I D C M a r k e t S c a p e : A s i a / P a c i f i c N e x t - G e n e r a t i o n T e l e c o m S e r v i c e s

Transcription

1 Asia/Pacific Headquarters: 80 Anson Road, #38-00 Singapore P E X C E R P T I D C M a r k e t S c a p e : A s i a / P a c i f i c N e x t - G e n e r a t i o n T e l e c o m S e r v i c e s Adrian Dominic Ho Sherlin Pang I N T H I S E X C E R P T The content for this excerpt was taken directly from IDC MarketScape: Asia/Pacific Next-Generation Telecom Services 2011, by Adrian Dominic Ho and Sherlin Pang, IDC Doc#AP T, September 2011 I D C O P I N I O N The Asia/Pacific (AP) next-generation telecom services vendor assessment uses the IDC MarketScape model to evaluate global service providers (GSPs) and regional service providers (RSPs) on their capabilities and strategies in implementing ICT services. The criterion for inclusion remains as: SPs should have a strong regional footprint with an extensive ICT services portfolio and a large installed base of multinational corporations (MNCs), midsize to large enterprises, and government bodies with regional or international ICT needs. IDC believes that the following are key differentiators that contribute to the success in this market: Extensive ICT services portfolio in the region. Besides IP VPN and Ethernet services, SPs should have a wide range of ICT services beyond network-related services. These would include business consulting services, enterprise mobility, managed desktop, application management, and cloud advisory. Full-fledged, on-premise private cloud capabilities. The differentiator is their ability to enable cloud federation or brokerage services and deployment (and even management) of on-premise private cloud. SPs must be able to demonstrate the ability to build platforms and integrate multiple cloud environments, accompanied by strong cloud migration advisory and consulting capabilities. Mobilution and vertical-specific solutions. Emerging offerings include telecom expense management (TEM), virtual desktop infrastructure (VDI), or targeted solutions like asset tracking, radio frequency identification (RFID) solutions. SPs that demonstrated their capability to implement vertical solutions within AP will also be well positioned. Customer acquisitions. GSPs need to show their ability to garner Asian-based MNC contracts, while RSPs demonstrate their ability to clinch contracts with global MNCs. Professional services (PS)-led selling leading to transformational projects. Large transformational projects (above US$50 million) are usually the direct Filing Information: September 2011, IDC #AP TE : Excerpt

2 result of PS-led engagements and seeding focusing on business process improvements and productivity gains that involve an extensive suite of ICT solutions. Emerging Asia is the next growth engine. SPs must demonstrate strong execution/strategy in key growth markets in the region, including China (critically important), India, and Indonesia, via their direct network presence and customer acquisitions. I N T H I S S T U D Y This IDC study is the second AP vendor assessment study on the next-generation telecom services market, using the IDC MarketScape model. Key vendors in this market are assessed on their current capabilities and longer-term strategies that will impact their ability to service the medium-sized to large enterprises, MNCs, and the government clients that have regional or international ICT requirements. The IDC MarketScape model uses a sophisticated scoring and ranking model that is based on both qualitative and quantitative criteria that result in a graphical illustration of each vendor's position in the market. The evaluation of the vendors is based on a comprehensive framework and a set of parameters that assess vendors relative to one another and those factors that are expected to be most conducive for success in a given market in the short and long term. M e t h o d o l o g y IDC MarketScape criteria selection, weightings, and vendor scores represent well-researched IDC judgment about the market and specific vendors. IDC analysts tailor the range of standard characteristics by which vendors are measured through structured discussions, surveys, and interviews with market leaders, participants, and end-user communities. Market weightings are based on user interviews, buyer surveys, and the input of a review board of IDC experts in each market. The individual vendor scores and ultimately vendor positions on the IDC MarketScape are based on detailed surveys and interviews with the vendors, publicly available information, and end-user experiences in an effort to provide an accurate and consistent assessment of each vendor's characteristics, behavior, and capabilities. Participants in this study include the GSPs and RSPs that have network connectivity and presence in the AP region, and, to qualify for inclusion in this AP next-generation telecom services IDC MarketScape, vendors must at least have multiprotocol label switching (MPLS)-based and Ethernet-based international service offerings to the targeted enterprise segment and provide cross-border connectivity to major markets in the AP region and beyond. There are 11 SPs included in this study: AT&T BT Global Services (including BT Frontline) 2 #AP TE 2011 IDC

3 Cable & Wireless Worldwide NTT Communications Orange Business Services Reliance Globalcom SingTel/Optus (including NCS) T-Systems Tata Communications Telstra & Telstra International Verizon Business S I T U A T I O N O V E R V I E W In the past one year, while the U.S. and Europe economy were struggling to get out of recession (and are still in a state of gloom now), Asia was recording double-digit growth, especially in China and India, fueled by domestic demands. Many U.S.- and Europe-based MNCs have been pouring investment, moving operations and staff into the region so as to be "closer" to their customers. These global enterprises, as well as the Asian-based MNCs, which already have presence in Asia's major cities, were expanding into tiers 2 and 3 cities to take advantage of cheaper resources or consumption growth in these cities. Besides China and India, there is also expansion into emerging markets like Cambodia, Vietnam, Philippines, Indonesia, and also Africa and the Middle East. In addition, enterprises are looking for a one-stop SP that not only provides networks services but also ICT services that are better aligned with their business processes, and enables them to be more agile and efficient in a highly competitive Asia market where speed-to-market and being first-to-market are important to gain a competitive edge. Many GSPs have increased investment within the region to serve the telecommunications needs of their U.S.- or Europe-based clients. Many have also set up customer support centers and operation centers, and have increased hiring within AP to support their customers better. Recognizing that this is the "era of the Asian enterprises," some GSPs are also actively hunting Asian logos and building partner relationships with local governments. They are building their service portfolio in the region and have set high enterprise revenue growth targets with a large proportion of this growth likely to come from Asia. The RSPs are also strengthening their managed services portfolio and capabilities and have indicated their intention to become the leading managed services/ict provider of the region or globally. Eventually, SPs that have extensive network presence, including in-country connectivity and local supports or even setting up research and development (R&D) centers in the region to bring down cost or to localize innovation, comprehensive managed services portfolio including cloud service deployment capabilities, strong PS and IT services, and have 2011 IDC #AP TE 3

4 good vertical industry knowledge, will be able to capture higher wallet share in the region. F U T U R E O U T L O O K I D C M a r k e t S c a p e A s i a / P a c i f i c N e x t - G e n e r a t i o n T e l e c o m S e r v i c e s M a r k e t V e n d o r A s s e s s m e n t Figure 1 shows each vendor position in the vendor assessment chart. Its market share is indicated by the size of the bubble, and (+), (-), and () icons indicate whether the vendor is growing faster, slower, or is even with the overall market growth. Market share is derived from revenue on international MPLS- and Ethernet-based data services and managed services (excluding support services) from both medium-sized to large enterprises and government segments within AP. F I G U R E 1 A s i a / P a c i f i c N e x t - G e n e r a t i o n T e l e c o m S e r v i c e s V e n d o r A s s e s s m e n t Source: IDC, #AP TE 2011 IDC

5 V e n d o r S u m m a r y A n a l y s i s Verizon Business Verizon Business (Verizon) maintains its position as one of the leaders in the AP next-generation telecom services market in Over the past one year, Verizon has made a number of upgrades/additions to the network, back-end systems, and service portfolio in the region. On connectivity services, the provider now offers Ethernet private line (EPL) service as a standard offering in Australia, China, Hong Kong, Japan, and Singapore. Additional countries are to be added by the end of Verizon already has Ethernet virtual private line (EVPL) and virtual private LAN service (VPLS) in 11 countries and has more than 45 MPLS nodes in 16 countries and 32 cities in AP. On the network, the provider upgraded its mesh network from seven-way to eight-way diversity across the Pacific and has invested 100 gigabit Ethernet (GE) ultra-long-haul into its backbone and Ethernet cores. In Asia, it has deployed native 100G optical transport devices in all PoPs and is ready to introduce 100G services in Asia anytime. Verizon is growing its infrastructure to handle the increased need for bandwidth within AP and from AP to the rest of the world. The increase in the size of infrastructure will allow Verizon to effectively handle the growing need for customer bandwidth demands for E1 to 10G services. In addition, the provider owns metro fiber networks in Japan, Australia, and Singapore, which is deemed to be more cost-effective over leasing from local carriers. Strength s Active seeding of Asian-based accounts for future growth. Verizon is one global provider that does not shy away from actively hunting for Asian logos. Asian-based enterprises are the ones that will dominate ICT spending globally within the next 3 5 years, and the provider is seeking every opportunity to grow its Asian MNC customer base, which is a wise move for a GSP playing in the AP region. Japan and India continue to be its two strategically focused markets, and it has been relatively successful in penetrating the Japan market. Verizon will continue to penetrate the Asia markets with cloud services, security services, and PS-led strategies. The provider is targeting to double its AP revenue (from the 2010 level) by Datacenter investments and strong security capabilities lay the foundation for "everything as a service" (EaaS) cloud services. Globally, Verizon has 200 datacenters, of which 37 are global Internet centers with 2.5 million sq ft of datacenter space. The provider has doubled its computing-as-a-service (CaaS) datacenters to six within the past one year with new ones expected in London and Canberra (Australia) by Within AP, it has 13 datacenters and a CaaS datacenter in Hong Kong (and Canberra by 2012). Out of the cloud datacenters in the United States, Europe, and Asia (Hong Kong, Canberra, and Tokyo), the provider will also be expanding its IaaS to include cloud storage and vcloud datacenter service. Verizon is further planning to expand its datacenter footprints in the region either through direct investment or strategic partnerships. Security is a major concern in cloud service delivery, and capabilities in security and security-related PS skills (via CyberTrust) have been a strong selling point 2011 IDC #AP TE 5

6 for the provider. In addition, the recent acquisition of Terremark also expands Verizon's IT and private cloud management capabilities to accelerate its EaaS cloud strategies. Strong portal capabilities and back-end investment for faster service delivery and enhanced customer experience. Comprehensive, user-friendly online enablement enhances customer online experiences, improve response time to end users, while at the same time reduces operation costs to SPs. The capabilities of Verizon's enterprise online portal, Verizon Enterprise Center (VEC), are impressive, supporting more than 100 applications, 13 languages, and include functions such as order placement, online invoice payment, network tools, collaboration and dashboard consoles, among others. Enterprises are able to access the portal from Internet-enabled mobile devices and conduct circuit test over mobile handsets. The emedia (online billing, BillManager, electronic data interchange [EDI], and direct data services) is able to generate global billing analysis report in 65 currencies, with capabilities to conduct further in-depth analysis. ebonding is also available to enterprises. On its back-end systems, the provider has made a number of enhancements, such as a unified customer data warehouse, to enable staff from different teams to easily search and access all customer information for faster response time to customers or extend mobile VEC to managed services like security and hosting. It is also revamping all its customer care agents' desktop to a virtualized environment to enable consistency in data view by agents across customer care centers. Challenge s Unclear strategy in the China market. Other than MPLS VPN Interconnect (MVIC) partnerships with Chinese telcos for in-country connectivity and setting retail stores in the country, the provider does not seem to achieve much success or have a clear strategy in Asia's fastest-growing market. Its strategy in the China market seems to be on the drawing board or is still at a very initial stage of exploring opportunities. Limited market penetration through vertical solutions and lack of mobility solutions in the region. Verizon has a range of vertical-specific solutions and PS for the healthcare, finance, utilities, retail, and public sector. However, it has not shown much success in penetrating into the local markets in the region with these vertical or ICT solutions. Most of its deals are still very much network and security related. The provider also lags behind its competitors in introducing enterprise mobility solutions in the region, including asset tracking, M2M solutions, or telecom expense management. E S S E N T I A L G U I D A N C E This year, IDC observes that many SPs in AP have ramped up their suite of VASs especially in the area of cloud services, as well as investment in customer support to enhance customer experience. These include enhancing their customer Web portal, increasing in-country local support, and investing in back-end systems, in addition to network upgrades or new PoPs in the region. Many have extended software as a service (SaaS) to the enterprise market, which previously was mostly targeted at 6 #AP TE 2011 IDC

7 SMEs, and have extended or plan to extend their IaaS to include desktop/workplace as a service, disaster recovery/business continuity as a service, security as a service or UCaaS. There are 11 SPs that are being evaluated in this AP next-generation telecom services market. Some already have extensive networks and managed services portfolio in the region and are extending their coverage and services to emerging markets like Africa and Middle East, while others are newer players that are still building their footprints, services portfolio, and brand recognition in the region. Among them, some lead in the managed network space, while others are striving toward becoming leading ICT players in the region. To enterprises that are choosing between providers to manage their network or ICT needs, they need to lay down clear business strategies internally and decide which providers best fit their needs. Enterprises should note that providers with high scores or positioning in the IDC MarketScape need not be the best option for them and might be better served by niche players. The following are some guidance for both enterprises and SPs: Build enterprise mobility and vertically aligned mobility solutions. With rapid business expansion (regionally and internationally) and increased mobility on the job, escalating roaming charges have been a major concern among CIOs. SPs that offer TEM with a promise of substantial cost savings will resonate well with CIOs. TEM can be used as a strategy to increase account penetration and stickiness with key customers and drive higher ICT wallet share. In addition, with the increasing use of smart devices (smartphones and tablets), mobile workforce, and the consumerization of IT, enterprises are looking for SPs that can manage the numerous mobile devices and operating systems, while allowing employees to access the enterprise networks and applications in a secure manner. VDI will be a viable technology that enables the centralization of applications and opens up new opportunities to SPs, including new revenue through supporting new or customized wireless applications, managing the mobile devices and communication infrastructure to enable a seamless mobile experience for end users. Establish private cloud capabilities and in-country datacenter footprints in the region. Almost every SP has implemented cloud computing services in the region, and some have set high revenue targets for cloud services. The continuing concerns among enterprises about placing sensitive workloads and customized applications in the cloud remain to be availability, governance, and security. Most large enterprises would adopt a hybrid model. SPs that can demonstrate the ability to implement or even manage on-premise private cloud for enterprises, and integrate different cloud environments to enable enterprises harness the benefits of cloud services, will be well sought after. Such capabilities will also be accompanied by strong cloud migration advisory and consultancy services. In addition, due to concerns over data proximity and accessibility, SPs that have in-country or in-region datacenters in selected key cities, either through building its own datacenters or through partnerships with local telcos or IT partners, will give them competitive edge to launch a broader set of cloud services in local markets IDC #AP TE 7

8 Build presence in emerging markets. Enterprises are moving rapidly into emerging markets like India, China, Indonesia, Philippines, or Vietnam, and are also expanding into tiers 2 and 3 cities to take advantage of exponential growth in these cities. SPs need to build up their presence in these emerging markets either through deep NNI relationships with local carriers, partnership with SIs, or build own PoPs (in open markets) to enable seamless network connectivity and deliver suite of managed services to these enterprises. Enterprises are also increasingly looking to outsource or outtask their networks and IT services, and SPs will need to demonstrate their ability to manage third-party vendors and provide end-to-end service management. L E A R N M O R E R e l a t e d R e s e a r c h Verizon Business Analyst Forum: Transform to Enable Better Business Outcomes for Enterprises (IDC #AP T, May 2011) C o p y r i g h t N o t i c e This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit Please contact the IDC Hotline at , ext (or ) or sales@idc.com for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or Web rights. Copyright 2011 IDC. Reproduction is forbidden unless authorized. All rights reserved. 8 #AP TE 2011 IDC