Report: Managed Network Services: Global Opportunity to 2012 (Strategic Focus) TOC

Overview
- Catalyst
- Summary
Key Messages
- Historical market drivers persist, yet new factors are stimulating demand for MNS
- The mix of MNS revenues is changing
- Value-added network services are key to capturing market share
- A business case for MNS must be made
- Emerging competitive threats are looming
- MNS providers are missing vertical opportunities
- Service contracts should function like management tools for customers
Table of tables
Market Opportunity
- Heavier network traffic and skills shortages are among persistent historical market drivers
  - Defining managed network services
  - Network traffic and complexity continues to grow and drive MNS demand
  - Customers continue to seek to focus on their core business priorities
  - The pool of available networking expertise is shrinking
- New drivers are stimulating the market
  - Increased globalization and trends in outsourcing are propelling MNS demand
  - Web 2.0, email and online business applications are straining corporate networks
  - Future proofing is a priority
- Control and cost issues are inhibiting MNS adoption
  - The do-it-yourself (DIY) approach persists but is becoming less viable
  - Customers want both managed services and control
  - Cost is still an issue, particularly in the mid-market
  - The adoption of value-added services is hindered by legacy customer networks
- The mix of MNS revenues is changing
  - VoIP revenue is growing, although not yet a mainstay
  - Revenue growth for mobile voice and data managed services is robust
  - Internet DSL services are commoditized
  - IP VPN and Ethernet drive WAN/data managed services revenue
  - Applications services will boost MNS provider revenues
Technology Evolution
- WAN and LAN services are poised for growth
  - Core WAN technologies will remain the revenue staple
  - There is a vast, untapped market for managed LAN services
- Value-added network services will capture market share
- Demand for network security is surging
  - Customers face new security threats
  - Providers are giving customers more network security visibility
  - Network security will be simplified in next-generation networks
- Application optimization and dynamic bandwidth are in demand
  - Application optimization can dramatically boost performance
  - Dynamic bandwidth services are becoming more sophisticated
  - Network bottlenecks are a growing concern
  - Unified communication and collaboration will drive app optimization demand
- Customers are curious about UCC but most cannot accommodate end-to-end deployments
Customer Impact: forging a business case for NETWORK SERVICES
- The migration to IP-based networks will be gradual
- A business case for MNS must be made
  - Customers are reticent to invest in MNS
  - Customers want the latest services yet balk at higher service costs
- MNS providers need to balance customization with standardization
- Customers want seamless global coverage
Competitive Landscape
- The competitive landscape is complex and co-dependent
  - In-house IT remains the chief competitor
  - More consolidation in the MNS market is likely
- Telecommunications companies have a global opportunity
- Large system integrators are positioned to capture application services share
- Independent MNS providers are a growing competitive force
  - Equipment vendors will equip independent providers with new SMB tools
- Equipment vendors are ripe to exploit the SMB market
  - Cisco does not rival MNS providers in the traditional sense
- Emerging competitive threats are looming
  - Web-based MNS providers may compete against all MNS providers
  - Low-cost outsourcers are nibbling at the MNS market share
- Independent providers and telecoms are leading the MNS market
Go to Market
- MNS providers are missing vertical opportunities
  - Retail is a booming MNS vertical
  - Some verticals are more cost conscious than others
- Opportunities exist to target specific geographies
  - Mobile networking needs vary by region
- The mid-market is an open playing field
  - Regulations and skills shortages are driving demand
  - Mid-sized businesses want but can' t afford customization
- A sales pitch for each decision-making department is required
  - Find the buyer and tailor the message
- Service level agreements should function more like management tools
- Recommendations
  - Providers should focus on value-added MNS offerings
  - Build a business case for network services
  - Customize services judiciously and balance them with standardized services
  - Target verticals by tailoring service offerings,partnerships and marketing
  - Tailor sales pitches for several decision makers
  - Work with marketing on fine-tuning service agreements
APPENDIX
- Definitions
- Methodology
- Further reading
- Ask the analyst
- Datamonitor consulting
- Disclaimer
List of Tables
- Table 1: Customers' general propensity to outsource will increase within two years
- Table 2: VoIP is the only fixed line managed service that will grow in revenues in five years
- Table 3: Mobile voice and data managed services will grow steadily through 2012
- Table 4: DSL services are the largest revenue opportunity among Internet managed services
- Table 5: IP VPN will lead WAN/data managed services revenue for the next five years
- Table 6: Application services revenue will continue to dominate hosting business
- Table 7: Enterprise security services are a growing global opportunity
List of Figures
- Figure 1: Customers' general propensity to outsource will increase within two years
- Figure 2: The importance of price in choosing an IT services provider is universal
- Figure 3: VoIP is the only fixed line managed service that will grow in revenues in five years
- Figure 4: Mobile voice and data managed services will grow steadily through 2012
- Figure 5: DSL services are the largest revenue opportunity among Internet managed services
- Figure 6: IP VPN will lead WAN/data managed services revenue for the next five years
- Figure 7: Application services revenue will continue to dominate hosting business
- Figure 8: The greatest opportunity to gain market share lies with value-added services
- Figure 9: Enterprise security services are a growing global opportunity
- Figure 10: Security deployments are among enterprises' largest IT projects
- Figure 11: Customers see no clear principal benefit of UCC
- Figure 12: Customers recognize a lack of infrastructure readiness is inhibiting UCC adoption
- Figure 13: Customers are gradually moving toward IP-based networks
- Figure 14: Customers are most likely to use their in-house team for IT needs
- Figure 15: Telecoms must extend their global reach to capture more market share
- Figure 16: System integrators will benefit from a global and applications-rich heritage
- Figure 17: Cisco dominates the mindshare of leading voice/data convergence vendors
- Figure 18: Independent MNS providers are poised to garner more SMB market share
- Figure 19: Equipment vendors have an untapped SMB opportunity
- Figure 20: Managed network services decision matrix
Figure 21: IT purchases involve multiple decision makers