managed services market evolution portfolio creation · the market is moving to ‘on demand’...

© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 1

Managed Services Market Evolution

& Portfolio Creation

Mahmoud Dasser, Director, Managed services - Cisco


Executive Summary

The time is now to pursue Managed Services Opportunities

Traditional and Next Generation services, and some verticals are very attractive for service providers

Service Providers have the network, Operation capabilities, Scale and Coverage and to lead managed services

Cisco has Vertical Knowledge, Technology, Channels, Service Creation expertise, Managed Operation and delivery Solutions and financing programs to partner with Service Providers and drive joint success


Customer requirements


CIO Top of MindForces Shaping IT Spending Decisions


Market Transitions Are Driving NewBusiness Imperatives

Save to Invest

Drive True Customer Intimacy

Unlock Employee Potential

Distance Yourself from Competitors

Conduct in person meetings without travelConsolidate and Centralize ITReduce real estate and energy costsControl mobility costs

Enable employees to work anywhereIncrease customer interactions and expert availDevelop custom apps to optimize bus processPromote employee participation and innovation

Increase quantity and quality of customer appsExtend reach to support customers anywhereConnect customers with the right person, NowInclude customers in your innovation process

Improve time-to-market via collab w/partnersBroaden reach via collab selling w/partnersEnter new markets without adding resourcesUnlock adjacent business models and markets


What Corporates are looking for:Reduced Cost / Productivity / Transformation / Low Risk

TotalEfficiencyTime

Savings

Remote Presentation of new small

ticket products

(Campaigns)

Move/Add/Changes,

toll bypassAudio

Conferencing, T&E

VirtualProductExpert

Real-time Response

to Customers

30

15

1010

5

510

2010 115

60

33

CASE EXAMPLE : UC BUSINESS BENEFIT AT FULL DEPLOYMENT ($M/yr)

Community Building/Mentoring

Click to Talk

& Co-browsing

Call Center Virtualization

Video Support

at Branch

20

35

Total Investment* below $25M

Business TransformationProductivityCost Savings

Business Transformation drives over half of the

benefits

* HW, SW, Installation, Network Upgrade and 1st yr serviceSource: Actual CBT engagement, values sanitized to preserve confidentiality


Service Provider Opportunities


Source: Ovum, SP Mktg Analysis

*Based on additional Cisco Analysis of IDC Report &

Historical Data for DC & MS Metrics

0

10

20

30

40

50

60

70

US$ Billions

8% CAGR(IT Industry)

19% CAGRSecurityMetro Ethernet

IP VoiceIP VPNData Center*

$28.5bn

$34.4bn

$41.9bn

$50.3bn

$59.7bn

$69.7bn

2007 2008 2009 2010 2011 2012

Managed Services OpportunityManaged Services Growing >2 Times Than the IT Industry

Nov 2008

“…a perfect storm is brewing. Technological change, the

technology investment cycle, and difficult economics are

combining to push some types of managed services over the

chasm."

Nov 2008

“Fueled by a global economic recession and rapidly

evolving technologies, the market for IT managed

services is poised to exploded during the next 24

to 30 months.”


When do Managed Services Make Sense?

Non-Mission CriticalAny activity that, if performed

poorly, would not pose an immediate risk

to the company

Mission CriticalAny activity that, if performed

poorly, would pose an immediate risk to the company

Non-DifferentiatingAny activity that does not contribute to competitive

advantage for the company

DifferentiatingAny activity that contributes to competitive advantage for

the company

Managed ServiceOut-TaskOutsource

Cor

eC

onte

xt

Managed ServiceOut-Task

Managed ServiceOut-Task

Focus & GrowRetain


Cisco Enables Service Providers to Capture theWhole Opportunity In Managed Services

Unified Communications ServicesUnified Communications Services

Web 2.0 Applications (SaaS)

Business Video ServicesBusiness Video Services

Business Class Network Services

Unified Communications (+IM, Presence)Mobile Unified CollaborationConferencing (Audio, Video)Unified Contact CenterSIP Trunking Services

Web Collaboration (audio, video, mobility)TelePresenceDigital Signage (In store, customer collaboration)

Web Collaboration (team spaces; WX Connect)Web Applications (WebEx Meeting Applications)Application Development (CUAE + WebEx Svcs)Application EcoSystem (Cisco Dev Network)

Application Aware Networking (WAAS)Application Performance ManagementSecure Network ServicesBranch Office & Teleworker Services


What Are Managed IT Services?

An IT Service is based on the use of Information Technology and supports the Customer's Business Processes. An IT Service is made up from a combination of people, Processes and technology and is defined in a Service Level Agreement.

All elements of Managed IT Services Are Proactively Monitored and Providers Can Troubleshoot Incidents from the NOC, According to Defined Service Level Agreements (SLAs) Negotiated with End Users

Managed Services Are often Offered on an Operating Expense Basis That Requires No Capital Outlay for the End User Customer


Managed Services Defined

SP NetworkNAS

Servers

Network or Cloud Based Services

CPE-BasedServices

DataCenter

BranchOffice

Customer Site Customer SiteNASServers

SP Data Center

ServiceServiceEnabledEnabled

CPECPE

ServiceServiceEnabledEnabled

CPECPE

Service-EnabledSP Router





36 Managed Services are in the StudyIP VPN

Data Center

Unified Communication

Metro Ethernet

Security


The Emerging Region overall opportunity is $26B in 2013; from $9.4B today. This represents an overall 18% CAGR.

$0.0

$5,000.0

$10,000.0

$15,000.0

$20,000.0

$25,000.0

$30,000.0U

SD (m

illio

ns)

Tota l Metro E $659.2 $958.8 $1,190.6 $1,455.9 $1,816.0 $2,164.6 21.9%

Tota l IP VPN $3,164.2 $3,644.9 $4,090.2 $4,931.3 $5,420.8 $5,830.8 10.7%

Tota l Data Center $3,423.1 $5,264.5 $6,527.6 $7,665.1 $8,603.6 $9,888.6 19.3%

Tota l UCC $1,173.1 $1,885.2 $2,917.9 $3,872.3 $4,919.9 $6,104.7 31.6%

Tota l Securi ty $1,024.5 $1,344.0 $1,574.7 $1,792.2 $1,959.4 $2,138.2 13.0%

2008 2009 2010 2011 2012 2013 CAGR

Data Center, UCC and Security are critical to get right and are built from a strong platform in Metro E and IP VPN. Cisco is seeing further demand from Corporates out-tasking


Yesterday, Today, Tomorrow’s Competition… Each Player need to consider 3 Critical Questions

IT Services Players/SIsService Providers

Managed Network Services

Managed IT/ App Services

Managed Security Services

Managed Voice/ UC Services

Hosted contactcenter

ConferencingMessaging

Intrusion detectionAnti virusAnti spam

Unified threat management

Disaster recovery

DesktopE-mail hostingApplications

hostingStorage

Data center Collaboration

SaaS

MPLS VPNLAN

Remote accessMobility

StrategicHow far up the value chain SP should goPartnership between Telcos, IT and SI playersGain International foot print

Operational• Service Creation competencies• NOC and OSS/BSS practice• IT and SI competencies

GTM / Sales• ICT Sales Skills• Industralize offering for SMB• Capture verticals opportunities

1 2 3


Data Center Data Center VirtualizationVirtualization

CloudCloud

______

SaaSSaaS

WebEx WebEx PostPathPostPath

______

Hosted Hosted Communication Communication

SolutionsSolutions

Hosted Hosted Protected Email Protected Email

ServiceService

______

Managed Managed ServicesServices

Limited to Limited to CPE CPE

PlatformsPlatforms

______

Cisco Cisco Customer Customer Premise Premise

EquipmentEquipment

All All PlatformsPlatforms

______

The Market is moving to ‘on demand’which again, means new business models

On Premise On Premise On DemandOn Demand

CPECPE Next Gen Data CenterNext Gen Data CenterDelivery Delivery PlatformPlatform

Y/Y Growth 27% 18% 23% 35%

Source Forrester Research, Mar 2009,: Cisco commissioned research on Global Managed Services Opportunity

12%+


Building a Managed Services Portfolio


Service Development Management Life Cycle

• Statement of opportunity

• Business Case• Service concept

definition• Marketing

Service Description (MSD)

• Technical Service Description (TSD)

• procure equipment

• Business processes

• Design/Impl. Network

• Design/Impl.OSS/BSS

• Brochures• Service pricing• Invoice design• Sales training

• Service Launch

• Service General availability

• Service Trial with beta customers

• Service Limited availability

Complete Cisco Service Lifecycle Approach

Strategic Concept Design and Plan Develop

Launch, Market, and Sell

LifecycleTest and Trial

Build the Service

Envision the Service

Market and Sell the Service


Building a Managed Service Practice

Full New: 3 to 18 months

New Feature: 3 to 6 months

Marketing/Sales Not Included

Average Time to MarketOther

5%Integration 20%

Hardware 20%SW

15%

Human 40%

Bringing a New Service to Market…


SP does most service development and delivery

Limited or no outsourcing

Extensive portfolio of skill-sets developed and maintained

Direct sales to create customer base

Applications, provisioning systems, and management interfaces are closed

Key Ser vice Delivery Activities TelecomServices

ManagedServices

Service Creation & Innovation

Design & Implement

Network Operation Center

Security Operation Center

CRM, Billing & Collection

Order Processing, Provisioning

2nd line support

1st line support

Marketing & Sales

Installation & Deployment

Customer

The Traditional Service Delivery Model

Success can be impeded due to skillSuccess can be impeded due to skill--set shortages, deployment inefficiencies set shortages, deployment inefficiencies and inflexible systems, upfront CAPEX and high OPEXand inflexible systems, upfront CAPEX and high OPEX

Service Provider


The New Service Delivery Model –for Innovation and Growth

The New Delivery Model builds service ecosystems to The New Delivery Model builds service ecosystems to improve revenues, timeimprove revenues, time--toto--market andmarket and operational efficiencyoperational efficiency

A service delivery ecosystem of partners to harness skills

Alternative route to accelerate Managed services adoption

Innovative Marketing and sales approach

An IP NGN architecture enabling service differentiation and lower TCO

Cisco can assist with building the new delivery model -solution architectures, Operations, High Touch Sales, Capital leasing, with vertical markets expertise

Key Ser vice Delivery Activities TelcoServices

VerticalServices

Service Creation & Innovation

Design & Implement

Network Operation Center

Security Operation Center

CRM, Billing & Collection

Order Processing, Provisioning

2nd line support

1st line support

Marketing & Sales

Installation & Deployment

Customer

Service Provider Operational Partners Implementation Partners

Par

tner

Rol

es fo

r Illu

stra

tive

Pur

pose

s O

nly


End Users

New Business Models is required to Address Vertical Markets

* VSP can be either a new company or a new department within an existing company

Cisco Partner (SI)

VSP*

Out Tasking & Outsourcing

VSP services

Key Stakeholders

Local Partner

SP access services

SP

Vertical & Application Providers

Consumer

SMB Real Estate

Public Safety

Enterprise

Education Health

Strategic collaborative services such as network intelligence


Example of Vertical Focus

Public Safety

Improved Communication Technology

Safety & Physical Security

Training & Collaboration

Connected Real Estate

Next Generation Learning

Energy Management

Safety & Security

Admin. & Operational Efficiency

Education

Connected Classrooms

Distance Learning

Next Generation Campus

Healthcare

Electronic Medical Records (EMR)

Connected Imaging

Clinical Collaboration

Medical Grade Network

Telemedicine


Situation /Challenge

• Social and technical development of Colombian workers

• 175 education centers.• Limited internal IT capabilities• Required to refresh Old technology,

switching, telephony, wireless and security

Solution • Telefonica / Orange as MS Partner• Unified end-to-end solution, and

one end-to-end service, • Managed VPN, Voice, security, data

centre LAN and wireless LAN, videoconference,, Internet access,

• Future: managed workstations (PCs and laptops) and helpdesk activities.

Case Study : Servicio Nacional de Aprendizaje (SENA) Managed Cisco Connected Learning Services

• Cut costs and delays associated with traditional film imaging

• Improves Quality of Patient Care • Provides secure image access—

from any location• Facilitates collaboration,

e-learning and knowledge sharing

Benefits

• 10,500 IP Phone (end of 2010)

Result



• Creation of the Interconnection System “Plataforma Mexico” to concentrate all crime & felony information

• 8 Corporate Buildings• 32 State Emergency Center C4 & 40

Sub C4• 623 Federal Police Stations• Primary & Secondary Data Centers• NOC & SOC

Solution • TelMex provided IPVPN, UC, Security & NAC services

• VSP Model to created NOC & SOC within the Public Safety Ministry facilities via specialized partners

• Collaboration with TelMex, Public Sector, Channels & Services team

“Plataforma Mexico” –a VSP opportunity to enhance public safety

• One integrated offer for all services to enabled “ Plataforma Mexico”

Benefits

• TelMex Secured a Long Term Public Safety Contract

Result



• Healthcare services 50 Millions to private Mexican workers

• 3000 sites national wide.• In a Typical Day:

417,000 Daily consultation3,600 Surgical interventions500,000 Lab testing48,000 Radiology testing

• Required Image Acquisition, Linkage, Processing and Storage

Solution • Telmex as Managed Services Partner• Managed VPN to provide Voice, Data

and Video services to 3000 sites• Managed WAAS Imaging

acceleration across 539 main Hospitals

Case Study : Instituto Mexicano Del Seguro Socail Managed Cisco Connected Healthcare Services

• Cut costs and delays associated with traditional film imaging

• Improves Quality of Patient Care • Provides secure image access—

from any location• Facilitates collaboration,

e-learning and knowledge sharing

Benefits

• $120M* USD per year of savings

Result

* Source: Mr Castañeda, IMSS CIO


Cisco Enables the Experience for Service Providers

Services and ImplementationServices and Services and

ImplementationImplementationTechnology

and SolutionsTechnology Technology

and Solutionsand SolutionsSales and MarketingSales and Sales and MarketingMarketing ChannelsChannels

MS Advisory services

MS Build, operate, transfer

ISR (Sec, voice)APM (Video,

WAAS)

Sales training programsMarketing programs

MSCPCisco Sales

compensation


Managed ServicesChannelProgram

Financial RewardsBusiness ModelTech BenefitsMarketing Benefits

Managed Services Channel Program and Cisco Powered: New Financial Incentives

Managed Services

Strategic Services

Legacy Services

Branding, Marketing and Tech Benefits

Financial Rewards/

Global Sourcing

Partner Program for Managed

Offers


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managed services market evolution portfolio creation · the market is moving to ‘on demand’...

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