MNS market: competitive landscape requires focused go-to-market approach


by CBR Staff Writer| 12 November 2008

Demand for managed network services providers is growing fast as enterprises of all sizes grapple with increasing network traffic and complexity. At the same time, enterprises are seeing their services budgets shrink. This has created an intensely competitive landscape among global managed network services providers, and even the industry's bellwethers face new and significant competitive threats.

New competitive threats have emerged in the global managed network services market.

The global managed network services (MNS) market is extremely competitive, particularly among the large telecommunications providers and conglomerate systems integrators that dominate it: AT&T, BT Global Services, HP Services and IBM Global Technology Services. Yet new threats are emerging in the form of smaller, more agile rivals, such as CSC, Orange Business Services, Verizon Business and Vanco, despite the latter's recent financial troubles. These smaller providers are forging key partnerships to expand their MNS portfolios while maintaining a focus on overall customer experience. This is putting new competitive pressures on the industry's leaders.

There is a chase to the mid-market among most of the world's top MNS providers, which consider the small to medium-sized enterprise market as the next frontier for new customers and revenues. In addition, while the vast majority of MNS revenue is driven by large enterprise customers, small to medium-sized enterprises are increasingly seeking out MNS as their networks also become more complex and difficult to manage.

However, research for a new report, in which Datamonitor ranks 13 of the world's leading MNS providers based on their network services, end user-user sentiment and market impact, shows that mid-market user sentiment varies from that of large enterprises and that most MNS providers are missing the mark when it comes to the mid-market.

There has also been a flurry of consolidation in the market, including among the top 'big four', as well as among smaller yet highly competitive rivals. In some cases, smaller players such as THUS and Vanco have acquired newfound market impact which may, in time, catapult them to the next competitive level. When it comes to HP's acquisition of EDS, however, it is a case of the strong getting stronger. Yet it remains to be seen how well HP will integrate EDS' MNS portfolio and customers, and what effect this will have on HP's global ranking.

Datamonitor's findings show that the most successful MNS providers have a winning combination of broad portfolio capacity, solid financial stability, and excellent quality of services, customer relationship management and global reach. Furthermore, while managed network services will continue to align with business objectives, providers must adopt a more focused go-to-market approach and improve their execution capabilities for future success.

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