Managed Services Spending Set To Boom

Small to medium-size businesses (SMBs) in the United States will be spending $7 billion on managed services in 2011, according to Techaisle. Growth will be in double digits over the next several years as well. At the moment, most of those services are related to IT infrastructure, rather than applications, but one would assume that will shift, over time. Managed Services Spending Set To Boom

The survey of 2000 SMBs and 600 channel partners in America also suggests that, as a percent of support and maintenance (known as break-fix), US-based SMB managed services’ spend will increase from 27 percent in 2011 to 40 percent in 2015. More than one in five small businesses (companies with 1-99 employees) use some type of managed services with greatest use observed among businesses with 50-99 employees.

Another percent of small businesses plan to use managed services suggesting robust opportunities for MSPs (managed services providers). Of the U.S. medium businesses (100-999 employees), 65 percent are using one or more managed services.


It also would be reasonable to expect some shifts in the IT services ecosystem, with MSPs displacing traditional "master distributors" to a greater or lesser extent. Ecosystem to shift

Enterprises Looking to Managed WAN Services

A recent survey of executives and IT leaders at large U.S. companies by Boston-based market research firm, Chadwick Martin Bailey (CMB) indicates that enterprises are increasingly relying on managed network service providers.

For example, one large fast-food franchise wanted expertise in restaurant operations and the ability to deliver industry-specific solutions like managed PCI Wi-Fi security, digital signage, or employee video training over the WAN.

In large part, the desire for managed services is a resource issue. IT departments are stretched thin and need to free internal resources up from basic tasks to focus on more-strategic priorities.

Strong customer support is considered nearly four times as important as technical criteria such as the provider's network architecture), when evaluating suppliers, the study suggests.

Strong service level agreements, a provider's understanding of their unique business applications and related industry expertise also were considered important.

Combined, these top criteria account for nearly two thirds of all the weight in an enterprise's final supplier selection.

Improved IT security, simplified compliance and better application performance are among the reasons managed services increasingly are favored. Demand for managed services also benefits from a preference to avoid new full-time hires.

The survey also suggests enteprises increasingly favor specialty service roviders that have high-touch customer service, vertical market expertise, and offer managed applications specifically tailored to their business.

A  majority of respondents favor providers with managed WAN optimization technologies that overlay their existing slower WANs, providing WAN acceleration and Quality of Service (QoS) performance without the associated costs and complexities.

CMB surveyed 342 decision makers at large distributed enterprises with WANs ranging from 100 to more than 500 networked sites, and typically more than 5,000 employees. 

The study was commissioned by Hughes Network Systems.

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Why Enterprises Buy Cloud Computing Services

Why are enterprises interested in any sort of cloud computing service? For the same reasons they are interested in just about any other computing or communications tool: they think it will reduce costs and create more value in the information technology investment.

Of course, enterprises don't buy "cloud computing." They buy tools that help them run their businesses.

Email might be an area ripe for a cloud shift, in that regard. It is a necessary function, but a function without compelling strategic advantage.

Typically, necessary but non-strategic functions are the sorts of processes one can think about outsourcing. And it is getting more burdensome to manage email processes, with growing  enterprise regulatory requirements relating to storage of email. The other issue is that email, like most other applications these days, "suffers" from bandwidth creep.

Over time, people are appending larger attachments, for example. Cisco's WebEx Mail service, for example, has full Outlook support. That means users will see no changes, nor will IT departments need to deal with massive training issues and client software updates.

But it isn't the "cloud" that makes the the change interesting. It is the savings in time, labor, money and functionality that will be key. "Cloud computing" as such will be interesting for some enterprises that want to shift capex into opex, that are growing very fast or that are primarily Web based.

For others it might be a way to offload server or computing center chores. But I suspect most users will find they prefer to use a cloud-based application or service because of the value the specific applications represent, because of the consumption or pricing model.

IT Staffing Crisis: Managed Services Opportunity

With only an estimated five million new workers entering a workforce in which twenty-five million will retire over the next twelve years, IT shops are facing an obvious personnel crisis, argue researchers at Ovum. "North American IT shops may well be facing a staffing perfect storm," says Tom Kucharvy, Ovum SVP.

Do the math: Lose 25 million; gain five million, for a net loss of 20 million IT personnel. Assuming technology and software continues to be more important in the future than in the past, it seems rather obvious that enterprise, small business and consumer technology support has to change, and change dramatically.

So is it not reasonable to assume that technology has to be made easier to use; support has to be virtualized (not delivered on site, by a technician)and software has to be delivered as a service?

Two big challenges are certain, Ovum argues. "The impending mass retirement of baby boomers will deplete staff and starve many companies of critical skills."

"Meanwhile, a shortage of replacements due to a smaller crop of college graduates and a dramatic decline in students planning to enter IT-related fields will compound the problem.

"Fundamentally reassessing the skills that will be needed over the next five to ten years rather than attempting to duplicate or replace current skills is the first strategic step companies must take immediately to address the issue," says Kucharvy.

Not Convinced, Eh?

Canadian small and mid-sized businesses remain more than a little unsure about the wisdom of out-tasking their information and communication systems and services, say researchers at The Yankee Group.