Managed services will drive AI adoption: Report

Organisations are relying on service providers to turn AI ambition into operational reality, according to KPMG.

Managed service providers are emerging as the lynchpin in turning AI ambition into operational reality, according to KPMG’s Managed Services Outlook Survey 2026.

Karlie Lytas, managed services partner, KPMG Australia said, “Most organisations aren’t short on AI ambition; however, they are struggling with executing at scale.”

For MSPs, this means owning integration, data quality, reliability and cost control.

“These are sometimes the friction points that slow clients down,” Lytas told CRN Australia.

With agentic AI, more than 90 percent of executives view managed services as essential to leapfrog technical debt and talent gaps that often stall initiatives.

Bryan Rogers, CEO of Redd, is finding strong and growing interest, but many customers don’t know where to begin.

“Most organisations aren’t asking for fully autonomous agents, yet — they’re still trying to understand what’s realistic, secure and valuable for them,” he said.

For Redd, common starting points are knowledge retrieval, reporting and reducing admin in low-risk operational areas.

However, organisations don’t have the internal capability to manage the complete process, particularly once agents start interacting across multiple systems. This is where service providers come in.

“Agentic AI isn’t a ‘set and forget’ technology. It relies heavily on good data, secure identity and information permissions, and ongoing governance,” Rogers told CRN Australia.

MSPs key to digital transformation success

Agentic AI isn’t the only pressure point where organisations are turning to MSPs.

The survey of 1,200-plus senior leaders, with research and analysis by IDC, found 87 percent have woven managed services directly into their plans for digital transformation.

Nick Sone, chief customer officer with Brennan, is finding that organisations are thinking about managed services earlier in the transformation cycle, rather than treating it as an add-on when the project is finished.

“It’s not just about deploying a new platform, creating a new environment or integrating a range of systems — it’s about how that technology is run, optimised, governed and evolved as the business needs change,” Sone explained.

Service providers are also viewed as a way to reduce operational costs and help fast-track innovation, the survey showed. Rogers has found MSPs are critical because transformation inherently increases complexity and risk faster than internal teams can scale.

“This is particularly true across cloud, security and always‑on operations,” he said.

Service providers must bridge capability gaps

With organisations seeking wholesale support with AI adoption, the onus is on service providers to continually rise to the challenge.

“Service providers need to invest internally to keep up with emerging capabilities, best practices and governance models,” said Sone.

But it goes much further than this, with service providers called on to support legacy infrastructure, modern cloud platforms, cybersecurity, compliance and day-to-day operational performance.

“Customers are rightly asking providers to bridge multiple worlds at once,” he said.

Rogers acknowledged it can be challenging for MSPs to keep up with emerging AI capabilities, best practices and governance models while supporting other transformation initiatives such as integration of cloud capabilities.

“Successfully fulfilling these requirements relies on strong standardisation, security frameworks and ongoing skills development within the MSP itself,” he said.

“But any MSP who is not doing this for their own internal operations risks being quickly left behind,” he added.

How MSPs can harness their growing importance

Managed services is now a strategic priority for 99 percent of organisations, with two‑thirds expecting the model to drive major operating, business and strategic impact within 24 months, according to KPMG’s survey.

Sone is seeing this shift first-hand. “Customers want partners who can help them improve resilience, control cost, reduce complexity and introduce innovation in a way that is actually accountable,” he said.

At the same time, some partners find that needs vary according to size, with larger, more mature organisations prioritising AI capabilities, while cyber and managed security services are the top consideration among mid-size organisations.

“Many understand that being able to harness agentic AI capabilities, while also sleeping soundly at night, requires security and risk management controls firmly embedded to support innovation and experimentation,” said Rogers.

The take-away from the survey is the way service providers are moving from the sidelines to become a strategic collaborator on AI, cybersecurity and innovation initiatives.

“Among our client base, technical proficiency and a strategic mindset have become assumed capabilities for any managed service provider that wants to be a true business partner and not just a transactional break/fix help desk,” Rogers said.