According to our latest forecast, which takes into account the first three quarters of 2012 research, the SMB Managed Services market will grow from $27B to $44B between 2012 and 2016, compounding at over 12%. Remote management monitoring services will cross US$15B during the same time period. Key points of the update include:
The most attractive segments are shown in the chart and sorted based on opportunity (2016 value>$1B), and growth (arrows are relative), so the largest and fastest growing segments are shown. Rank based on revenue opportunity is listed in the left hand column.
13 of the 19 sub-segments are expected to reach over 1B$ in opportunity by 2016, with over half growing at double-digit rates,
The Remote Services segments are generally growing faster than onsite, with notable exceptions in India where the labor market and domestic bandwidth contribute to a viable onsite market, and China, where second and third tier markets are expected to adopt remote services more slowly than the combined remote/onsite increase.
While at 12%, the market is not growing quite as fast as in Cloud Computing, the robust increases will be a very good opportunity for SPs and MSPs in the market. The difference in fulfillment and delivery between cloud computing and managed services is thinning rapidly. Channel partners and managed services providers are quickly cross-migrating their skill sets to serve both technology areas. The path being chosen by Channels to move from one offering to the next is strongly dependent upon their current offering. Those that are in the mobility space are moving to cloud, while those in the cloud are moving to managed services. The point being that understanding the channel dynamics and current offerings can provide clues in the direction they will move. Similarly, within managed services, the channels are moving from one offering to another; vendors wanting to partner with Channels must identify the ideal cluster of services to take advantage of Channels outreach and capabilities.
Techaisle offers forecasts for all the above sub-segments by Region, Country, SMB company size and Channel flow share, customized to your needs. Please contact us if you would like more information on how this information can be combined with your internal market model to offer a clearer view of opportunity and resource allocation to best increase market share share during 2013 and beyond.
Target Market Attack Strategy
Larger SMBs = Easier Sell: Larger SMBs with more complex needs are more likely to be receptive to using managed services. While the adoption varies by service, a “safe” rather than a sweet spot to target are businesses with 20 – 249 employees. Younger IT managers and business decision makers that are growing up in the "work from anywhere, anytime, any device" era are more likely to consider managed services as a first response rather than an after-thought. Improving mobility solutions (devices, bandwidth and applications) is also creating a favorable environment for managed services. IT Vendors should be careful to note that they are running a service business and as such, buyers tend to set a higher bar. Loyalty to a particular vendor is driven by quality of service, reliability and uptime, responsiveness and customer service (no different from any other service business today). However, the provider market today is very fragmented. After so many years, there is still some confusion among SMBs in understanding what managed services really means and how it is different from cloud.
Many SMBs still have their channel partners “manage” their network and other IT infrastructure on site by sending support staff over. Small businesses in particular are seemingly gravitating towards service providers, many of them are single–person individuals. In some other cases, large service providers are also motivating small businesses to use their services as “hosters” as opposed to monitoring and management. Backup and Recovery services are increasingly gaining ground with small businesses with many new offerings being introduced by service providers including large IT vendors. Traditional server backup methods are being shunned by small businesses, as once-a-day backups leave them vulnerable to data losses and trouble recovering data quickly in the event of a data corruption, virus or other disaster. Lack of adequate IT staff also results in inconsistent backup procedures and failed data recovery. This is one area where remote backup managed services show a higher usage than combination (onsite/remote).
Techaisle research shows that many of the factors that drive SMBs towards Managed Services are very similar to the benefits they seek from cloud computing:
- Strategic (Focus on core business, Reduce risks, Improve competitiveness and reaction time)
- Tactical (Cost control, Lack of IT staff, Better IT response time and proactive management)
The combined benefits are increased agility and lower business risk, which translate into a more competitive posture and less stress for the SMB owner. It is therefore not surprising that Cisco has led the way by combining its managed services and cloud computing channel programs.