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Managed Services, SaaS and Other Predictions for 2008
12/27/2007 11:06
It's customary on the last week of the year to reflect on the past and make predictions for the New Year. Whom am I to buck tradition?
In my editor's letter this month, I wrote about 2007's hot technologies for the channel, including Software as a Service, Mobility, Unified Communications and SIP Trunking.
But what about next year? I think these technologies will continue to be hot, but I also think this will be the year of Managed Services.
The value prop for businesses is clear -- pay-as-you-go outsourcing for increasingly complex services. Robert Rosenberg, president of Insight Research, says a significant dirver will be the growth in the number of business locations or endpoints that connect to each other acorss a WAN. “When you compare the growth of establishments to the growth of managed network connections, the increasing need for managed services is unmistakable,” he says. Insight Reseach predicts the managed services market will grow at a CAGR of 10 percent for the next five years, i ncreasing from $28.6 billion in 2007 to $47 billion in 2012.
Here are some other predictions from analysts coveringn telecom:
CLECs Trudge On
New Paradigm Research Group: This year’s M & As were fueled by the mega-mergers of AT&T and Verizon, and has significantly altered the overall CLEC map. ... While CLECs have grown in size, they are operating leaner and attaining economies of scale within their territories of operation. With a smart game plan, CLECs have the potential to thrive.
Green, Green, Green
Technology Futures Inc.: During 2008, everything turns green. The greening of information technology (IT) started in 2007, but will pick up speed and spread to all parts of both the corporate and consumer domains. This includes efforts at conserving power, more efficient procedures, less travel, and many other activities to save resources. Some companies will step up to the challenge, but look for major shifts in R&D budgets and collaborative partnerships to reflect this trend.
Despite Progress, Uncertainty Remains for WiMAX
Instat:
Despite many positive events over the last 12 months, WiMAX still faces much uncertainty. Investor pressure could force Sprint to pull back on its announced deployment, which could impact what other carriers do with WiMAX, and negatively impact the entire WiMAX community.
Spectrum prices are likely to rebound
Analysys: Spectrum auction fever will once again hit the USA in January 2008, with the FCC auctioning over 1000 licences in the 700MHz band. AT&T's recent USD2.5 billion purchase of 12MHz of the 700MHz band from Aloha Partners suggests that spectrum in this band will sell for significantly more than the spectrum at the AWS cellular auction in August 2006.
Being Open: Growth, Friction or Fragmentation
John Puterbaugh, Founder & Chief Strategist, Nellymoser: Although openness will lead to consumers having greater choice - better products and services offered at better price points - open devices and networks will create more fragmentation. And, it is not clear that open access can function as a primary growth driver until other enablers are in place. If you think about the rapid growth of Web 2.0, and think about what will drive “Mobile 2.0?, it will be: (i) ubiquitous mobile broadband access ...(ii) frictionless distribution ... (iii) affordable, unrestricted access to enabling software platforms ( i.e. tools & technology - the picks and shovels).
Software as a Service Will Impact Partner Landscape
IDC:
"In 2008 we expect several major vendors and their respective partner ecosystems to become more engaged in the SaaS market," said Stephen Graham, group vice president of Software Business Strategies at IDC. IDC recent survey of Microsoft partners found 70 percetn viewed SaaS as an opportunity. "The survey results clearly show that partners are very optimistic about the potential opportunity that lies ahead and that they expect to link with other firms to realize this potential."
Now it's your turn ...
Tell us what you expect to happen in 2008. Click on comment below or e-mail me at khenderson@vpico.com.
User Comments !
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Posted by: Dale Stein | December 27 2007 11:50:15
SAAS and Managed Services are already in play by Ma Bell and VZ. A couple of CLEC's too.
But Managed Services is about leveraging in-house talent to offer valuable services to for clients. Examples would be IDS, Managed Firewall, and other WAN Security services. Regional CLEC's will have an easier time selling Managed Services than the national CLEC's. Closer to the customer. Better ability to forge relationships between technicians and IT manager at customer location. (Cost cutting has not helped large CLEC's keep talent.
Endless layoffs at ILEC's hasn't helped morale or talent either). Managed Services requires talent (or a really well-known partner).
SAAS would work if vendors were hosting Microsoft products, but most aren't.
So you have to get over the hump of installed assets in the form of a paid for license base AND the factor that most workers don't want to (nor like
to) learn new software programs. (It's one of the barriers to Hosted PBX:
Teaching Mary how to do Call Park on the new Polycom phone when she has been using a Rolm for 15 years). CRM, conferencing, collaboration -- will probably be SAAS wins in 2008. Email, sure, especially for Exchange.
With the credit crunch and the slowing down of the economy, I would think we will see more M&A, one or 2 BK's, and a couple more private equity deals.
With the economy, sales will be harder to come by and pricing will be even more the determining factor. (Result for Agents: fewer sales at lower revenue resulting in smaller commissions in 2008.)
Since Ma Bell already bought 700 spectrum from Aloha, expect them to just run up the price. VZW HAS to win the auction to stay even with the Deathstar. This won't matter to agents until 2010, since the spectrum won't be released until 2009.
Sprint & WiMax. Clearwire & WiMax. MOTO & WiMax. Oh, the possibilities. If Hesse can be bold enough to back XOHM and open it to the channel, Sprint may have a winner on their hands. One note is that Sprint HAS to deploy their
2.5 GHz spectrum in 2009 -- or risk losing it. An FCC merger condition requires that it be deployed by 2009. It will only matter to Agents, if we get to sell XOHM Mobile Broadband (and get paid for it).
Of these spots, the only concern to agents is whether or not your CLEC "partners" will still be around by 2009. How many will be acquired, go private, or BK? We will see.
The FCC gave out an early holiday gift to CLEC's and consumers by not giving Verizon its 6 city forbearance.
Other bits in 2007
COMPTEL ended the year by picking a CEO and President after Earl Comstock resigned back in May. It's Board is now made up of fiber guys and VoIP players and two question marks (Covad who was bought by Platinum and EarthLink).
Speaking of EarthLink, 2007 saw the Muni Wi-Fi balloon pop. EarthLink realized that there wasn't much ROI on the muni projects as they were structured. This took the pressure off AT&T, who backed out of a couple of deals too.
There was a flurry of mergers in 2007, which meant Integration. As we have seen with Sprint-Nextel and Level(3), Integration is where the rubber meets the road. As Larry Bossidy writes "Execution" is the process of taking the big thoughts and making them actions. Lack of execution will get you fired, ask Gary Forsee or Carly Fiorina (or soon Pat Russo).
Channel Programs have taken a hit this year, including Intelliverse, Global Crossing, and especially Verizon. The other hit has been commissions. As prices have decreased, so too has the average agent income. While masters suggest that agents should add on TEM and Asset Management sales, that won't always be the answer. VAR programs from the SAAS, VoIP, and hardware space are recruiting from telecom now. So that is an option.
Broadband and cellular penetration are flattening out. It seems everyone that wants a broadband connection has one; same with the cell phone, which is at 88% penetration.
The real battle to watch in 2008 will be between Microsoft and Cisco/Webex with IBM as a third string.
Posted by: Peter Radizeski | December 27 2007 14:35:30
At TelePacific, we expect to see a continuation of 2007 trends from our agents and customers with MPLS VPN for multi-location applications, Dynamically allocated integrated services (with SIP) and ever increasing bandwidth demands from new applications, like video, will dominate the SME decision process. Managed services that offer security, remote storage and other value added services will also continue to increase in demand if they are properly packaged and their value is communicated affectively to the customer.
Posted by: Ken Bisnoff | December 31 2007 09:48:39
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Khali Henderson 
Cara Sievers 
Kelly Teal