MANAGED SERVICES Europe REPORT
Published March 2006

Report Synopsis
Market forces have conspired to create a new space in managed services. Briefly entered then exited by telcos and ASPs following the dot.com collapse, managed services have emerged as an opportunity experiencing growth from a small base, and currently running at 20% per annum.

This new report assesses for the first time the Managed Services market in Europe and draws upon a survey of 80 players across the region. Interviews were conducted with the 7 types of player engaged in the managed services space including data centres, systems integrators, hardware and software vendors, telcos and ISPs.

The speed of change in managed services is matched only by the rate of barriers to entry falling. It is characterised too by the number of new entrants converging in the space from outside traditional integrators and professional services companies, including the Data Centre provider and Telcos. The volume of new entrants demonstrates the compelling attraction across all segments for longer-term recurring, sustainable rental revenues.

Growth drivers are found in changes occurring in the Enterprise; provider players are seeking new sources of rental income and mitigation of revenue declines in traditional businesses. As large scale outsourcing appears to be on the wane, Enterprises are seeking new alternatives including multisourcing and near-shoring.

Competitors in the managed service space are encountering challenges in the delivery of managed services, and at a time of further change in technologies. New business models are emerging as utility computing and on-demand services are being invested in and tested.

Finding that Enterprises are increasingly receptive to partial third-party management of infrastructure and assets, players who have have moved into the managed service space will confront the need to choose between the delivery of standardised or customised solutions. In doing so, the importance of collaborative partnerships for all players is emphasised throughout the report, even though this may result in other trade-offs.

The report observes that migrating to managed services requires investment as well as acceptance of risk. Competition is intensifying, the cost of sales and channels and pressure to produce standardised products is increasing. In addition, the emergence of “on-demand” or pay-as-you-go IT models is occurring as providers attempt to broaden acceptance of hosted services.

Evidence gathered for the report suggests that Telecom Providers will eventually dominate the hosting market due to their business scale and customer-market presence, taking approximately 32% market share by 2011.

Although all service providers will benefit from the adoption of managed services, Data Centres stand to gain extensively by providing carrier neutral space to the System Integrators and Hosting providers. This argument runs counter to the view that Data Centres will gain most by providing managed services directly to the enterprise customer. Data Centre revenue share for direct end user managed services will be relatively small but for those positioned with blade servers the opportunity to acquire further revenues will be high.

The report is a tour-de-force carrying the reader across the all-important player segments, assessing their strengths and weaknesses and the challenges they confront in the quest to provide managed services. The research identifies key trends and new issues – software as a service, utility computing, hosted applications, seismic changes in the integrator market, VoIP and the integration of LAN and WAN and the criticality of managed services not yet fully recognised among players seeking to define market positions in the space.

The report concludes with forecasts of managed service market growth through to 2011.

Who Should Buy this Report:

• Enterprise Users
• Telecommunication Service Providers
• Altnets
• ISPs
• Systems Integrators
• Data Centres
• Web Hosters
• Carrier Hotels
• Colocation Providers
• Disaster Recovery and Business Continuity Specialists
• Hardware and Equipment Vendors
• Software Companies
• Applications Hosters

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