New competitive threats for IT MNS market

DQW Bureau
28 Nov 2008

Demand for managed network service (MNS) providers is growing rapidly as
enterprises of all shapes and sizes are grappling with increased network traffic
and complexity. At the same time, enterprises are seeing their budgets shrink.
This has created an intensely competitive landscape among global MNS providers.
Even the industry's major providers are facing significant compe­titive threats.
A new report by 'Decision Matrix: Selecting a Managed Network Services Provider'
independent market analyst firm Datamonitor evaluates 13 of the world's leading
MNS providers based on their network services, end user sentiments and market

Smaller MNS providers on the rise

The global 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 Vanco, despite the latter's
recent financial troubles. These smaller providers are forging key partnerships
to expand their MNS portfolios while at the same time maintaining a focus on
overall customer experience. This is putting new pressures on industry leaders.

The mid-market battle

There is a chase to the mid-market among most of the world's top MNS
providers, which deem the market catered to by small to mid-sized enterprises as
the next frontier for new customers and revenues. And while large enterprise
customers drive the vast majority of MNS profits, small to mid-sized ones are
increasingly seeking MNS, as their networks also become more complex and
difficult to manage. However, the research shows that mid-market user sentiment
varies to that of large enterprises and that most MNS providers are missing the
mark when it comes to the mid-market.

Consolidation icing MNS

There has also been a flurry of consolidation in the market, including among
the 'big four' as well as amid smaller but highly competitive rivals. In some
cases, small players such as THUS and Vanco have acquired newfound market
strategies, which in time may catapult them to the next competitive level.

A survey conducted by Datamonitor shows that major players in the MNS market
are facing tough competition from new and smaller providers as the leaders seek
to consolidate their position in the global market. When it comes to HP's
acquisition of EDS, however, it is a case of the strong acquiring stronger. Yet
it remains to be seen how well HP will incorporate EDS' MNS portfolio and
customers, and its effect would be on HP's global ranking.

The report's findings show that the most successful MNS providers have a
winning recipe that includes broad portfolio capacity, solid financial
stability, excellent quality of services, customer relationship management and
global reach. It also predicts that while MNS will continue to align with
business objectives, providers must adopt a more focused go-to-market approach
and improve their execution capabilities for future successes.


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