This Frost & Sullivan research service titled Managed Services Market in South Africa provides an overview of the current status of the market including size, competitive environment and key developments. The offerings within managed services are analysed and newer technologies and trends in each service offering discussed. It also identifies important practices and achievements of leading market participants and analyses the major criteria and requirements of companies when selecting to outsource business data services. The research service also highlights the significant investment areas in business data services during the forecast period and provides recommendations to service providers. In this research, Frost & Sullivan's expert analysts thoroughly examine the following market sectors: data centre hosting and cloud services.

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Market Overview

Small to Medium Enterprise Sector Emerges as a Key Market for Cloud-based Offerings

Under the current economic conditions, managed services have emerged as particularly critical for businesses in South Africa as they aim to contain costs and improve efficiency. Enterprises are increasingly outsourcing non-core IT processes in order to focus on their core mission. The emergence of cloud computing has given impetus to this trend, as businesses are now able to access the computing resources they need, when they need them, over the internet. Small and medium enterprises (SMEs) are positioned to benefit immensely from cloud-based offerings as these services essentially circumvent the need for businesses to invest in costly capital infrastructure. In South Africa, cloud computing is now a reality, and is poised to become the standard mode of delivering computing resources in future. More pertinently, a significant majority of enterprises have invested in or are planning to invest in cloud services in the near future.

“Increased uptake of cloud-based services will be driven by the ever declining broadband costs,” notes the analyst of this research. “The SME sector represents a key market for cloud-based offerings as these companies often cannot afford to build their own infrastructure. The declining costs of bandwidth will make these offerings affordable and attractive to the sector.” The cloud presents SMEs with the only route to access normally expensive computing resources. Shared cloud infrastructure, or the public cloud, is a viable option for SMEs that cannot afford to build data centres of their own. Thus, cloud services are slated for greater uptake in future as businesses move towards managed hosting services. “A critical enabler of this level of uptake will be the projected falling of bandwidth prices on a sustained basis,” remarks the analyst. “As infrastructure becomes far more ubiquitous, particularly undersea cables and terrestrial networks, the costs of bandwidth and internet-based services, such as cloud offerings, are expected to fall.”

Service Providers Need to Focus on Reducing TCO, Especially for Emerging Services

Although managed services’ key value proposition is its ability to reduce costs, the reality is that the total cost of ownership (TCO) for a number of businesses is still high, or has even subsequently increased, negating any potential benefits to be derived from these services. A case in point lies in areas such as software as a service (SaaS), where challenges related to integration with existing systems have resulted in companies running SaaS systems parallel to their existing systems. This has further increased the total cost of ownership for these businesses.

Another manner in which managed services can potentially impose additional costs on businesses relates to the sub-optimal customer service that can emanate from poor service provider response times and lacklustre technical innovation. It is therefore imperative for service providers to focus more on providing true TCO savings rather than merely on price.

Market Sectors

Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:

• Data centre hosting
• Cloud services

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