Artificial Intelligence not only dominated technology conversation in 2025, it also weighs heavy on MSPs’ minds when looking at their major challenges for 2026.
While members of the 2025 MSP 501 generally had solid results last year, smart MSPs are always looking ahead for potential roadblocks. We asked members of the MSP 501 executives about the challenges they face this year, and AI received the most attention although cybersecurity and attracting talent were also on their minds.
Here’s a sampling of their most daunting challenges entering 2026.
Challenges around AI
Simplifying AI adoption is a common theme for MSPs entering 2026.
”A primary challenge will be helping our customers adopt AI in a safe, compliant, and effective manner,” No. 15 CloudWave CEO Erik Littlejohn said.
“We need to continue to build new ways to make AI adoption simpler for clients,” No. 81 PCH Technologies CEO Tim Guim said. “We also need continue to find new ways to drive use cases for AI to improve our internal efficiencies.”
“I still see a lot of hesitation and confusion of businesses utilizing AI to enhance and automate operations,” No 104 California Telecom CEO Jim Gurol said. “[Chat] LLMs seem to be getting all the attention and the challenge is to get customers to buy into newer AI technology where you can actually automate and enhance operations.”
“Every company now uses AI, but few govern it well,” No. 20 BlackHawk Data CEO Maryann Pagano said. “I met so many IT managers this year who have staff ‘dump’ confidential information into AI platforms, not understanding that once you do that, it’s out there for the world to see. 2026 will force companies to implement real AI governance frameworks. Regulating that is going to be a high priority for most people in the tech industry.”
“A challenge for customers in 2026 will be the next phase of AI readiness,” No. 37 Otava CEO TJ Houske said. “While interest in AI continues to surge, many organizations still struggle with the foundational elements, modernizing their data architecture, establishing strong governance frameworks, and preparing multi-cloud environments to securely support AI-driven workloads. Ensuring data quality, protection, and compliance will be essential for customers to fully realize the value of AI.”
Cybersecurity Challenges
Security is always a big issue for MSPs, and AI makes keeping clients safe even more challenging entering the new year.
“One of the biggest challenges in 2026 will be AI security,” No. 42 Thrive CTO Michael Gray said. “I expect that next year will see the first major public breach of an AI model. And it won't just be a data leak; someone will find a way to manipulate a decision-making model (like one used by an insurance company to determine policies), take control of the decision-making process and hold it hostage.
“Our biggest challenge in 2026 will be navigating the commoditization of Microsoft services while managing rising AI-security demands and margin pressure,” No. 36 Sourcepass CEO Chuck Canton said. “This will require a continued shift toward higher-value, higher-margin offerings, particularly in NOC, SOC, advanced security, and AI-enabled services. A breach at such a public level will act as a major wake-up call for the industry, revealing the weakness of model pipelines and data integrity practices.”
“With the rise in sophisticated cyber threats, healthcare organizations will need more robust cybersecurity measures,” CloudWave’s Littlejohn said. “As hospitals and health systems increasingly turn to Managed Security Service Providers (MSSPs), our team must ensure we meet these demands by providing expert-level protection and 24/7 monitoring.”
“Ransomware is now industrialized,” No. 4 Assured Data Protection CEO Simon Chappell said. “Attacks are faster, more targeted, and more destructive. Our challenge for 2026 is staying ahead of threat actors while continuing to guarantee the recovery outcomes our clients rely on. This means deeper automation, broader telemetry, and continued investment in platform engineering.”
Talent Challenges
Skills shortages is also a common theme among leading MSPs.
No. 117 Braden Business Systems Erik Braden said “Scaling talent and culture without losing our human edge” is a major 2026 challenge. “As Braden grows, our challenge is preserving the people-first culture, transparency, and service standards that enabled 97% satisfaction and 98% retention.”
“The market is full of generalists, but very few people have genuine experience recovering complex environments at speed under duress,” Assured DP’s Chappel said. “We’ve grown from 95 to over 200 employees in a short timeframe, and maintaining that level of high-caliber, specialist talent remains a challenge as the industry shifts toward resilience-first expectations.”
“The ongoing shortage of IT and cybersecurity professionals presents a challenge for organizations across numerous industries looking to manage their security internally,” Littlejohn said. "Our team is focused on helping our customers bridge this gap through strategic partnerships and by delivering specialized expertise that hospitals cannot maintain in-house.”
Business Landscape Challenges
Other 2026 issues include overall economy uncertainty, merger and acquisition management and cloud sprawl that has popped up in recent years.
“I think the uncertainty in the economy is a huge driver,” No. 99 360 SOC CEO Chris Icheson said. “Although tools like AI may make finding opportunities AND engaging easier, I believe there is still a lot of uncertainty in the market. I also believe overlapping spend is something that organizations now are wanting to steer clear of.”
“2025 was a year of continued expansion for Blue Mantis,” No. 328 Blue Mantis CEO Josh Dineen said. “We experienced robust organic growth in our core areas of cybersecurity, cloud, and managed services, and further strengthened our capabilities with five strategic acquisitions spanning networking, carrier services, data protection, IT service management, and IT operations management. We also expanded our onshore, nearshore, and offshore presence, scaling our global employee base. Our biggest challenge now is to mature all these investments and maximize their return, while ensuring we continue to deliver exceptional business value to our clients—without sacrificing quality for either our customers or our employees.”
“Cloud environments are more fragmented than ever,” BlackHawk Data’s Pagano said. “We are starting to see this more than ever. Everyone raced to the cloud but didn’t really do a good enough analysis before they did. The industry is shifting toward cloud simplification, not cloud expansion. [MSPs] who look at an environment from an agnostic perspective are the ones people need to bring in. Some sell products; some sell a solution to a problem. Picking the right people to help is important.