligations and AI adoption strategies.
N-able addresses recent incidents
Adler directly addressed two recent incidents affecting N-able customers: an N-central security vulnerability and a Cove Data Protection infrastructure failure. On the N-central vulnerability, Adler said N-able contained the threat quickly. "Less than 48 hours from the time we had started that investigation until the patch was available is a very, very quick timeline," he said. "We felt that was our obligation to all of our customers to make sure that you were secure."
On the Cove incident, Adler acknowledged an unusual storage failure. "We should never lose data," he said. However, he said the impact was smaller than some public commentary suggested. Adler framed both events as real-world examples of resilience in practice. "Because we had properly planned for disruption, because we had planned for being resilient, the impacts are much less."
Why this matters for executives and strategy
The Melbourne event made clear that MSPs who remain focused on break-fix support and device management will face margin compression as AI makes those services cheaper to deliver. The growth path runs through consulting, governance, and bespoke AI application development - services sold to the C-suite, not just the IT department. For executives, the message is that their technology partners are repositioning as strategic advisers capable of addressing shadow AI risks, data classification gaps, and compliance obligations. Those who treat MSPs as commodity vendors will miss the opportunity to redirect budget toward higher-value AI readiness work.
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