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South African Managed Services Market
Frost & Sullivan, Nov 2010, Pages: 117
South Africa's managed services market is at its infancy stage and is seen by service providers as a vibrant and exciting market with endless opportunities. There are two value propositions for managed services namely, cost and efficiency. Companies are looking to transform from a capital expenditure (CAPEX) model to operating expenditure (OPEX) model by reducing their Total Cost of Ownership. The recent economic downturn and the constant pressure on business environment by advanced and fast evolving technology has forced companies to develop IT strategies to reduce costs while increasing efficiency and ensuring global competitiveness. Prominent technologies driving the uptake of managed services are cloud hosting and virtualization
Research Overview
This Frost & Sullivan research service titled South African Managed Services Market provides an overview of the status of the managed services market, including the market size, competitive environment and the key developments in service design and offerings. It also analyses the offerings within managed services and newer technologies and trends in each service offering. It identifies the key practices and achievements of leading market participants and analyses the main criteria of companies when deciding to outsource business data services. It highlights the important investment areas in business data services and provides recommendations to outsourced business data service providers and companies looking to outsource their services. In this research, Frost & Sullivan's expert analysts thoroughly examine the following market sectors: data centre hosting, application/Web hosting, infrastructure support, network security, specialised security and disaster recovery/business continuity.
Market Overview
Legislative and Regulatory Concerns Compel Companies to Outsource their Business Data Services
While managed services have emerged business critical in South Africa, most of them are too complex, resource-intensive and expensive to operate in-house. The managed services market is an emerging one and providers and integrators are expecting substantial growth due to the improved bandwidth capacity resulting from the launch of Seacom undersea cables and wire and cable services (WACS) cable. Furthermore, stringent regulatory requirements in sectors such as financial services, mining and manufacturing have had operators turning to the experts to ensure that their systems are compliant with the various legislation. In the case of business data services, improved efficiencies and access to the relevant skill sets have replaced budget constraints as the top reasons for outsourcing.
Companies are looking to shift from a capital expenditure (CAPEX) model to an operating expenditure (OPEX) model to reduce their total cost of ownership. The OPEX model moves away from the ‘do it your self’ concept to a ‘do it for me’ paradigm. “The critical shortage in skills to manage the highly complex IT services in house has caused companies to look to third-party service providers,” says the analyst of this research. “In addition, legislation such as the National Credit Act of 2007 and the King III Report have increasingly caused operators to depend on specialist third parties to achieve systems compliance.”
However, in most outsourcing deals, the total cost of ownership has continued to be high. In areas such as software as a service (SaaS), challenges regarding integration with existing systems have resulted in companies running SaaS systems parallel to their existing systems, which increases the overall cost. Furthermore, the customer service of the third-party company, especially if it is a local one, has been characterised by long response times and poor technical innovation. Managed service providers must focus on promoting the total cost of ownership benefits rather than cost savings because not only does the latter seem like an hollow promise, but with business data services becoming mission critical, companies are focusing on reducing the total cost of ownership rather than obtaining ROI.
“It is also crucial that service providers enhance their customer service offerings,” notes the analyst. “Customer service strategies will provide a strong competitive differentiator for operators, by offering access to wide support networks, making available a range of technical solutions and facilitating knowledge sharing.”
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Data centre hosting
- Application/Web hosting
- Infrastructure support
- Network security
- Specialised security
- Disaster recovery/business continuity
- Technologies
The following technologies are covered in this research:
- Cloud computing
- SaaS (everything as a service)
- Virtualisation technologies
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