Kaplan: Managed Services Are Transforming the MarketBy Pedro Pereira | Posted 2007-03-20 Email Print
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Trends such as on-demand software and managed services are changing the way technology is used, according to the keynote speaker at Ziff Davis' Managed Services Virtual Trade Show.IT trends such as managed services and software as a service have already disrupted the way the software industry does business and are also transforming the overall technology market.
Customers' expectations for IT services have shifted from remediation to prevention, according to Jeff Kaplan, managing director of analyst firm ThinkStrategies. No longer are customers calling on IT services providers only to fix broken-down systems and applications.
"They want proactive management that can ensure the ongoing availability of the technology rather than reducing its downtime," said Kaplan, who delivered the keynote for the Ziff Davis Virtual Trade Show on managed services on March 20.
So prevalent are these models becoming that the industry already has experienced a disruption to the traditional ways of doing business, Kaplan said.
He cited eBay and Amazon.com as examples of consumerism that are contributing to the way technology is delivered and used. And he cited the acquisition of Siebel by Oracle as a result of match-up between Siebel and Web-based CRM (customer relationship manager) vendor Salesforce.com, whose new business model forced its competitor into being acquired.
Kaplan said consumerism and the type of on-demand services pioneered by Salesforce.com figure among 10 major trends that are reshaping the market. The other eight, he said, are globalization, commoditization, differentiation, worker dispersion, Web 2.0, social networking, reliability/security and operational efficiency.
Such trends as worker dispersion and globalization lend themselves to managed services because customers can hand over IT tasks that become difficult or expensive for them to handle themselves.
Kaplan said that contrary to the prevailing belief that managed services is geared to SMBs (small and midsize businesses), ThinkStrategies has found through research that companies of at least $500 million in revenue are more comfortable with the model.
Sixty-two percent of representatives of such companies polled said they are already using managed services, compared with 31 percent of companies with revenue of less than $50 million. The number of polled companies with revenue of $50 million to $500 million that said they are using managed services was 55 percent.
Kaplan said providers still need to overcome a number of barriers to deliver managed services. These include marketing hype, customer confusion, office politics and billing challenges.
Ultimately, he said, providers have to not only deliver the services, but they also must ensure reliability and network security.