Yankee Group Finds Outsourcing IT Management and Networking Infrastructure Relies on Key Areas; Managed Services Continues to Fuel Service Providers' Revenue Growth by the Millions

Business Wire, April 3, 2006

BOSTON -- Yankee Group today announced significant growth projections for the managed services market; this market will grow at a compound annual growth rate (CAGR) of 8% from 2005 to 2008, exceeding $25 billion by 2008. As enterprises seek to mitigate risk and reduce their network complexity, they are increasingly willing to out-task the management of their IT and communication services. However, a gradual migration to managed services will help enterprises adopt these solutions, which will fuel managed services market growth.

Although managed services enable enterprises to reduce costs and focus on their core business, the majority of corporations manage their IT and communication infrastructures internally. Enterprises' reluctance to out-task the management of IT and networking infrastructures springs from their perception of service providers' lack of security capabilities, responsiveness and service reliability. These three factors are the key attributes enterprises use when evaluating a managed service provider for an outsourcing deal. For example, when evaluating managed service providers, enterprises showed little interest in ROI/TCO tools, indicating the existence and influence of a deeper issue: security. Yankee Group also revealed that SLAs and performance-based service fees form an appealing value proposition to enterprises to out-task the management of their IT and networking platforms to a third party.

When evaluating the managed services that enterprises would most likely out-task in the next 12 months, managed IP telephony ranked first across verticals. Enterprises stated that they would most likely out-task mobility in the next 24 months, which will give a head start to fixed-mobile convergence.

"The managed services arena holds a tremendous amount of promise for revenue streams, attracting a large and varied pool of communication players from network service providers and systems integrators to virtual network operators," said Taher Bouzayen, Yankee Group senior analyst. "Each industry player has strong potential to make an impact on the growing market, but the provider that understands enterprises' communication needs and IT requirements from an infrastructure management standpoint will most influence the burgeoning market."

NOTE TO EDITORS

For interviews contact:

--Taher Bouzayen, Yankee Group, 617-880-0394, tbouzayen@yankeegroup.com

--Christina Oh, Yankee Group, 617-880-0238, coh@yankeegroup.com

YANKEE GROUP (www.yankeegroup.com)

Yankee Group is the expert in navigating the global connectivity revolution. For more than 35 years, Yankee Group's strategic vision, research and analysis, quantified market intelligence and credible advice has been guiding innovation and empowering our clients to make critical business decisions. Yankee Group is headquartered in Boston with presence throughout North America, Europe, the Middle East, Africa, Latin America and Asia-Pacific.