A NEW TYPE OF SERVICE PROVIDER EMERGES, IDC SAYS

July 14, 2000

COMMERCIAL NEWS

Framingham, MASS. — The Internet has so changed the way management services are delivered that a new market has sprung up. The changes involve moving management of traditional distributed network and client/server systems away from the customer premises and back to a remote mainframe-like model of datacenter delivery, a model commonly referred to as an Internet datacenter. According to IDC, a new type of service provider, a networked infrastructure management services (NIMS) provider, is cropping up in response to the transforming market.

“The unique characteristics of these new players include the centrality of delivering service offerings that will support Internet-based ebusiness customer needs, the incorporation of Internet management services as part of service offerings, and perhaps most significantly, the delivery of these services from datacenter-type environments,” said David Tapper, senior analyst for IDC’s Networked Infrastructure Management Services research program. “NIMS providers will be delivering management services for a broad range of networks – including local and wide area networks, intranets, extranets, the Internet, and virtual private networks – and networked servers, applications, and clients that are part of these systems.”

Opportunities for these new providers are plentiful. IDC estimates the market for these services topped $17 billion in 1999 and will more than double to over $36 billion in 2004, and these figures don’t include networked infrastructure management services that are part of broad-based IS outsourcing contracts.

The United States will represent the biggest opportunity for NIMS providers. Through 2004, it will account for almost 50% of the market’s revenues. Latin America and an area IDC calls rest of world, which includes Eastern Europe and the Middle East, will be the fastest-growing regions, increasing their revenues at 1999-2004 compound annual growth rates (CAGR) of 22.3% and 20.1% respectively. In comparison, the worldwide market will increase at a CAGR of 16.3%.

In terms of industries, in the United States banking is the biggest spender on networked infrastructure management services.

“More than in other vertical industries, banking and financial service organizations are able to measure directly the costs of infrastructure downtime in hard dollars,” Tapper said. “As a result, banks continue to invest large sums in infrastructure monitoring and management, which include recovery, archiving, high availability, and security monitoring services, to ensure that systems are operational on a 24 x 7 basis.”

IDC recently published Worldwide Networked Infrastructure Management Services Forecast and Analysis, 1999-2004 (IDC ##B22095). This report examines the U.S. and worldwide markets. It forecasts revenue growth in the market through 2004 by 29 discrete service activities, 7 regions by industry, and by organization size. The report also discusses industry trends, customer preferences, winning attributes for service providers, and the market’s opportunities and challenges. The report concludes with recommendations for service providers wanting to compete in this segment.

IDC delivers insights and advice on the future of ebusiness, the Internet, and technology to help organizations make sound business decisions. IDC forecasts worldwide markets and trends and analyzes business strategies, technologies, and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC provides global research with local content through more than 500 analysts in 43 countries worldwide. IDC’s customers comprise the world’s leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at http://www.idc.com .

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