Managed services: It's all about IP

05 Sep 2007

'You are starting to see convergence become a reality,' said Andrew Dobbins, Verizon regional VP for sales and services. 'It used to be that a greenfield site deployment would be designed and maintained in-house. Now there seems to be more of a willingness to out-task that network infrastructure to the likes of ourselves.'

Paul Gregory, director of marketing and solutions at Cable & Wireless, observes a similar trend. 'What we really see is a customer going from Layer 1 into a VPN environment. They convert to on-net voice and now they're trying to make efficiency gains with collaboration across the enterprise.'

The other factor - no surprise here - is cost. 'Our surveys show that squeezing out more cost savings continues to be an obsession of many enterprises this year,' said Adrian Dominic Ho, research manager for IDC's managed services and enterprise networks in Asia Pacific.

A managed services arrangement 'not only leads to cost savings but also gives them access to technology' that can drive productivity and increase competitiveness, a recent study by Ho found. The study showed that enterprise outsourcing and managed services of IT and communications in Asia Pacific (excluding Japan) were valued at $23.3 billion in 2006 and is expected to reach $36.2 billion in 2012, with a CAGR of 9.2%.

It's an impressive number, but the bulk of it is in IT. Indeed, for the tier 1 global carriers, enterprise services are a tiny part of their overall revenues. But it's a prestigious business, yes, and MNCs pay very well.

However, competition, the supply glut and the rise of IP have reduced the capacity business to low-margin commodity status. Telcos now talk about climbing the services value chain and offering some IT services as well. The question is, which ones‾

Gartner analyst Foong King-Yew urges caution. IT and telecom services are still quite distinct, despite some overlaps, he says, and calls on telcos to plot their strategies with care.

More leverage

Foong also noted that managed services business involves a good deal of supplier push. 'Among the top global carriers, there's less and less differentiation in terms of network coverage and so on. To really develop new revenue streams, many are pushing for so-called managed services as a form of incremental revenue.'

He agrees that one advantage of building a managed services portfolio is it gives a telco more leverage and contact points into a customer. But this is where new skills are called for. 'By and large it requires new ways of selling to the enterprises. Some regional carriers may not have the necessary expertise to really push products out into the market.'

Partnering is the obvious option, he says, pointing to SingTel's partnership with IBM to deliver security services in Singapore. (see related article on page 36) Cable & Wireless' vendor partnerships around the region are quite typical: it works with Cisco for IP telephony and IP contact centers and Datacraft for systems integration.

Related content

No Comments Yet! Be the first to share what you think!