Managed Services Gaining Global Momentum

Savvy business leaders are increasingly turning to managed services to enable them to focus more attention on their core competencies, according to the latest market study by Pyramid Research. Managed services free up valuable IT and networking resources, decrease staffing needs and enable investment in activities that differentiate companies from their competition.

That said, the primary adoption driver is the current state of the global economy. As business leaders everywhere face increased financial pressure, they’re looking to managed services to offload their capital expense burden and improve operational efficiencies.

Analysts typically define managed network services as the management and monitoring of telecom infrastructure or applications by a third party -- either with equipment at the customer’s premise or hosted in a managed services provider (MSP) data center.

Responding to the Growing Global Demand
MSPs have responded to the increasing demand for new managed cloud services with a dramatic increase in investment to grow their managed services portfolios to include different types of out-tasked IT services for their customers. They are creating additional services that can be layered on top of the basic transport network offerings.

To learn more about the current market potential, Pyramid Research conducted an independent survey of more than 200 IT professionals from around the world to determine the types of managed services they’re using.

Primary conclusions from the market study include:

• Executives polled were willing to spend a large portion of their IT budgets -- between 10% and 20% -- on network-centric managed services, as the providers continue to prove the value and reliability of their offerings.
• The majority of enterprises -- almost 60% -- already use a managed service and have been doing so for between one and four years.
• Europe still has had the highest adoption of managed services -- driven in large part by the challenges of managing and maintaining business across multiple borders. However, the economic recession drove more North American companies to adopt managed services -- to lower costs and improve employee productivity.
• Additionally, emerging markets, such as those in Africa and Latin America, are preparing for managed services -- especially as broadband network access becomes more established.
• Multinational corporations and large enterprises have the most uptake in network-centric managed services, with SMEs now also looking for proven solutions that lower their costs.
• IT managers are applying a significant portion of their budget to managed services. Almost 25% of enterprises spend between $10,000 and $50,000 annually. Additionally, 26% of enterprises allocate between 10% and 20% of their IT budgets for managed services.
• The types of managed services that MSPs are providing are growing at a phenomenal rate. They manage everything from unified communications (UC) applications, to network security, to network connectivity and telepresence video collaboration services.
• Service trends over the next 18-24 months include managed machine-to-machine (M2M) services, such as automotive telematics, smart utility metering, fleet management, mobile health, point-of-sale transactions, mobile computing, wireless alarms, remote monitoring and wireless local loop (WLL).
• Growth is expected to continue throughout the U.S. and Europe -- especially in Eastern European countries, over the next 18 months. Latin America and Asia will provide continued expansion of these managed services.

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Widespread Private and Public Cloud Adoption

Cisco released the final installment of the Cisco Connected World Report, an international study about the behavioral trends of workers in accessing information anywhere, with any device, and the ability of information technology (IT) professionals to address their needs.

The latest results focus on data center, virtualization, and cloud computing trends, and evolving IT roles, in the context of increasingly mobile and distributed workforces.

The study found that global IT professionals are creating new job opportunities by increasing collaboration among teams in the data center, and adopting new technologies such as virtualization and cloud computing. But they’re also struggling to maintain security and data governance as employees demand more offsite access to networks and information.

Comparing Cloud Adoption Rates by Country
For example, across the 13 countries in the global study, 52 percent of the IT professionals stated they use or plan to use cloud computing, while much higher cloud adoption rates are predicted in Brazil (70 percent), China (69 percent) and India (76 percent).

Across the world, respondents rated the following as their top data center priorities for the next three years: improve agility and speed in deploying business applications (33 percent), better manage resource capacity to align demand and capacity (31 percent), increase data center resilience (19 percent), and reduce power and cooling costs (17 percent).

This report adds to the initial survey results released in October, which revealed that workers want flexible access to corporate information from any mobile device, anywhere, anytime, and to the results released in November -- which revealed disconnects in worker expectations around information access, IT policies and employee awareness of policies.

The latest survey results examine how IT managers are evolving their data centers and taking advantage of new technologies, while working to accommodate trends in the workplace like social media, device proliferation, video and an increasingly mobile workforce.

Summary of Cloud Computing Trends

• Cloud use today: Across the study's 13 countries, only an average of 18 percent of respondents are using cloud computing today, while an additional 34 percent plan to use the cloud.
• Top cloud users today: Brazil (27 percent), Germany (27 percent), India (26 percent), U.S. (23 percent) and Mexico (22 percent) top the list of countries that are already taking advantage of cloud computing, exceeding the average (18 percent) across all countries.
• Future cloud use: A large majority (88 percent) of IT respondents predict that they will be storing some percentage of their company's data and applications in private or public clouds within the next three years.
• Private clouds: One in three IT professionals said more than half of their company's data and applications will be in private clouds within the next three years. Private cloud adoption was predicted to be higher in Mexico (71 percent), Brazil (53 percent) and the U.S. (46 percent.)
• Timing for public clouds: Of those respondents that will use public clouds, one of every three (34 percent) plan to deploy within one year, and 44 percent predicted their companies would use public clouds within the next two years; 21 percent are expected to do so within two to three years.

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Managed Cloud Services for the Public Sector

Cloud is not a one-size-fits-all proposition – clearly, the right approach depends on your organization’s needs and priorities. Different service and deployment models can be adopted to match the requirements of different types of workloads from across the whole organization.

To illustrate some of these solution trade-offs, we’ll profile public-sector organization needs, and their related information technology and communications service requirements.

Government entities will use a variety of Cloud configurations. Those of sufficient scale will likely adopt similar Cloud models to those of large enterprises. Organizations with common needs and interests may join together to build and share community clouds.

Some government services may be provided through the public clouds of managed service providers. A major issue for public-sector organizations will be balancing concerns and regulations regarding privacy and security with aspirations for transparency and sharing information.

Community Cloud Use-Case Scenario

• Governments are challenged to provide seamless, open, and transparent access to services and information while protecting security interests.
• End-users (e.g., constituents, journalists, government analysts, law enforcement, military, intelligence analysts) need secure access to information from various media, formats, and geographies.
• Traditionally, public sector organizations have taken a silo approach to data management (e.g., mapping specific information to specific communities of users). While the siloed approach offers some security benefits, it limits true collaboration potential.

Role for Cloud Technologies

• Community clouds offer a consolidated approach to shared resources, allowing data and applications to be stored collectively.
• Different end-users are able to work securely and collaboratively using these common datasets, thereby increasing transparency, cooperation, and efficiency.

Application Considerations

• Security and compliance policies must still be defined and managed (particularly for sensitive data sets).

We anticipate that there will be growing demand for collaboration solutions to support secure and rich collaboration experiences within and across government agencies -- and with external organizations.

While government organizations may also see tangible benefits in using public clouds, we expect private and hybrid cloud models to be popular. Hybrid clouds will come in many flavors, including the virtual private cloud model in which an organization has access to dedicated resources in a public cloud. An increasing percentage of total IT spend will move to managed hybrid clouds as the technology and applications mature.

Government organizations should invest the time to determine where Cloud applications are most appropriate, based on workload-specific requirements around cost, risk, and performance.

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