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Managed Services 3.0

“œAnother X.0 expression”, you say.”How original.”Certainly, the trend du jour is to update a way of doing things and label it with an”X.0″ after most any phrase or expression. But, you know, I’m not ready to abandon the logic for the sake of a new fad that is obtuse or overt”marketing bull.” I really tried to avoid it, REALLY, but for managed services, the taxonomy works rather well. So, here goes-”œManaged services” is one of those terms which has meant many things to many people. The lack of a generally accepted definition of managed service has contributed to its slower than expected growth in the past. The history of managed services can be summarized as:

  • Managed Services 1.0: The first generation of managed services in the 1980s consisted of highly customized network outsourcing arrangements designed by the telecommunications carriers to meet the needs of a select group of large-scale corporations.
  • Managed Services 2.0: The second generation of managed services emerged in the 1990s when a new class of independent service providers tried to sell remote monitoring services to small- and mid-size businesses (SMBs).

These previous generations of managed services failed to completely fulfill their promise for a number of reasons. Managed Services 1.0 worked well for a small number of very large customers, but couldn’t scale to meet the needs of smaller companies in a broader market. Managed Services 2.0 consisted primarily of start-up xSPs that couldn’t win customer confidence because they lacked sufficient remote management capabilities and couldn’t demonstrate strong enough financial viability. Today, customer attitudes have changed and enabling technologies have advanced to make managed services more timely and effective to create a new opportunity for managed services to prosper.Managed Services 3.0 represents a new stage in the evolution of the market that brings together the ‘perfect storm’ of escalating customer needs, matched by accelerating technological advancements and better industry best practices to meet the IT/network management needs of companies of all sizes. First and foremost, it’s important to define a managed service. End user and xSP experience and engagement leads Cisco to define managed services as:

  • Information technologies delivered as finished solutions, managed remotely by highly skilled professionals from a Network Operation Center (NOC)
  • Proactively monitored whereby providers can troubleshoot incidents from the NOC, according to defined Service Level Agreements (SLAs) negotiated with end users
  • Independent of whether equipment is sold to end customer (capital expense) or offered on an operating expense basis

In my next few posts, I’ll outline the various aspects to this”perfect storm” and discuss the customer, provider and (yes) Cisco shifts that are causing market research to show the managed services market to conservatively reach $66 billion by 2012.

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