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Ovum: Market for managed IP-based services continues to grow

Tue, 05/20/2008 - 8:05am
Traci Patterson

A new Ovum study, which was commissioned by Cisco, has found that businesses are increasingly looking to managed service providers for managed Metro Ethernet, managed IP Virtual Private Networks (VPNs), managed IP voice and managed security.

The market for these managed IP-based services continues to grow at a current compound annual growth rate (CAGR) of 18 percent compared with the forecast period, and the market is expected to deliver returns of $66 billion by 2012, the report found.

"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," said Peter Hall, Ovum's research director. "This results in significant opportunities for those able to meet those needs, especially in the areas of managed voice and security."

Key findings and conclusions from the study include:

  • Europe currently leads in the adoption of managed services but will be overtaken by the North American market, which is expected 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 $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.
  • 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."

The study was based on data collected from more than 1,300 individuals in companies that use managed services. The companies – which were in the finance, manufacturing, retail, government, healthcare and education markets – were located in 14 countries worldwide: in North America, Europe, the Middle East, Africa and Asia.

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