How the Public Cloud Unlocks Profitability for MSPs in the Age of AI

AI is no longer a corporate buzzword; it’s a boardroom mandate. The 2025 McKinsey Global Survey on AI found that more than three out of four organizations already use AI in at least one business function, with two-thirds expecting to increase investment over the next three years. But AI can’t deliver on its promise without one essential ingredient: scalable, accessible data storage.

Unstructured data is forecast to grow at a 16% compound annual rate through 2028, nearly doubling in just four years. For managed service providers (MSPs), this shift represents both risk and opportunity. AI is raising the bar for what clients expect from their data: instant accessibility, predictable costs, centralized control, and AI-ready infrastructure. Legacy approaches can’t keep up; fragmentation, hidden costs, and limited scalability stall progress and erode margins.

Public cloud adoption gives MSPs the foundation to deliver on AI’s promise. It consolidates data into a single, flexible infrastructure, ensures affordability and scalability, and removes the operational friction of legacy systems. More importantly, it opens the door for MSPs to monetize services that thrive on AI-ready data, turning today’s storage challenge into tomorrow’s growth engine.

Cloud adoption: The core engine of MSP growth

For MSPs, profitability depends on recurring revenue, and the cloud is where those streams are built. It’s no coincidence that 59% of high-earning service providers with more than $10 million in revenue have already migrated all client workloads to the cloud, positioning themselves as leaders in digital transformation.

Cloud adoption doesn’t just modernize infrastructure; it creates service lines that can be monetized consistently. Each represents a recurring revenue stream that strengthens client relationships while expanding margins:

• Infrastructure design and management: Delivers flexible IT environments that scale with business growth

• Data backup and protection: Ensures security and resilience through immutability and redundancy

• Business continuity and disaster recovery: Keeps operations running during outages or disruptions

• Active archiving: Centralizes access to support compliance, analytics, and AI readiness

MSPs that combine these services with security offerings are seeing the results directly on the bottom line, with net profit margins of 15% or higher. That’s the business case for cloud adoption: turning storage into a predictable, recurring growth engine.

The cost efficiency challenge MSPs can’t ignore

Recurring revenue may be the growth engine for MSPs, but profitability still hinges on one factor: cost efficiency. In theory, moving workloads to the cloud should eliminate hardware refresh cycles and reduce the overhead of managing on-premises infrastructure. In practice, hidden fees for accessing and securing data often turn projected savings into margin erosion.

The numbers tell the story: 80% of MSPs exceed their cloud budgets. Complex tiering models and opaque fee structures make it nearly impossible to forecast spend, and that unpredictability undermines the recurring revenue models that MSPs depend on.

Until costs become transparent and predictable, cloud adoption risks weakening the very business case it was meant to strengthen for MSPs.

Data access: The hidden driver of cloud costs

For MSPs, the economics of hyperscale storage hinge less on how much data you manage and more on how often that data is touched. Every retrieval triggers an egress fee, and those costs add up quickly. The reality is that data is rarely as “cold” as clients assume. In 2024, 83% of MSPs reported accessing archived data at least monthly, a trend certain to accelerate as AI adoption increases demand for real-time insights.

Tiering strategies were meant to contain costs, but they fall short in multi-tenant environments where usage is unpredictable. Analytics, compliance audits, and AI workloads generate irregular bursts of access that no automated model can anticipate. For providers, that unpredictability translates directly into rising bills, eroded margins, and client frustration when costs don’t align with expectations.

Unless pricing models evolve, AI won’t just accelerate data growth; it will intensify cost volatility, making long-term profitability even more difficult for MSPs to sustain.

Multi-tenant models: Breaking silos, protecting margins

If unpredictable access drives costs up, data fragmentation makes the challenge even greater. AI depends on accessible, centralized data, yet many MSPs are still constrained by siloed systems that increase complexity and inflate costs. Multi-tenant cloud environments offer a way forward: consolidating client data within a single infrastructure while securely separating tenants. The result is a model that eliminates silos, protects margins, and enables providers to scale services with control and efficiency.

Wasabi Account Control Manager brings this to life with a single console to deploy, manage, and monitor storage accounts at scale. MSPs can provision buckets in minutes, enforce policies consistently, and automate reporting and access across their client base.

An example from Whalley Computer Associates demonstrates the impact. With Wasabi Account Control Manager, they were able to achieve:

• Faster time to market by converting trial accounts into production in minutes

• Improved cost forecasting with visibility into storage consumption, egress data, and API requests

• Higher customer satisfaction by proactively identifying and resolving errors

The outcome: efficiency that safeguards profitability, supports AI readiness, and creates capacity for new revenue growth.

Turning storage into a growth engine with Wasabi

Profitability isn’t theoretical; it’s proven. An IDC study found that Wasabi customers saved an average of $20,500 per 100TB while unlocking an additional $38,500 in potential revenue. Those results come directly from eliminating egress fees and complex tiering models that erode MSP margins.

With Wasabi, cost predictability becomes a competitive advantage. Our pricing model strips out hidden fees and simplifies management across clients and workloads. The result: storage shifts from a cost center into a reliable growth engine, one that drives recurring revenue, protects profitability, and strengthens your position as the strategic partner clients rely on to navigate digital transformation.