A new report from consultancy BroadGroup forecasts that Managed Services in Europe will almost triple in value by 2011 to €6.2bn. Managed services have emerged from a small base to an opportunity experiencing growth currently running at 20% per annum, and approximately equal in size to the combined revenues for web hosting and colocation. The report, ‘Managed Services Europe’, provides the first assessment of service offerings in the sector, and the strategies of new market entrants. The number of new entrants in the managed services space demonstrates a compelling attraction across all segments for longer-term recurring, sustainable rental revenues. Finding that Enterprises are increasingly receptive to partial third-party management of infrastructure and assets, a range of players have moved into the managed service space but will confront the need to choose between the delivery of standardised or customised solutions. In doing so, the importance of collaborative partnerships for all players is emphasised throughout the report, even though this may result in other trade-offs. The report observes that migrating to managed services requires investment as well as acceptance of risk. Competition is intensifying, the cost of sales and channels and pressure to produce standardised products is increasing. In addition, the emergence of “on-demand” or pay-as-you-go IT models is occurring as providers attempt to broaden acceptance of hosted services. Evidence gathered for the report suggests that Telecom Providers will eventually dominate the hosting market due to their business scale and customer-market presence, taking approximately 32% market share by 2011.

Although all service providers will benefit from the adoption of managed services, Data Centres stand to gain extensively by providing carrier neutral space to the System Integrators and Hosting providers. This argument runs counter to the view that Data Centres will gain most by providing managed services directly to the enterprise customer. Data Centre revenue share for direct end user managed services will be relatively small but for those positioned with blade servers the opportunity to acquire further revenues will be high.
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