Sunday, May 18, 2008

Cisco/Ovum Study Projects Strong Growth for Managed Services

The market for the four leading managed IP-based services has a current compound annual growth rate (CAGR) of 18 percent and is expected to deliver revenues of US $66 billion by 2012, according to a new study commissioned by Cisco and carried out by Ovum. These four services are managed metro Ethernet, managed Internet Protocol (IP) Virtual Private Networks (VPNs), managed IP voice and managed security.

The multi-year study collected data from more than 1,300 individuals in companies using managed services in 14 countries across the Americas, Europe, Middle East, Africa and Asia. The companies are in the finance, manufacturing, retail, government, healthcare and education markets.

Other key findings and conclusions from Ovum's study include the following:

  • Europe currently leads in the adoption of managed services, but will be overtaken by the North American market, which is expected grow to be the largest market in the world for managed services by 2012. Asia Pacific is projected to have the most rapid growth fueled by managed service adoption in India and China, with a CAGR estimated at 27 percent.

  • Customers who have adopted managed services are largely pleased with that decision, and they are enjoying lower costs and higher levels of support and availability than anticipated.

  • The current global market for managed IP VPN services is the largest among the managed services studied at US $17 billion.

  • By 2012, managed IP VPNs will remain the most widely deployed adopted service, though IP voice is the fastest-growing managed service with a 39 percent CAGR for the forecast period.

  • The manufacturing industry remains the vertical industry that uses the most managed services, followed by finance and retail. Government fell from third to fourth place in managed services adoption since the first report was published in February 2006.

  • Thirty-nine percent of the respondents said they would use "Cisco Powered" services if offered by their providers, in comparison to a total of 8 percent who said they would use services based on solutions from the next four most highly ranked networking vendors in the study.

  • Interest from end users in managed service bundles continues to grow, with more than 64 percent of respondents indicating that better, more intelligent, integrated managed service solutions would further incline them to purchase bundles.

"As IT and networks become ever more critical to business success, customers recognize the importance of uptime, security and performance in supporting critical applications," said Al Safarikas, senior director of marketing at Cisco. "The worldwide growth in managed services indicated by this study shows that businesses are recognizing that these can be successfully delivered by a managed service provider."