IP-based managed services worth €42bn by 2012

Peter Hall/Ovum
05 Jun 2008

Cisco has announced the latest results of a multi-year market study of the global adoption of managed IT and communication services. The study, performed by Ovum and commissioned by Cisco as part of its on-going commitment to enabling service providers, confirmed that businesses are increasingly looking to managed service providers for managed metro Ethernet, managed Internet Protocol (IP) Virtual Private Networks (VPNs), managed IP voice and managed security.

The report notes that the market for these managed IP-based services continues to see strong growth at a current compound annual growth rate (CAGR) of 18% over the forecast period and is expected to deliver revenues of US$66 billion (€42 billion) by 2012.

This study was based on data collected 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.

CIOs and IT directors are increasingly looking to service providers and managed service specialists for deployment and management of their networks to reduce costs and improve efficiency. This results in significant opportunities for those able to meet those needs, especially in the areas of managed voice and security.

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

"¢ 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 fuelled 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 (€10.84 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% CAGR for the forecast period.

"¢ Manufacturing industry remains the vertical sector 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.

"¢ Some 39% of respondents said they would use "Cisco Powered" services if offered by their providers, in comparison to a total of 8% 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% of respondents indicating that better, more intelligent, integrated managed service solutions would further incline them to purchase bundles.

Hall and Cisco will host a series of live webcasts entitled, "Capture the Managed Service Opportunity in Your Region," on May 20 and 21. Topics include will include:

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