Growth forecasts for managed services is also fuelling M&A activity as firms, vendors and channels rapidly realign in a changed market. Channels may be finding it hard to keep up with the pace of change.
With Managed Services revenue forecast to grow at 11.3% CAGR through to 2017, according to Insight Research, M&A activity in this segment is also accelerating as telecoms service providers, vendors and systems integrators all jostle to bring in the skills to fulfil a burgeoning requirement, says John Chapman, Content Director for the Managed Services & Hosting Summit.
"With economies around the world showing no signs of any rapid growth IT departments seem to be turning to Managed Services organisations to either take over the running of some of their IT services allowing them to focus on new developments or using Managed Services and the Cloud to enable them to deliver new applications without up-front capital or manpower investments," he says.
"The Insight report highlights that from network service provision through to application deployment IT departments are turning to Managed Services as a cost effective alternative to meet the increasing demand from users for new business applications and greater mobility."
This increased demand seems also to be fuelling M&A activity in this sector and disturbing the balance of partnerships in the channel as John Chapman explains, "The accelerating demand for Managed Services seems to have caught out many channel organisations as well as vendors and service providers. This has led to a scrabble to acquire the skills rather than develop them organically."
"Right across the world M&A activity in the Managed Services sector is accelerating with major vendors like IBM and global service providers like NTT buying managed services and cloud providers. This has also extended into the channel with global Systems Integrators like Logicalis buying a number of datacenter hosting providers and managed services companies in the last two years. At a smaller scale in the UK we are seeing consolidation in the telecoms channel as users migrate to managed services, we see hosting providers buying IT services companies to meet the increasingly complex demands of their clients and organisations like 6 Degrees emerging from almost nowhere through acquisition and mergers to, within 3 years, a major Managed Services provider."
"All the signs are evident that the Managed Services and Hosting business model is here to stay but what we are seeing with all the M&A activity is that the defined channel models of yesteryear are being reshaped. It is plain that vendors and service providers want more of the profitable services business and are no longer going to leave it to systems integrators and solution VARs to add the services value."
"The whole move to a Managed Services business model is therefore fraught with uncertainty. There is no doubt that this is where the channel needs to be but what are the secrets to success, where are the growth segments and who do you partner with?"
"At the Managed Service and Hosting Summit we plan to explore all these issues and through presentations and debate with top industry analysts, vendors, service providers and distributors help delegates understand all the issues and identify some key opportunity areas."
To register your interest in attending the Managed Services & Hosting Summit go to: www.mshsummit.com
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